Opinion

Russia’s war in Ukraine, Vladimir Putin and Xi Jinping’s recent meeting in Moscow, and China’s apparent success in brokering a diplomatic rapprochement between Iran and Saudi Arabia have fuelled renewed chatter about threats to the global primacy of the United States – and particularly to that of the US dollar.I encountered such commentary in the responses to my recent Global Policy article assessing the future of the Brics (Brazil, Russia, India, China, and South Africa). The group is now considering an enlargement that would bring in countries like Iran and Saudi Arabia, raising questions about its criteria for membership and the role of its own New Development Bank. But would a larger and more influential Brics-Plus really create risks to the dollar?Perceived threats to the dollar’s role in the global financial system are nothing new; they have been a frequent occurrence since I began my career in the 1980s. Obviously, if there comes a time when the US ceases to be the world’s largest economy, the dollar’s status will be called into question. The same was true of pound sterling in the first half of the twentieth century (though the pound was not knocked off its global perch until well after the United Kingdom had been surpassed economically).The eclipse of the dollar would not necessarily be a bad thing for the US, given all the added responsibilities that come with issuing the world’s main reserve currency. In a global economy where the US already is no longer as dominant as it once was, it is not optimal to have everyone else be so dependent on the American monetary system and the Federal Reserve’s domestically driven priorities. Other economies would much prefer that their own currencies, monetary policies, and trade patterns not be so influenced by those of the US.But the fact that a US-excluding group of emerging powers has higher aspirations for itself does not necessarily mean anything for the US-centred financial system. After all, the Brics and potential Brics-Plus countries face many significant challenges of their own, and it is not clear what they hope to achieve together beyond issuing symbolic statements. Crucially, the group’s most important economies are China and India, bitter adversaries that rarely co-operate on anything. Until that changes, it is fanciful to think that the BRICS or even an expanded grouping could mount any serious challenge to the dollar.I often despair at the lack of co-operation between China and India – the world’s two most populous countries by far. If they could overcome their historic animosity and develop an ambitious shared agenda for expanding trade and tackling issues like health threats and climate change, the idea of a Brics-driven challenge to the financial and monetary status quo would become not just plausible but imminent.In this spirit, I have long argued that China should make the first move by inviting India to help co-design elements of its signature Belt and Road Initiative. Realising the BRI’s ambitious agenda of transnational infrastructure investments in co-operation with India would make a far more powerful and lasting contribution to Asia and beyond. Otherwise, the BRI will remain a narrowly Chinese initiative that exists primarily to impose Chinese preferences on others.The potential addition of Saudi Arabia and Iran comes with similar caveats. Yes, bringing on two major oil producers (in addition to Russia) increases the likelihood of some oil being priced in currencies other than the dollar. But unless edging out the dollar is an explicit, genuinely shared, and deeply held goal, such invoicing changes will be exciting only to niche financial writers. I have lost count of the times I have heard arguments about why oil could soon be priced in a new currency. First it was going to be the Deutsche Mark, then the yen, then the euro. It’s still the dollar.Finally, and most importantly, for any Brics (or Brics-Plus) member to pose a strategic challenge to the dollar, it would have to permit – indeed encourage – foreign and domestic savers and investors to decide for themselves when to buy or sell assets denominated in its currency. That means no capital controls of the kind that China has routinely deployed. Until the Brics and potential Brics-Plus countries can find a credible alternative to the dollar for their own savings, the greenback’s dominance will not really be in doubt. — Project Syndicatel Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK treasury minister, is a member of the Pan-European Commission on Health and Sustainable Development.

Italy’s culture wars have begun.Almost six months after taking office, Prime Minister Giorgia Meloni’s right-wing government is pushing out bills that promise to promote national identity, defend the traditional family, protect cultural heritage and hold back migrants.Recent proposals include a bill to safeguard the Italian language and a ban on lab-grown food. Critics say the welter of legislation is aimed at disguising the fact that the coalition is struggling to make headway in more crucial areas, such as utilising European Union post-Covid-19 pandemic funds.“These ‘identity’ choices can spark tensions with the EU in the long term, especially when it comes to civil rights issues,” said Massimiliano Panarari, a political communication expert at Unimercatorum university.Last month Brussels froze a €19bn ($20.76bn) tranche of the money, requesting clarification on Rome’s efforts to meet the agreed policy targets needed to obtain the transfers.On civil rights, Meloni vaunts the importance of traditional family values.Government lawmakers say policies to protect heritage were always going to be a key part of their agenda, and Italy has for years undervalued its rich, historic patrimony.“We do not have diamonds, or big oil and gas resources,” said Fabio Rampelli, a senior member of Meloni’s Brothers of Italy party.“Italian mines are made up of culture, gastronomy, language, arts, fashion, history, archaeology and monuments. This is what we can offer to the world, and what we can improve.”Taking the lead, Rampelli last month put forward a bill proposing fines of up to €100,000 ($109,000) for Italian companies and public entities that use foreign terms, most notably English, instead of the national language in their official documents or communication.The opposition Five Star Movement ridiculed the idea, pointing out that the government itself had added the English term “Made in Italy” to the title of the industry minister when it took office last year.“Identity messages are meant to tell the electorate that Brothers of Italy will not give up its line,” analyst Panarari said.Agriculture Minister Francesco Lollobrigida defended the ban on lab-grown food by saying it was incompatible with Italy’s culinary history and potentially dangerous for health.Meloni herself has called for the creation of a “Made in Italy” high school to teach students the creative and business skills which made the nation “great in the world”, a proposed law presented by her party said.When Meloni won power last year, there was widespread concern in Europe about her post-fascist political roots, fearing she would follow the authoritarian path trod by her old political friend — Hungarian Prime Minister Viktor Orban.She has largely defied her critics, avoiding tough confrontation at home and clashes with Brussels, which was a regular target of her fiery rhetoric in previous years.But she has not rowed back on electoral promises to be hard on immigration. One of her first acts was to curb the operations of charity rescue ships in an effort to reduce the time they could spend at sea looking for migrants.In her autobiography I am Giorgia, published in 2021, Meloni compared mass immigration to the forced transfers of populations in the old Soviet Union, aimed at diluting local customs and religions.“The right wants to preserve these same deep-rooted identities that the left wants to cancel,” she wrote, warning of the dangers of “ethnic substitution” and the dilution of Europe’s Christian culture.Opinion polls suggest that voters are broadly supportive of the government’s actions, with backing for Brothers of Italy seen at 29% in recent polls, slightly lower than at the start of the year but up from the 26% it scored in the October ballot.“I believe these are attempts to divert attention away from the real challenges, including the economy, and to lure us into an ideological debate,” said Alessandro Alfieri, a senator with the opposition centre-left Democratic Party (PD).Other critics on the left accuse the government of being stuck in a defensive pose, wanting time to stand still — a charge the culture minister rejects.“Being conservative means relying on the sense of history, on tradition to seek the way to the future, it does not mean rejecting change,” Gennaro Sangiuliano told a seminar last week on the construction of an Italian cultural identity.“It means mastering (change), orienting it to the deep sense of the history of a community.” — Reuters

Tucked away in the Himalayan foothills of northeast India and frequently battered by strong winds and landslides, the isolated village of Hengbung is well-accustomed to prolonged power cuts.But the village’s challenging terrain — it is mountainous, hard to reach, and criss-crossed by streams — is now proving an opportunity to ensure reliable electricity for the community.A pumped-storage hydropower system fitted with solar-powered pumps started operating in the village last July — the first such project in India to integrate hydro with solar.Built on a stream, the facility features two interconnected reservoirs and essentially acts as a giant water battery, which stores renewable power for release later during grid outages or when demand is higher.At least 350 people in Hengbung — located in Manipur state — now have consistent lighting in their homes and streets as a result of the system, said the Foundation for Environment and Economic Development Services (FEEDS), a local NGO involved in the initiative.“The project has made a sea change in the lives of our villagers by fighting out darkness while keeping the environment clean,” said FEEDS founder, Haokholet Kipgen, who is a Hengbung resident and the wider area’s local political representative. The project — a collaboration between FEEDS, the NB Institute for Rural Technology (NBIRT) and Visva-Bharati University, with central government funding of Rs29mn ($353,195) — is part of a drive to boost India’s renewable energy capacity.One of the top global emitters of greenhouse gases, India wants to increase its renewable generation to 500 gigawatts (GW) by 2030, from an output of about 120GW, government data shows.Hydropower has been earmarked as a key part of this, as it can provide continuous power when other green power sources —such as solar and wind — are limited by poor weather conditions.But as renewable energy generation grows, particularly from solar power, energy storage is also needed to ensure the nation’s grid remains stable around-the-clock and outages are avoided.India’s total operational battery storage capacity is about 50 megawatt hours (MWh), according to the India Energy Storage Alliance (IESA). A recent study by the Council on Energy, Environment and Water (CEEW) estimated that the country’s need would be 327 gigawatt hours (GWh) by 2030.Energy experts say that pumped-hydro storage projects (PSP) could be a key solution, and India’s power ministry recently published draft guidelines to promote the technology.Currently there are eight operational PSPs in India with about 4.7GW capacity overall, most drawing their main operating power from the national grid.But India’s government has identified about 120 sites for the technology, with the total storage potential of 103GW.Nine further PSPs have been commissioned, with three now under construction, and energy analysts said private power firms are now looking to combining hydro power with clean energy, following the example of the landmark system in Hengbung.“Such projects show the way in transitioning to a sustainable energy future by integrating renewable energy with hydroelectric power and storage,” said Santi Pada Gon Chaudhuri, NBIRT’s founder and an energy advisor to the central government.The PSP in Hengbung has two interconnected reservoirs with a total capacity of 1.9mn litres of water, equivalent to about three-quarters of an Olympic swimming pool.During power outages — which are often caused by snapped transmission wires or transformer breakdowns during monsoon rains and in winter — the upper reservoir releases stored stream water to operate a turbine, feeding green power to the grid.That released water then accumulates in the lower reservoir, until it is later pumped back upstream, using solar power, to make it available for power generation again.During monsoons, when there is plenty of stream water to drive the turbine and restock the upper reservoir, excess solar power is fed into the national grid. Energy experts said PSPs have a longer lifespan, lasting for at least six decades, than lithium-ion or lead-acid batteries.“Pumped water storage systems can be a dependable option ... especially when renewable sources such as the sun or the wind may not be available to match the electricity demand,” said Disha Agarwal, senior programme lead at CEEW, a think-tank.Major hydroelectric facilities being built across other Himalayan areas and regions of India have sparked huge protests from residents due to the environmental and social impacts.Yet Arun Kumar, a professor of hydro and renewable energy at the Indian Institute of Technology Roorkee (IITR), said PSPs require far less space than big hydro plants and tend to be located away from rivers and communities or settlements.Nevertheless, he acknowledged that PSPs faced challenges including maintaining required water levels, getting land clearances and attracting investment.The power ministry’s draft guidelines on PSPs say Indian states should consider concessions, subsidies and tax relief for such projects, and call for the use of climate finance options including sovereign green bonds.Kumar said his team of researchers reviewed more than 50 PSPs in different stages of development, and found that their average cost per kilowatt unit stored was about Rs3 ($0.04) — around half that of other storage options.Although the systems need capital investment of between Rs50-60mn ($608,000-730,000) per MW of capacity, he said they are cost-effective storage solutions in the long run.The Hengbung project has lit up the homes of between 350-400 people so far and powered 84 street lights in the village. The next phase aims to cover a further 1,100 inhabitants.Residents said power supplies are now far more stable than in previous years when bad weather and landslides led to power cuts, with repairs taking days to carry out in the village.FEEDS said it has trained local young people to maintain the system, and pays villagers to do repairs when problems arise.“The system is in our hands now; we can run and maintain it ourselves,” said Romi Rai, a 32-year-old who makes a living farming poultry.Rai and his wife Jeena said the system had improved their family life by giving her light to do stitching and household chores more hours of the day, and helping their 6-year-old son do his homework without worrying about the lights going out.The couple said they are also proud their community is providing an example for the rest of the nation.“We are happy to be a part of the country’s green energy drive, even from our remote village,” Rai said. — Thomson Reuters Foundation

Bad news about the health of the $100tn global economy keeps coming amid a weakened momentum. The World Trade Organisation has said 2023 global trade growth would be slightly better than feared, but would remain “subpar”, weighed down by the Ukraine war and stubbornly high inflation. WTO economists expect to see the volume of global merchandise trade slow to 1.7% this year — a full percentage point lower than in 2022. That forecast is slightly better than feared last October, when the WTO projected 2023 trade growth would be as low as 1%, but a far cry from the 3.4% expansion initially projected a year ago. The organisation’s economists also estimated that real global GDP growth at market exchange rates would be 2.4% this year, a notch above the 2.3% forecast in October. The WTO’s report has cautioned that “the pace of trade expansion in 2023 is still expected to be subpar, weighed down by the ongoing war in Ukraine, stubbornly high inflation, tighter monetary policy and financial uncertainty”. There are several factors causing the steep decline, including elevated global commodity prices, monetary policy tightening in response to inflation and outbreaks of Covid-19 that disrupted production and trade in China. Higher commodity prices helped the value of world merchandise trade to rise 12% in 2022 to $25.3tn. Looking forward, the WTO said trade growth in 2024 should rebound to 3.2%, while GDP picks up to 2.6%. In addition, the International Monetary Fund has warned that its outlook for global economic growth over the next five years is the weakest in more than three decades. The Fund has urged nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity. The IMF slightly lowered its outlook for the global economy yesterday, while predicting that most countries will avoid a recession this year despite economic and geopolitical concerns. The IMF predicted the global economy will grow by 2.8% this year and 3% in 2024, a decline of 0.1 percentage point from its previous forecasts in January. The leadership of the World Bank and IMF hopes to use this year’s spring meetings to promote an ambitious reform and fundraising agenda. But their efforts will likely be overshadowed by concerns among member states over high inflation, rising geopolitical tension, and financial stability. The overall picture painted by the IMF outlook is a gloomy one, with global growth forecast to slow in both the short and medium terms. Close to 90% of advanced economies will experience slowing growth this year, while Asia’s emerging markets are expected to see a substantial rise in economic output — with India and China predicted to account for half of all growth, IMF managing director Kristalina Georgieva said last week. The global economy surpassed $100tn for the first time in 2022 but will stall in 2023 as policy makers continue their fight against soaring prices, the Centre for Economics and Business Research — the British consultancy — said in January. Indeed, 2023 was supposed to be the comeback year for the world economy following the Covid pandemic. Instead, it is marked by a continuing war, record inflation and climate-linked disasters. It is a “polycrisis” year, a term popularised by historian Adam Tooze. Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending. Above all, 2022 was the year of inflation. Make no mistake, 2023 is going to be eventful as well as crucial. Policy makers, businesses and investors need to prepare themselves to pursue different strategies to protect value and seize opportunities.

As First Republic Bank’s share price fell by double-digits in the aftermath of the collapse of Silicon Valley Bank last month, some people close to the San Francisco-based lender were worried short sellers were exacerbating its travails, according to a source familiar with the situation.Investors who wager shares in a company will fall were increasing bets on First Republic’s stock when it was already taking a beating, making it difficult for the bank to recover its value, according to the source.Short interest in First Republic indeed increased as turmoil in the banking sector intensified, although measures vary. The percent of shares borrowed — the basic mechanism of a short bet — was minimal to start the month but increased to between 7% and 37% by March 31, according to various data provider calculations, versus averages between 3% and 5% across all stocks.Two of the banks that shut down last month, Silicon Valley Bank (SVB) and Signature Bank, showed a similar pattern: short interest increased as their stock started to fall, at varying degrees of intensity.Problems at US regional banks grew last year, as rapidly rising interest rates slashed the value of some banks’ holdings in long-term assets such as home loans and government bonds. Some lenders were also challenged by exposure to cryptocurrency and technology companies. The underlying issues exploded last month when depositor flight spiralled out of control and regional lenders across the board saw their shares hit.How much short sellers contributed to the downward spiral reprises the debate about whether so-called shorts are market watchdogs or opportunistic investors who profit from others’ misery. In the case of the banking crisis, a review of data and interviews with short sellers and their critics show, the answer may be both.“The shorts in the months before the collapse were accurately warning the markets...that the bank (SVB) was being dangerously mismanaged,” Dennis Kelleher, President and CEO of Better Markets, a nonprofit industry group in Washington, DC, said in an e-mail. “The problem is once that collapse happened, shorts with various motives started targeting other banks.”Some short sellers have been public about their negative views on banks but reject suggestions that they are to blame for the problems.Short-seller Jim Chanos wrote in a March 13 client letter seen by Reuters that investors had known about the underlying balance sheet problems that brought down SVB since last summer. But it was only when the bank, which his fund was short, “abruptly tried, and failed, to raise capital ... that anyone cared.”First Republic and Chanos declined to comment. Signature and SVB did not respond to requests for comment.Short selling is a controversial practice, blamed in the financial crisis of 2008 for adding to the pain; it was temporarily banned, albeit with little impact. Some high profile short sellers were later celebrated as making prophetic calls about the US housing market.The crisis of confidence in US regional banks started when shares of SVB plunged and depositors fled after it announced plans on March 8 to raise capital to fill a nearly $2bn hole from the sale of securities.The Santa Clara, California-based lender was taken over by regulators on March 10, in turn dragging down the shares of other regional lenders. New York’s Signature failed on March 12, and First Republic lost more than 80% of its market value by mid-March.As the crisis accelerated, JPMorgan Chase & Co equity analysts wrote on March 17 that short-sellers were “working collectively to drive runs on banks,” and venture capitalist David Sacks asked on Twitter whether “scurrilous short sellers” had used social media to exacerbate depositor flight from SVB.JPMorgan and Sacks did not respond to requests for comment.Even so, interviews and public postings show at least some short sellers had placed bets against regional banks well before the crisis hit.These included: William C Martin, who shorted SVB in January 2023; Nate Koppikar of Orso Partners, who shorted SVB in early 2021; Barry Norris of Argonaut Capital Partners, who shorted SVB in late 2022; John Hempton of Bronte Capital Management, who shorted Signature in late 2021; and Marc Cohodes, who shorted Silvergate Bank in November 2022, according to interviews with Reuters.Porter Collins, co-founder of hedge fund manager Seawolf Capital, said he saw how rising interest rates would likely hit banks and, in early 2022, shorted SVB, Signature, First Republic, Silvergate and Charles Schwab Corp.“There were warning signs,” he said, “that were pretty easy to see for those who looked.”Schwab and Silvergate did not respond to requests for comment.Such early short sellers, however, were in the small minority. Shorts represented only about 5% of SVB’s stock float as of March 1, according to data tracker S3 Partners, with First Republic at around 3% and Signature at 6%. That compares to an average of about 4.65% across all stocks, per S3.Data from S&P Global Market Intelligence and ORTEX, who use different methodologies, have similar numbers showing SVB, First Republic and Signature with relatively low overall short levels before the crisis.Short positions increased over March, although the measures vary, per the three data providers. On First Republic, the percentage of shares on loan peaked at between 7% and 39% last month, while SVB peaked at between 11% and 19%, and Signature peaked between 6% and 11%.Regardless, short positions in most regional banks were nowhere near some highly shorted stocks like electric carmaker Tesla Inc, which hit around 25% as recently as 2019, and GameStop Corp, which surged past 100% of shares in 2020, according to Refinitiv data.An exception was Silvergate, a cryptocurrency-focused lender, which for months faced an unusually high level of short interest compared to other banks — above 75% by the time it said it would wind down operations on March 8.S3’s Ihor Dusaniwsky said the overall increase in shorts on US regional banks during March was an “extraordinarily small” part of overall sector trading; the declines were driven by regular stock holders selling their shares.“The shorts are not driving the stock price,” Dusaniwsky said. “People are saying that the tail is wagging the dog. It’s certainly not the case in most of these names.”Short-sellers scored regardless: overall short bets in US regional banks gained $4.76bn in March, up 35% on an average short interest of $13.4bn, according to S3. — Reuters

The largest-ever genetic assessment of the woolly mammoth has yielded new insight into this elephant cousin — an icon of the Ice Age — including about its fluffy hair, small ears, cold tolerance, fat storage and even dry ear wax.Researchers on Friday said they had analysed the genomes of 23 woolly mammoths — including 16 newly sequenced ones — based on remains preserved in Siberian permafrost. They then compared them to the genomes of 28 modern-day Asian and African elephants.“The objective was to find those mutations that are present in all mammoths but not in any of the elephants — that is, the genetic adaptations exclusive to the woolly mammoth,” said evolutionary geneticist David Díez-del-Molino of the Centre for Palaeogenetics in Stockholm, lead author of the study published in the journal Current Biology.“We find that woolly mammoths had molecular adaptations in genes related to coping with cold Arctic environments, such as thick fur, fat storage and metabolism, and thermal sensation, among others,” Díez-del-Molino added.The genomes included a mammoth from 700,000 years ago — near the origination time of this species on the Siberian steppes — and others that lived later in their history, thus showing how genetic adaptations evolved.The species, which arose at a time when Earth’s climate was cooling, inhabited parts of northern Eurasia and North America. Most mammoths went extinct roughly 10,000 years ago amid a warming climate at the last Ice Age’s end, with scientists debating whether human hunting played a role. The last ones died out on Wrangel Island off Siberia’s coast 4,000 years ago.The first complete mammoth genome was sequenced in 2015, after a partial genome in 2008.The new study showed that 92% of unique mutations already existed at the outset of the species, with continued evolution on certain traits. For example, mammoths evolved ever-fluffier fur and ever-smaller ears over time.“Our 700,000-year-old woolly mammoth may have had larger ears than the mammoths of the last Ice Age,” Centre for Palaeogenetics evolutionary geneticist and study senior author Love Dalén said.One highly evolved gene was one that when “turned off” in laboratory mice results in unusually small ears. Woolly mammoths were about the size of modern African elephants, around 13 feet (4 metres) tall, but had much smaller ears to guard against losing body heat from a larger ear surface.Several genes involving fur type and growth differed from modern elephants. One of them in humans is associated with Uncombable Hair Syndrome, a condition characterised by dry and frizzy hair that cannot be combed flat. In mammoths, fluffier hair, as well as fat deposits, would have helped provide insulation in the cold.The mammoths had a mutation in a gene that in people is associated with having dry ear wax, though it is unclear how this gave them any advantage. The same mutation is associated with reduced body odour in the armpits in humans, though this may not mean mammoths had a dainty aroma.“I very much doubt mammoths would have been sweating into their arm pits. This is a very unique human thing, I think. Other mammals regulate their body temperature in other ways. So it is very unclear if mammoths would have smelled differently because of this gene variant,” Dalén said.The study helped clarify variable shades of mammoth hair colour — brownish with a touch of red. Mutations in an immune system-related gene indicated the species adapted to a serious pathogen outbreak at some point.While the researchers are not involved in trying to resurrect the mammoth through cloning, their work could assist any such effort.“The dataset we present could be seen as the first element of a road map towards resurrection,” Dalén said. “But it should be pointed out that the road ahead is long, likely to be full of pot holes, and in the worst-case scenario leads nowhere.” — Reuters

The Future of Life Institute’s open letter demanding a six-month precautionary pause on artificial-intelligence development has already been signed by thousands of high-profile figures, including Elon Musk. The signatories worry that AI labs are “locked in an out-of-control race” to develop and deploy increasingly powerful systems that no-one – including their creators – can understand, predict, or control. What explains this outburst of panic among a certain cohort of elites? Control and regulation are obviously at the centre of the story, but whose? During the proposed half-year pause when humanity can take stock of the risks, who will stand for humanity? Since AI labs in China, India, and Russia will continue their work (perhaps in secret), a global public debate on the issue is inconceivable. Still, we should consider what is at stake, here. In his 2015 book, Homo Deus, the historian Yuval Harari predicted that the most likely outcome of AI would be a radical division – much stronger than the class divide – within human society. Soon enough, biotechnology and computer algorithms will join their powers in producing “bodies, brains, and minds,” resulting in a widening gap “between those who know how to engineer bodies and brains and those who do not.” In such a world, “those who ride the train of progress will acquire divine abilities of creation and destruction, while those left behind will face extinction.” The panic reflected in the AI letter stems from the fear that even those who are on the “train of progress” will be unable to steer it. Our current digital feudal masters are scared. What they want, however, is not public debate, but rather an agreement among governments and tech corporations to keep power where it belongs. A massive expansion of AI capabilities is a serious threat to those in power – including those who develop, own, and control AI. It points to nothing less than the end of capitalism as we know it, manifest in the prospect of a self-reproducing AI system that will need less and less input from human agents (algorithmic market trading is merely the first step in this direction). The choice left to us will be between a new form of communism and uncontrollable chaos. The new chatbots will offer many lonely (or not so lonely) people endless evenings of friendly dialogue about movies, books, cooking, or politics. To reuse an old metaphor of mine, what people will get is the AI version of decaffeinated coffee or sugar-free soda: a friendly neighbour with no skeletons in its closet, an Other that will simply accommodate itself to your own needs. There is a structure of fetishist disavowal here: “I know very well that I am not talking to a real person, but it feels as though I am – and without any of the accompanying risks!” In any case, a close examination of the AI letter shows it to be yet another attempt at prohibiting the impossible. This is an old paradox: it is impossible for us, as humans, to participate in a post-human future, so we must prohibit its development. To orient ourselves around these technologies, we should ask Lenin’s old question: Freedom for whom to do what? In what sense were we free before? Were we not already controlled much more than we realised? Instead of complaining about the threat to our freedom and dignity in the future, perhaps we should first consider what freedom means now. Until we do this, we will act like hysterics who, according to the French psychoanalyst Jacques Lacan, are desperate for a master, but only one that we can dominate. The futurist Ray Kurzweil predicts that, owing to the exponential nature of technological progress, we will soon be dealing with “spiritual” machines that will not only display all the signs of self-awareness but also far surpass human intelligence. But one should not confuse this “post-human” stance for the paradigmatically modern preoccupation with achieving total technological domination over nature. What we are witnessing, instead, is a dialectical reversal of this process. Today’s “post-human” sciences are no longer about domination. Their credo is surprise: what kind of contingent, unplanned emergent properties might “black-box” AI models acquire for themselves? No one knows, and therein lies the thrill – or, indeed, the banality – of the entire enterprise. Hence, earlier this century, the French philosopher-engineer Jean-Pierre Dupuy discerned in the new robotics, genetics, nanotechnology, artificial life, and AI a strange inversion of the traditional anthropocentric arrogance that technology enables: “How are we to explain that science became such a ‘risky’ activity that, according to some top scientists, it poses today the principal threat to the survival of humanity? Some philosophers reply to this question by saying that Descartes’s dream – ‘to become master and possessor of nature’ – has turned wrong, and that we should urgently return to the ‘mastery of mastery.’ They have understood nothing. They don’t see that the technology profiling itself at our horizon through ‘convergence’ of all disciplines aims precisely at non-mastery. The engineer of tomorrow will not be a sorcerer’s apprentice because of his negligence or ignorance, but by choice.” Humanity is creating its own good or evil. While the outcome cannot be predicted, one thing is certain. If something resembling “post-humanity” emerges as a collective fact, our worldview will lose all three of its defining, overlapping subjects: humanity, nature, and divinity. Our identity as humans can exist only against the background of impenetrable nature, but if life becomes something that can be fully manipulated by technology, it will lose its “natural” character. A fully controlled existence is one bereft of meaning, not to mention serendipity and wonder. The same, of course, holds for any sense of the divine. The human experience of a higher power has meaning only from the standpoint of human finitude and mortality. Once we become homo deus and create properties that seem “supernatural” from our old human standpoint, such distinction will disappear. The question is what, if anything, will be left. Will we follow the AIs that we created? There is every reason to worry that tech-gnostic visions of a post-human world are ideological fantasies obfuscating the abyss that awaits us. Needless to say, it would take more than a six-month pause to ensure that humans do not become irrelevant, and their lives meaningless, in the not-too-distant future. — Project Syndicate * Slavoj Žižek, Professor of Philosophy at the European Graduate School, is International Director of the Birkbeck Institute for the Humanities at the University of London and the author, most recently, of Heaven in Disorder.

It was exactly four years ago the World Health Organisation (WHO) recommended that children under five years of age must spend less time sitting watching screens, or restrained in prams and seats, get better quality sleep and have more time for active play if they are to grow up healthy. The guidelines were developed by a WHO panel of experts, who assessed the effects on young children of inadequate sleep and activity and reviewed evidence around the benefits of increased activity levels. Failure to meet the then physical activity recommendations was responsible for more than 5mn deaths globally each year across all age groups, the April 2019 guidelines had pointed out while explaining that over 23% of adults and 80% of adolescents were not sufficiently physically active.What Apple CEO Tim Cook suggested the other day is also in same vein. He has encouraged parents to limit screen time for their kids, something that seems counterintuitive to selling iPhones but nevertheless he feels is important. During an interview with GQ magazine, Cook warned parents that kids are ‘digital’ now, and suggested that ‘hard rails’ are needed to make sure children do not spend too much time in front of a phone screen. “Kids are born digital, they’re digital kids now. And it is, I think, really important to set some hard rails around it,” Cook said after GQ senior staff writer Zach Baron mentioned that his own young child is “obsessed” with his phone. “We make technology to empower people to be able to do things they couldn’t do, to create things they couldn’t create, to learn things they couldn’t learn. And I mean, that’s really what drives us,” the Apple chief continued. “We don’t want people using our phones too much. We’re not incentivised for that. We don’t want that. We provide tools so people don’t do that.”Cook’s comments come as studies have shown that too much screen time could alter children’s developing brains and increase their risk for mood disorders. About one third of youths spend more than four hours per day looking at phone, computer or TV screens, a recent study published in the Journal of Behavioural Addictions said. Kids ages 9-10 who spend more time in front of screens exhibited higher levels of depression and anxiety by the time they turned 11 or 12.Cook, who says users ought to take periodic breaks from their phones, pointed out that Apple has developed tools for iPhone users to track their screen time. Parents can use the iPhone’s Screen Time feature to generate activity reports, monitor how often their children pick up their device and which apps and websites they are using. “We try to get people tools in order to help them put the phone down. Because my philosophy is, if you’re looking at the phone more than you’re looking in somebody’s eyes, you’re doing the wrong thing. So we do things like Screen Time. I pretty religiously look at my report,” he said. If the CEO of the world’s largest tech company by revenue and biggest company by market capitalisation is doing so, the message is loud and clear.

Rising food prices are making it difficult for many families in the Middle East and North Africa (Mena) region to put meals on the table.Double-digit food price inflation hits the poor much harder than the rich in the Mena region, although a recent World Bank research suggests that this is likely occurring as well in other emerging and developing economies.This is largely due to the disproportionate share of family budgets the poor devote to food and energy.Average year-on-year food inflation between March and December 2022 was 29% in the Mena region, which is far larger than (19.4%) headline inflation.These outsized increases in food prices, even if temporary, can have long lasting effects. The increase in food prices associated with the Russian invasion of Ukraine may have increased the risk of stunting by 17-24% in the developing Mena region, which translates into about 200,000-285,000 stunted newborns.Substantial peer-reviewed research has shown that child malnutrition can lead not only to poor performance in schooling, but also to lower incomes and poorer health outcomes well into adulthood.Furthermore, the effects are intergenerational — the children of adults who were stunted at birth may be affected too. The key link between food price inflation and its long run effects is early childhood, and the state of child health and nutrition in the region was already an area of public-policy concern before the current food crisis.Indeed, the prevalence of food insecurity in the region has been steadily on the rise from about 11.8% in 2006 to 17.6% in 2023. Thus, this report links the short-run challenges posed by the evolving global environment for the region’s macroeconomic outlook, particularly economic growth and inflation, to long-term development challenges that will need to be addressed well after the shocks emanating from the war in Ukraine have receded.Double-digit food price inflation will weigh on the Middle East and North Africa region this year, causing growth to slow to 3% from 5.8% last year, according to the World Bank.Average year-on-year food inflation across 16 Mena economies between March and December 2022 was 29%, which was higher than the headline inflation of 19.4% year-on-year during that period, the World Bank said.The report warned that deteriorating nutrition resulting from high food prices would have long-lasting impacts on child development and future prospects.Clearly, the fallout from the fight against inflation has accentuated vulnerabilities in the global economy. The increase in interest rates by central banks seeking to curb inflation is slowing global economic activity.At the same time, the tightening financial conditions are likely to increase debt distress in emerging markets economies.Yet, high inflation remains a challenge in the short run, especially among economies in the Middle East and North Africa region that have experienced currency depreciation.Even if the spike in inflation, particularly food-price inflation, turns out to be short-lived, the World Bank says it will still result in long-term development challenges that should, in principle, alter public policy priorities in the short- and long-term.

When Finland cleared the last hurdle for Nato membership last week, major Western newspapers buried the story. Yet Foreign Minister Pekka Haavisto justly celebrated “these historic days” – the end of 75 years of neutrality. As of this week, Finland is formally in, and Sweden, another eternal neutral, will soon follow, once Turkiye allows. Why would these two countries throng into an alliance that French President Emmanuel Macron diagnosed as being “brain dead” only four years ago, and which former US president Donald Trump saw as “obsolete” in 2017? The wisdom of the eighteenth-century British wit Samuel Johnson offers a broad answer here: “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” But there is an even pithier answer to this question: Vladimir Putin. The man who would be King of Europe has given North Atlantic Treaty Organisation (Nato) a new brain and a new lease on life. What an irony! One of Putin’s many pretexts for subduing Ukraine was to stop Nato enlargement once and for all. Instead, by pushing two neutral Nordic countries into the Alliance, he has achieved the opposite. Nato, now, has not been in better health for decades. Yet Putin does not deserve all the credit. Nato was never as sclerotic as Macron and Trump presumed. It is the oldest alliance of free countries, and longevity bespeaks functionality. In past centuries, royals changed coalitions more often than their wigs. As Lord Palmerston famously said: “We have no eternal allies, and we have no perpetual enemies.” Nato is unique in the annals of nation-states. When Napoleon was beaten for good, the coalition arrayed against him was history. Nato, by contrast, was never a temporary marriage of convenience that would fall apart after victory or defeat. Its forces are integrated under a supreme commander and benefit from hardware compatibility, common communications, and constant training. Such synergies make it costly to renationalise defence, and no member has ever defected. Moreover, the Alliance keeps growing. It started with 12 states in 1949. Greece, Turkiye, and West Germany joined in the 1950s, followed by Spain in the 1980s, three former Soviet satrapies in 1999, and seven more in 2004. Albania and Croatia were admitted in 2009, with Montenegro joining in 2017 and North Macedonia in 2020. Once Finland and Sweden are in, the original 12 will have expanded to 32. Growth does not imply obsolescence. The most critical reason for longevity is the United States, which had to overcome its long aversion to what Thomas Jefferson, in his First Inaugural Address in 1801, called “entangling alliances.” In fact, the US did not commit to Europe in the early years of World War I or World War II. The turn from self-isolation to permanent alliance with Europe had to await the Cold War, when those ex-isolationists provided Western Europe with that most precious gift: a security umbrella Made in the USA, including more than 350,000 US troops and thousands of tactical nuclear weapons at the peak that kept Stalin’s heirs on their best behaviour. Moreover, the US acted not only as a protector, but also as a pacifier. With their common security assured, age-old enemies like Britain, France, and Germany could safely dispense with arms races and strategic rivalry in favour of trust and community. This is why the European Defence Community (without the US) died in the cradle in 1954, why Nato has reached the age of 74, and why a purely European strategic player remains a noble dream – even if the EU plus Britain add up to the world’s second-largest economy (after the US and ahead of China). The US is the not-so-secret ingredient. It spares the Europeans the necessity of mounting a divisive autonomous defence. Putin’s war of conquest against Ukraine proves the point. When US President Joe Biden committed in earnest after Russia’s full-scale invasion last year, the hesitant Europeans could feel safe enough to engage. With Mr Big there to deter the Kremlin’s nuclearised war machine, would-be mediators like France and Germany have curbed their classic reflexes. Germany abandoned the Nord Stream 2 gas pipeline from Russia while providing a steady stream of equipment to Ukraine, even Leopard 2 tanks, but only after the US had gone first with its Abrams tanks. Thus, the “brain dead” Alliance has bounced back – nothing like an impending hanging to concentrate the mind. Nato, give or take Hungary or Turkiye, has grasped the obvious. The war on its doorsteps is not just about Ukraine, but also about a precious European order that has delegitimised conquest. The stakes could not be higher. As in Stalin’s days, Putin’s lunge has re-introduced the spectre of Russian hegemony over Europe. Putin wants a certified sphere of influence, preferably a back-to-the-future restoration of the old Soviet empire. If the Ukraine war turns into a blood-drenched stalemate, the voices of accommodation – “give Putin an offramp” – will grow louder on both sides of the Atlantic, on the left and on the right. Is Europe prepared for its strategic paradigm to shift toward the return of power politics? Already, Russia’s war of aggression has revealed the price of three decades of European disarmament. The Alliance has shrunk not only its munitions stockpiles, but also its arms production lines. High-intensity protracted warfare seemed to have gone the way of the buggy. Yet, whichever way the war goes, it holds a sobering lesson for the West: Pile up plenty of gear and ordnance, invest in mobility, and train your troops. “A conqueror is always a lover of peace,” taught Clausewitz. They want to move in “quite calmly.” Hence, “we must prepare for war” in order to avert it. As the West peers ahead, it should heed the age-old rule: Deterrence is better than having to halt aggression. It is also a lot cheaper. — Project Syndicate Josef Joffe, a member of the editorial council of Die Zeit, is a fellow at the Hoover Institution and teaches international politics at the Johns Hopkins School of Advanced International Studies.

This is a perilous moment for the world economy, as stubbornly high inflation, bank failures, and geopolitical tensions threaten to derail growth. There are a few bright spots, with China and India projected to post around 5% and 6.5% growth, respectively, this year. As the latest update to the Brookings-Financial Times Tracking Indexes for the Global Economic Recovery (TIGER) demonstrates, however, the proliferation of risks and the tightening of financial conditions are taking a toll on business and consumer confidence and investment.Inflation in major economies seems to have peaked as supply constraints ease, demand weakens, and some transitory factors – such as last year’s spike in energy prices – wane. Still, persistent above-target inflation leaves many central banks with little choice but to continue tightening, even if less aggressively than before. Complicating matters further is the banking-sector turmoil in some advanced economies, including the United States, which has undermined private-sector confidence and could, when paired with tighter financial conditions, hinder growth beyond this year.The US economy continues to show surprising resilience despite numerous headwinds, with employment and consumption demand still growing robustly. Yet the collapse of Silicon Valley Bank and Signature Bank last month augurs more trouble. Even if authorities can head off systemic risks, already-fragile business and consumer confidence may still take a hit. With inflation expectations easing, a “softish” landing is not out of the question but depends on how quickly the Federal Reserve tries to push inflation toward its target while seeking to limit damage to the financial sector. Moreover, the impending showdown over the federal debt ceiling could disrupt markets worldwide and adversely affect growth.The eurozone and the United Kingdom seem to have put the worst of their woes behind them, though a robust recovery is hardly assured. Mild temperatures and falling energy prices helped both economies negotiate a difficult winter, but high inflation – especially when paired with anaemic GDP growth – forces tough policy choices.In Japan, both domestic consumption and exports continue to stagnate. If above-target inflation persists, the Bank of Japan could face pressure to reverse yield-curve control and abandon negative policy rates, which have kept the yen weak and provided limited support to domestic demand.Low-income and frontier economies are suffering the most, because they face a triple whammy of higher debt-servicing costs, weak export demand, and limited policy space. But major emerging-market economies have held up quite well, even though some have experienced high inflation and weakening currencies relative to the dollar.With its zero-Covid policy – and the disruptive effects of its abrupt reversal last December – largely in the rearview mirror, China looks poised to hit this year’s growth target of around 5%, even if momentum slows.India is poised for another year of strong growth, with previous economic reforms at last bearing fruit, although domestic demand is showing signs of waning. High (albeit declining) inflation has left the central bank with limited room for manoeuvre, and the government has varied some of its spending to support demand while aiming for fiscal discipline. But the country’s lengthy reform agenda remains incomplete, and the banking system continues to be burdened by nonperforming loans, which will impede private investment.Global risks are multiplying and spreading, and policymakers, especially central bankers, are floundering as they reach the limits of their powers. While major economies’ monetary policies have prevented economic growth from collapsing, they have also exposed serious financial weaknesses, adding to concerns about medium-term growth. For these and many other economies, embracing more productivity-enhancing supply-side, labour-market, and financial reforms is the best way to rebuild private-sector confidence and foster durable prosperity.

After years of global climate-policy leadership, the European Union is looking warily at the United States’ sudden embrace of ambitious clean-energy subsidies. Ultimately, America’s entry into the clean-energy race is good news for both the planet and Europe. But will US generosity toward its own companies under the recent Inflation Reduction Act (IRA) hollow out Europe’s industrial base even further? Will dirty industries continue moving east and south as clean ones move west across the Atlantic?Europe must prevent this outcome. But how should EU leaders proceed?Unlike in the US, European policymakers have long heeded the economists who suggest that carbon pricing is the best strategy for tackling climate change. That means making dirty energy more expensive, in line with the external costs that it imposes on society. Though the EU’s Emissions Trading System is far from perfect, it now prices roughly half of Europe’s carbon pollution at around €100 ($109) per tonne; and several national governments in the bloc have introduced their own carbon taxes. None of this is sufficient on its own. But Europe’s carbon-pricing policies are clearly much better than America’s incomplete state-level patchwork and its complete lack of a federal carbon price.Now, US policymakers have seemingly taken the easy way out, subsidising clean energy instead of pricing dirty energy. But while giving handouts is politically easier than imposing taxes, there is in fact a strong economic argument for subsidies in this case. Yes, Economics 101 calls for pricing negative externalities, but Economics 102 calls for subsidising positive externalities that arise from learning by doing. The argument is simple: installing the thousandth, and especially the millionth, solar panel will be much faster and cheaper than installing the first, owing to all the efficiencies and improvements that have been developed along the way.The same logic extends to research and development more broadly. Innovators deciding on how much to invest in R&D will generally spend less money than is socially optimal, because their decisions typically do not include the possibility that the result will create shoulders for others to stand on. That, too, calls for subsidies.Policymakers from California to Germany have embraced the learning-by-doing logic with solar subsidy schemes that start high in the first year and decrease almost immediately thereafter. Germany’s feed-in tariffs (payments to solar-energy producers above the market price) started as high as €0.40 per kilowatt-hour for small rooftop solar units, but have since been scaled back to under €0.15. That tapering is appropriate, given how cheap solar power has become in recent years. It also demonstrates that the subsidies worked.While solar feed-in tariffs have decreased, EU carbon prices have risen some tenfold, from as low as €10 per tonne. It is here that the EU’s climate policy shines. European policymakers recognise that carbon pricing is crucial, and they have acted on that insight.But neither carbon pricing nor subsidisation is enough on its own. Just as the US ought to take a page from Europe’s book on carbon pricing, Europe should follow the US in pursuing green subsidies. Early economic analyses of the IRA calculate that the legislation’s provisions, like its various tax credits for clean energy, create an implicit carbon price of around $12 per tonne – scarcely one-tenth of Europe’s explicit one.Whatever reasons Europe had for avoiding green subsidies in the past, European competitiveness and energy security demand that they be reconsidered in the context of the IRA. China currently produces the vast majority of the world’s clean-energy technologies: including three-quarters of all solar panels and batteries sold globally, well over half of all wind turbines, and around half of all electric vehicles. In some clean technologies, like heat pumps, Europe is behind not only China but also North America, which produce 39% and 29%, respectively, compared to Europe’s 16% share.This import dependency translates into significant geopolitical vulnerabilities. Relying on China for solar panels may be less dangerous than depending on Russia for gas; but that hardly makes it prudent. The EU urgently needs to create new incentives for domestic manufacturers and invest in a more resilient clean-energy supply chain.The IRA should be welcomed around the world. Of course, its immediate effect will be to boost US clean-energy investments, and it will inevitably rankle some foreign manufacturers and governments as it generates headlines around the world about companies being lured to the US. But it is important to remember that just as economic growth is not a zero-sum game, neither is clean growth.In a recent paper, Costas Arkolakis of Yale University and my Columbia Business School colleague Conor Walsh show that the IRA’s subsidies will pay for themselves through increased global GDP, owing to the positive spillovers from learning-by-doing dynamics. The implication is that the EU and the rest of the world will ultimately benefit from the US subsidies. And Arkolakis and Walsh’s analysis does not even account for the positive welfare effects of helping to address climate change. Add those in, and US clean-energy subsidies (or future European ones) look like a win-win-win.The massive costs of unchecked climate change are already mounting and should be sufficient to show that much more needs to be done on both sides of the Atlantic, as well as around the world. For their part, US policymakers should recognise that their long-awaited clean-energy push would be strengthened enormously by additional measures to make polluters pay for the costs of their pollution.The EU, meanwhile, must take the arguably easier step of ramping up its own clean-energy subsidies. It can and must afford to do so. The result will be a race to the top, with the global economy and the planet as clear winners – a truly rare occurrence in the annals of global economic competition. – Project SyndicateGernot Wagner is a climate economist at Columbia Business School.

Voluntary markets for carbon offsets have recently come under fire, with critics questioning the efficacy of contracts that aim to reduce atmospheric carbon dioxide relative to what would have happened in the contract’s absence. The biggest concerns are about “nature-based” projects involving various land-use changes – such as protecting forests, planting new ones (afforestation), and so forth.But these instruments’ imperfections are no secret. For well over two decades, ecologists and foresters have been working to develop more sophisticated methods to satisfy economists’ faith in market instruments, and they have made good progress. Though offset schemes are still riddled with complexity, there is no question that they pay for something that matters.Imagine seeing what the atmosphere sees. The Intergovernmental Panel on Climate Change’s Sixth Assessment Report provides an outline of the planet’s carbon cycle, which makes evident the fundamental role of plants’ conversion of CO2 into cellulose and back on a massive scale. Terrestrial photosynthesis alone draws down 113bn tonnes of carbon every year. By comparison, humanity added about 11bn tonnes of carbon to the atmosphere last year.The problem, of course, is that humans’ cumulative contributions go in only one direction, whereas the carbon captured by vegetation is normally balanced by an equal, opposite flow from plant respiration and degradation. By interfering with the climate system, we have thrown this balance off, adding a net flow of about 5.9bn tonnes to the landscape and the ocean every year. In other words, the planet is drawing down only half of what we inject into the atmosphere.Even a relatively small perturbation in this vast natural cycle can reach an enormous scale. That is why nature is such an attractive climate-mitigation option. Suppose we succeed in eliminating fossil-fuel combustion. Keeping global average temperatures within 1.5C or 2C of pre-industrial levels will still require substantial carbon removal. Estimates vary, but they are on the order of 200-300bn tonnes removed by plants before 2100.Nor will the story end there. The atmosphere contains about 870bn tonnes of carbon in the form of CO2 (one-third of which has been added since industrialisation), and the carbon cycle connects that atmospheric stock to vast reservoirs. The largest is the ocean, which holds 900bn tonnes at the surface and another 37tn tonnes deeper below. Terrestrial vegetation and soils also hold about 2.15tn tonnes, and permafrost contains another 1.2tn. As far as the atmosphere is concerned, losses from any of these reservoirs could easily exceed the carbon we burn (from the 930bn tonnes that are sequestered in fossil fuels).Far from being a secondary concern, managing the stocks and flows of carbon through the planet’s ecosystems is essential to keeping the entire Earth system in balance. But to carry out that task, we will need to think differently about the landscape. Landscapes and seascapes are not just the backdrop to our life. They are public infrastructure, and like all infrastructure, they must be paid for and maintained.Since the 19th century, however, we have known that paying for infrastructure by rewarding its marginal benefit (as offsets do for nature-based interventions) almost never covers the total cost. Because public-utility infrastructure like a highway or an airport tends not to command a high enough marginal value, taxation must cover the rest. Whom to tax then becomes the most important question.To illustrate the point, consider Brazil, whose ecosystems contain some 60bn tonnes of carbon in above-ground biomass. One way to estimate how much this stock is worth is to assume that we value carbon at a given price, say, $50 per tonne (halfway between the price in the regulated European market and nature-based offsets in voluntary markets). In this scenario, Brazil is home to ecosystems worth $10tn, which is over six times the country’s GDP and far greater than the value of its 13bn barrels of oil reserves.Now, how much should the world pay Brazil to keep that forest in trust for everyone? Assuming a 2% fee on the value of the assets (a reasonable rate for most asset managers), the country ought to receive $200bn per year. On those terms, Brazil would almost certainly put a stop to deforestation in the Amazon.But here we run into a sad truth. There is simply no evidence that the international community has any appetite to pay such sums. In 2022, total overseas direct assistance amounted to just $186bn. For years, rich countries have failed to honour a 2009 pledge of mobilising $100bn per year to help developing countries adapt to climate change.By thinking of natural assets not as infrastructure but as service producers, we end up relying on the voluntary payments companies make at the margin in exchange for “offsetting” some other reduction that they cannot or will not carry out. But, for all this mechanism’s shortcomings, at least it directs some money – albeit a drop in the ocean – toward carbon-landscape management.Of course, additional scrutiny of offsets is welcome for driving improvements. But it would be a fatal mistake to conclude that protecting forests or augmenting Earth’s carbon sink is any less urgent than reducing fossil-fuel emissions. Nature-based offsets traded in voluntary carbon markets should be seen as merely a first step. In the end, we will need to do “all of the above”: end fossil-fuel combustion, maintain ecosystems, and augment nature’s capacity to draw down carbon, regardless of whether we can prove that such reductions would not have happened anyway.The atmosphere does not care about our motivations, counterfactuals, or moral hazards. All it sees is carbon flowing in and out. Ecosystems store carbon and draw it from the atmosphere at scales that matter. All of us – taxpayers, consumers, and companies – must pay for this critical public good. – Project SyndicateGiulio Boccaletti, an honorary research associate at the University of Oxford’s Smith School of Enterprise and the Environment, is the author, most recently, of Water: A Biography (Vintage, 2022).

For nearly two decades, the battle for talent has shaped how firms around the world are run and governed. With firms deriving value mainly from their human capital, rather than from the physical assets they owned, a talented workforce came to be coveted more than plants or machines. In 2001, the celebrated management consultant Peter Drucker published an article entitled The Next Society, in which he argued that giving more freedom to what he called knowledge workers is essential, as the key battle of this century is the war for talent. And he was almost right.Unlike machines, however, human capital cannot be owned. Talented workers can always leave, taking their employers’ value with them. Over the years, firms responded to this threat by decentralising decision-making processes and giving workers greater autonomy. To encourage talented employees to stay, firms introduced incentive pay and stock-based compensation packages, with the hope that equity ownership would give managers a stake in their company’s future.In other words, the empowerment of talent became the new mode by which firms organised their activities. Consequently, CEO pay has skyrocketed over the past 40 years. With human capital now the primary driver of top incomes in the United States, the “working rich” – rather than financial capitalists – have become the capitalists of the twenty-first century.My co-author Thierry Verdier (of the Paris School of Economics) and I show that this profound change in the nature of the corporation has been largely driven by globalisation. As companies entered new markets in search of talented workers to hire, the threat of losing valuable employees to foreign competitors increased, fuelling a fight for talent. To attract and retain human capital, companies began offering increasingly higher wages and greater decision-making power to top performers.In an increasingly competitive environment, new ideas take on greater importance. As Eastern European markets began to open up after the fall of the Iron Curtain, Austrian and German firms decentralised their decision-making. Talented workers were encouraged to show initiative and were given more independence, especially when it came to researching and developing new products.But now the war for talent appears to be winding down. Nowhere is this more evident than in Silicon Valley, where the fierce competition for human capital has given workers a massive amount of power over employers. To entice potential hires and keep their existing workforce happy, tech companies have had to offer huge pay packages, stock options, horizontal-management structures, unlimited vacations, wellness retreats, and generous benefits.But those days are gone. As interest rates rise and growth slows, Silicon Valley bosses have begun to reclaim power from workers by slashing perks and initiating massive layoffs. According to data compiled by layoffs.fyi, more than 160,000 tech workers have been laid off since the start of this year. An additional 164,000 lost their jobs last year, with half of these cuts happening in October, November, and December.The financial sector is undergoing a similar shift, as the ongoing market turmoil and looming crisis lead to layoffs. After two decades of fighting for talent, companies are clearly using the current upheaval to wrest back control and reverse years of management indulgence that have left them with a generation of entitled workers. Bossism and recentralisation of decision-making seem to be the order of the day.This shift has been triggered by three major events. First, the Covid-19 pandemic and subsequent supply-chain disruptions have accelerated the process of deglobalisation. This trend has likely weakened the global competition for talent, contributing to the recent decline in the college-wage premium and to unexpected wage compression.Second, with the sharp increase in interest rates driving up the cost of capital, maintaining profitability depends more on retrenchment than on new ideas. Belt tightening is easier with a centralised organisational structure, because companies can exploit synergies across different divisions.Third, the emergence of ChatGPT and other generative AI programs has allowed companies to automate certain management functions, such as interviewing new hires, checking references, verifying identities, and carrying out health and safety assessments.This trend will likely accelerate over the next few years, as technological innovations enable companies to automate more high-skilled jobs. Tellingly, just days after laying off 10,000 workers, Microsoft announced plans to invest $10bn in OpenAI, the San-Francisco-based company that developed ChatGPT. The ultimate winners of the war for talent, it seems, will be the machines. — Project Syndicate

It’s the morning of April 2, the day the UN has declared as World Autism Awareness Day. I am scheduled to visit Renad Academy, a specialist school for children with autism. The school is named after a flower that grows in our Qatari desert. I am fasting and tired, lacking in sleep because of a Ramadan night stretched through to dawn. I arrive at Renad debilitated and leaden. And then, I visit the pre-school class and my mood shifts — my energy soars.Children are scattered all around the class, hardly listening to their teacher, although alert to the intrusion of strangers. Although some try not to meet our gaze, we catch the curious glances of others. I squeeze myself into a tiny chair between two young students and attempt to engage them in conversation. Haya is the more open of the two, immediately sharing her interests, her favourite game, and even her apple. She immediately captures my heart and elevates my mood. I ask her if she would like to join me in touring the school. She doesn’t hesitate, simply taking my hand and standing up, ready to go.It is not so long ago that there was very little awareness of the needs of children like Haya and her classmates. The first person ever diagnosed with autism, American Donald Triplett, is still alive. In his childhood, he was sent to an institution where his quirks and mannerisms were not understood. His story turned out happily, but unfortunately this has not been the case for a great many people. Rather than drawing on our humanity to bring out their best, our society would confine those who did not ‘fit’ perceived norms to the sidelines. Unable, because of their autism, to play and achieve in the manner of other children, they were not allowed even to enter the playing field. Many were bullied, and, prevented from accessing full education and extracurricular activities, they were destined for lives of unfulfilled potential and denied the opportunity to contribute to their communities.That’s why Al Shafallah Center for Persons with Disability was opened back in 1999, and Renad Academy in 2016, with many other facilities and specialised programmes launched in between. It’s why in 2007 we proposed the UN declare a World Autism Awareness Day, and it’s why Qatar became the first host country in the history of the FIFA World Cup to provide dedicated sensory rooms for people with autism and sensory processing difficulties at our stadiums.Qatar has operated under its world-leading National Autism Plan since 2017. Once a diagnosis is made, a family is linked with the many health, educational and social support services that exist here. Early intervention provides the strongest foundation on which to build a positive future.As a small nation, both in size and population, we are able to develop close links between all our diagnostic, treatment and support services, research and analyse genetic links, and both support and follow those with autism throughout their life’s journey. We are developing a compassionate holistic programme of education, mental and physical healthcare, and genetic research which leverages the unique characteristics of our population to discover new genes and uncover scientific insights. These could pave the way for innovative and effective intervention strategies, as our researchers investigate the powerful capabilities of AI coupled with state-of-the-art sensing technologies to enable the remote observation and quantitative assessment of children with autism.Today, statistics suggest that, worldwide, as many as 2% of children are somewhere on the autism spectrum. Its prevalence appears to be increasing, although certainly this is at least partly because of more accurate diagnostic techniques. Here in Qatar, recent research shows that one in every 87 children is diagnosed with autism. It is vital that children are diagnosed as early as possible: that way they have the best chance of being supported and educated in a way that accords with their own individual needs.Autism is not a disease. It’s a condition that people live with throughout their lives. Its impact can be minimised, but only when all of us accept that difference should be celebrated rather than shunned. Recognising the individuality and ability of a child such as Haya is the first step towards empowering her to take her own rightful place in our society.Haya led me into a roundtable meeting of experts convened on World Autism Awareness Day — a meeting where we could discuss Qatar’s achievements and the challenges in meeting the needs of children like Haya, their parents, and all those who intervene, teach and counsel them. She was reluctant to leave. Her teacher persuaded her to take her colouring back to the classroom.Little Haya is fortunate that she has been diagnosed early. She is eager to go to the school that has been carefully designed for her and for other children with autism; I do not say “like her”, because all are so different and unique. At Renad Academy, there is no pressure to conform or to achieve in the traditional way. The students are free to be themselves and recognised for their right to belong in our society just as they are.Beyond safe havens such as the academy, their journey may not be so smooth. But international recognition through World Autism Awareness Day and Month helps chip away at the lack of acceptance that still exists in pockets here in Qatar and in other parts of the world. I hope it will encourage some families to choose to bring out the best in their children, rather than deny that their child is ‘different’.Being hugged by Haya was, for me, a very special thing. My dream for Haya and for all children with autism or other forms of neurodiversity is not that they win, but that they be allowed onto the field to play, alongside all the other children, cheered on by the parents and all the family, teachers and supporters they need. Every child has a right to be treated with dignity, to be educated, and to reach their full potential.

In a world beset by crises, one is not getting nearly enough attention: the sovereign-debt emergency faced by half of the world’s emerging and developing economies. Fortunately, a new innovation in sustainable finance has emerged that may help countries to avert debt disaster, while tackling other crucial challenges, especially nature degradation and climate change.To be sure, there have been valiant efforts to use traditional political and technocratic channels to address the looming wave of sovereign-debt crises. Bodies like the G20 have produced frameworks, instruments, and initiatives aimed at providing a lifeline to debt-distressed countries, and institutions like the World Bank have attempted to convince major creditors, including the new generation of major sovereign creditors such as China, to offer debt relief. But, with sovereign-debt risk taking a back seat to what are widely viewed as more imminent domestic and regional systemic crises, little meaningful progress has been made.The consequences of inaction are far-reaching. Fiscally strained governments cannot meet their populations’ fundamental needs, with ever-larger numbers of people confronting food and fuel insecurity. Beyond the humanitarian dimensions of this situation, the resulting social and political distrust and instability undermines global cooperation on shared challenges, from climate change to conflicts like the Ukraine war.Against this dire backdrop, sustainability-linked sovereign debt could be a game-changer. The mechanism is simple: sovereign borrowers define performance targets in relevant areas, such as greenhouse-gas emissions and deforestation. If they meet the targets, they are rewarded with lower debt-servicing costs.For example, last year, Uruguay issued $1.5bn in sustainability-linked bonds (SLBs), maturing in 2034, and could see its associated debt-servicing costs fall by up to 60 basis points. The project-based “green bonds” of the past, by contrast, delivered an advantage of just a few basis points, at best, while requiring debtors to bear the considerable costs of defining, monitoring, and reporting the “use of proceeds.”Debt-distressed countries can secure even larger reductions in debt-servicing costs if sustainability-linked performance agreements are backed by public guarantees to lenders. In fact, of the seven pathways for scaling up the sustainability-linked sovereign financing approach presented in a new report from the Sustainability-linked Sovereign Debt Hub, the one with the highest potential for tackling the current crisis is credit enhancement.Along this pathway, sovereign credit risk is transferred to guarantors such as multilateral development banks, bilateral development-finance institutions, and private insurers. A credit guarantee, insurance policy, or other credit-enhancement mechanism improves the debt’s rating, thereby reducing the sovereign issuer’s servicing costs and unlocking additional funds. This in turn expands debtor countries’ fiscal space, unlocking more resources to invest in both meeting performance targets and advancing other priorities.Best of all, if the combination of greater debt sustainability and improved nature and climate outcomes bolsters resilience and productivity, sovereign risk – and overall debt-servicing costs – will fall further, setting in motion a much-needed virtuous cycle.Scaling up credit enhancement to support sustainability-linked sovereign financing would require co-operation involving multilateral development banks, the OECD countries, and other major sovereign creditors, such as China. While ambitious in today’s fractured world, such a mechanism would underpin a value-for-money approach to addressing both the debt crisis and broader sustainability challenges.Strengthening institutional capacity is also essential, especially for under-resourced low-income issuers. And efforts must be made to increase market awareness of, and private sector appetite for, sustainability-linked debt.If these pathways are taken, emerging-market and developing-economy sovereigns could issue $250-400bn in SLBs by 2030, according to estimates by NatureFinance, up from just $3.5bn at the end of last year. Under these projections, SLBs could comprise 6-9% of the projected 2030 stock of external public debt owed by emerging and developing economies.Of course, performance-based sovereign-financing instruments are nothing new, and their track record is far from perfect: debt-distressed countries have often faced contentious forms of macroeconomic, fiscal, and institutional conditionality. And when it comes to debt, development, or sustainability, there has never been a silver bullet.Nonetheless, by linking debt relief with efforts to address broader challenges like climate change, and enabling debtors to set their own performance targets, SLBs may be able to succeed where traditional political approaches have failed to mitigate short-term sovereign-debt risks and bolster long-term sustainable development. A silent revolution in sovereign financing may already be in the making.

President of the Arab World Institute in Paris Jack Lang has hailed Qatar for playing a pivotal role in teaching Arabic in France. In an exclusive interview with Qatar News Agency (QNA), Lang, who served as Minister of Culture and Minister of Education in the government of former president Francois Mitterrand, said the Institute seeks to deepen and develop co-operation relations with Qatar, through activities, shows and exhibitions that highlight the rich cultural heritage of Doha and celebrate Qatari creators in all fields. In this context, he noted the last co-operation between the institute and Qatar was signing an agreement to encourage the teaching of Arabic and its dissemination in France about a year ago. Lang praised the role carried out by Qatar and its pivotal contribution to supporting culture and encouraging learning Arabic at the Institute and in France, through the Qatari embassy in Paris. He noted that Qatar had a strong presence at the Gulf Film Festival, and in several plastic and art exhibitions, adding the special collection of plastic art in the Arab World Institute Museum includes a distinguished selection of the Qatari artist Youssef Ahmed’s works. He added the Institute organised, in co-operation with the Doha Film Institute at the end of 2021, a special night showing a group of Qatari short films in the presence of most of their directors. Lang indicated that Qatari sports had a special presence in the huge exhibition held by the Arab World Institute on sports and football in the Arab world, which displayed designs of the Qatari stadiums that hosted the FIFA World Cup Qatar 2022. He noted that the Institute organised, in co-operation with the Qatari diplomatic bodies in France, the Year of Qatar at the Institute and in France, to highlight the Qatari history, heritage and culture. This partnership and events witnessed great success and turnout from the public eager to discover the hidden aspects of the distinctive culture of the Arab Gulf state, Lang said, expressing the Institute’s welcome for co-operation agreements and proposals by Qataris to highlight their heritage and culture within the activities of the Arab World Institute in Paris. Lang hailed Qatar’s great role and its effective contribution to the establishment of the Museum of Contemporary Islamic Art at the Arab World Institute in Paris, through the prominent role carried out by HE Sheikha Al Mayassa bint Hamad bin Khalifa al-Thani, the Chairperson of the Board of Trustees of Qatar Museums, in supporting the museum by all means. He expressed fascination at what he described as an “urban revolution” in the infrastructure in Qatar. He pointed to the impressive success achieved by Doha in organising the FIFA World Cup Qatar 2022, stressing that this success was on all sports, engineering, media and culture levels. Lang was appointed President of the Arab World Institute in Paris by French President Francois Hollande in 2013. Over the term of his presidency, the Institute has witnessed a quantum leap and a great movement, and has overcome its financial crisis. Regarding the institute’s future policy and the most important activities, Lang pointed to many major projects, activities and events, including the major exhibition that the Institute will organise in May under the title “What Palestine Offers to the World” which will celebrate Palestine, its culture, history and cause. He underlined that the symbolic title of the exhibition carries a special message from the organising authority to uphold the Palestinian culture, heritage and creativity in all its colours and characteristics, and will blend the historical side with the contemporary artistic side. Lang also noted that the Institute will also shed light on Gaza and what it suffers from siege and marginalisation, and will ensure the attendance of artistic and cultural figures from Gaza. He disclosed that he will visit Gaza Strip and the West Bank soon to put the final touches to this great event and give the Palestinian cause the status it deserves. He also said that the institute is organise, with the school entry next fall, another event that celebrates contemporary Arab plastic art from all schools and trends, and all Arab countries will be represented by their culture, heritage and customs. Lang is among the French intellectuals who defend the Arabic language and the need for its presence in the school and cultural milieu. In this context, he published in 2020 the book The Arabic Language...a Treasure of France, in which he sheds light on the depth of the Arabic language, its history and its distinguished position, past and present. Despite the value of this book, and the value of the voices defending the Arabic language, this language still has not gained its fortune, and this treasure is still hidden, marginalised and forgotten in France, in the opinion of some. In this context, the former academic and law professor explained that France is historically linked to the Arab world, whether in the positive, cultural, civilised sense or in the negative, colonial sense, pointing out that the Arabic language is one of the important cultural links between Paris and the Arabs, stressing at the same time, however, when he was a minister, he encouraged the teaching of Arabic in French schools, despite all the obstacles he encountered. He explained that he noticed, during his assumption of his ministerial duties, that the problem in France does not lie only in the Arabic language, but rather in the rest of the foreign languages, such as German, Italian and Spanish, which also remained marginalised, indicating that the Arabic language today is taught in many French institutes and schools, but there is a problem of continuity that it suffers from, which repels some pupils and students from learning it, despite their attachment to it. He said that France has signed co-operation agreements in recent years with Maghreb countries to recruit qualified Arabic language teachers, within the framework of encouraging the intensification of continuity in learning this beautiful language. Lang said that since assuming the presidency of the Institute, he has been keen to take care of the Arabic language, noting that he has developed Arabic language certification that is taught at the Institute, and this certificate is recognised by France, Europe and internationally. He said that what gives cause for optimism is the great interest in recent years to learn, study and delve into Arabic in French universities and higher institutes, indicating that the certification created by the institute will encourage this enthusiasm for learning Arabic. Lang also appreciated the pivotal and major role played by Qatar, through the agreement signed by the Institute with it, in encouraging the learning of Arabic at the Institute and in France.

They are the living dead, waiting for the elusive revival. They are zombie firms, creations of easy credit and beneficiaries of central bank largesse.A zombie firm typically refers to a company that doesn’t earn enough to pay its interest costs for an extended period.The rise of zombie firms has been linked to the era of easy money the US Federal Reserve and other central banks ended last year when they rapidly raised interest rates.Now, tighter money threatens to create new zombies and kill off others that had been barely holding on. But central bankers face tricky balancing acts as they try to cool inflation without swelling the ranks of the financially undead.An estimated around 15% of listed firms in developed nations were considered zombies as of 2017, up from about 4% in the late 1980s, according to a study by the Bank for International Settlements (BIS).A Goldman Sachs analysis in 2022 estimated that some 13% of firms based in the US could be zombies. A Fed study showed the number of zombies among listed firms hovering around 10% between 2000 and 2020, with higher numbers during recessions.In the US, their ranks have swelled in recent years, comprising roughly a fifth of the country’s 3,000 largest publicly-traded companies and accounting for about $900bn of debt as of May 2022.The European Bank for Reconstruction and Development estimated that in the years before the pandemic, roughly 5% of companies there could be classified as zombie firms.Since 2016, China has pushed supply-side reforms that have sought to cull the number of zombies.Central banks opened spigots wide to keep the global financial crisis of 2008 from triggering a depression, using low interest rates and other measures to try to stimulate business activity.They kept rates low for years in the face of a notably anaemic recovery, then opened the faucets again when the pandemic struck: The Fed cut interest rates back to near zero and didn’t raise them until March 2022.The unparalleled era of easy money came to a screeching halt in 2022, as central banks shifted gears to subdue inflation: The Fed raised its benchmark rate from near zero to 4% in a mere six months.That speed led to worries that something in the financial system would break, as the tightening of credit revealed previously hidden vulnerabilities.Those fears seemed to materialise in the failure of two US banks, and the buyout of global giant Credit Suisse.A rise in debt-service costs can tip a vulnerable company into zombie status, and interest rates have been going up around the world.For example, some 36% of South Korea’s publicly traded developers struggled to service debt fully last year, up from 29% in 2021, according to the Bank of Korea. There are fewer of them in nations where borrowing costs remain very low.About 13% of Japan’s companies were considered zombies in the year that ended in March 2022, according to research firm Teikoku Databank Ltd. While that’s up from 9.9% two years ago, the ratio remains relatively low in Japan, which has been the exception to many central bank trends: The Bank of Japan’s aggressive monetary easing has kept borrowing costs down.Trapped in a cycle of stagnant growth and productivity, zombie companies suck up capital that could otherwise be used by innovative companies to invest in new products and services.Zombies trap assets and employees, making life harder for start-ups, slowing innovation. And their existence lowers margins, making investing in healthy competitors less attractive.While the economically efficient thing to do with zombies is to put them out of their misery, the long persistence of the phenomenon is a sign of how hard shutting them down can be.

Even before Russia detained Wall Street Journal reporter Evan Gershkovich on Wednesday, the Biden administration was at an impasse over another American held by Moscow: Paul Whelan, a former US Marine serving a 16-year sentence in a Russian prison.With relations between the world’s two largest nuclear powers strained to the breaking point by Russia’s war in Ukraine, officials in Washington have for months been unable to reach a deal to free Whelan, convicted by a Russian court of espionage in 2020.Whelan was left out of a December prisoner exchange that saw the United States and Russia trade WNBA star Brittney Griner for Viktor Bout, a convicted arms trafficker. That prompted the administration’s critics to accuse it of unfairly favouring a celebrity and giving adversaries incentive to grab more US citizens.An earlier swap was conducted in April 2022 for Trevor Reed, another former US Marine.Paul Whelan’s brother, David, has welcomed Reed’s and Griner’s releases even though both were detained after his brother. But he told Reuters in response to a question about any potential swap for Gershkovich that it would be “unacceptable” for the administration to again strike a deal that leaves Paul behind.“I would be very disappointed in the US government if they decided to bring home someone who had not spent as much time as my brother,” David Whelan said in an interview.State Department spokesperson Vedant Patel said in a news briefing on Thursday the Whelan and Gershkovich cases should not be compared. Washington continued to engage with Moscow on Whelan’s case through a channel established by Biden and Russian President Vladimir Putin in 2021, he added.“(Whelan’s) release continues to be an absolute priority,” Patel said.Contacted on Saturday, Patel declined to elaborate on why the two cases should not be linked.Russia’s security service has, without providing evidence, accused Gershkovich of gathering information classified as a state secret about a military factory.Contacted over the weekend by Reuters, the Russian foreign ministry did not respond to a request for comment on what impact, if any, Gershkovich’s detention would have on the Whelan case.On Sunday, in a phone call with US Secretary of State Antony Blinken, Russian Foreign Minister Sergei Lavrov asked Blinken to “respect the decision of the Russian authorities” who say Gershkovich was caught “red handed,” according to a summary of the call from Russia’s foreign ministry.In previous cases of Americans detained in Russia, Moscow has emphasised the need to let its justice system run its course before considering the possibility of any exchange, and has said negotiations should not take place in public.The Wall Street Journal has denied Russia’s claims and called for Gershkovich’s swift release. A spokesperson for the newspaper did not respond to specific questions for this article.Reuters was unable to reach Gershkovich’s family for comment.The detention of Americans overseas is a growing problem for the United States. Foreign policy experts say some governments — including Iran, Russia and North Korea — use arbitrary detention as a negotiating ploy.Republican House speaker Kevin McCarthy, a frequent critic of President Joe Biden, told Fox News Digital on Thursday that Gershkovich’s arrest, coming after the swap for Griner, showed “when the president pays ransom, they’ll go after and take more Americans.”Biden on Friday called on Russia to release Gershkovich. The White House has said the espionage charges levelled against the journalist were “ridiculous.”To ensure a focus on the most urgent cases, the State Department designates some of the Americans held abroad “wrongfully detained,” a step that moves a case to the jurisdiction of the special envoy for hostage affairs and opens the door for additional resources to be directed at winning their release.Wall Street Journal Editor-in-Chief Emma Tucker told CNN on Friday she was “optimistic” Gershkovich would soon get that designation.“When that happens, that’s official recognition that the charges against him are bogus and after that things, we hope, could move a bit more swiftly,” Tucker said.Whelan is the only American detained in Russia with that designation. Lawyers who work on cases of US citizens detained overseas have also been pushing for the administration to also designate Marc Fogel, a teacher who like Griner was charged with cannabis possession in Russia, as wrongfully detained.The State Department has called for Fogel’s release on humanitarian grounds and says it continually reviews whether such cases meet the requirements for “wrongfully detained.” A department spokesperson declined to comment further on the lack of a designation. Fogel’s family was not immediately available for comment.The Biden administration has secured the release of at least 25 “wrongfully detained” Americans. More than 30 other US citizens are still being held abroad with that designation.David Whelan said while Gershkovich’s detention might divert US government attention away from his brother’s case it could also provide impetus for a joint swap involving both Americans.“I’m on the fence about whether this is likely to help Paul’s case or hurt it,” he said.On Sunday, Blinken called for the “immediate release” of both Americans.Tom Firestone, former resident legal adviser at the US embassy in Moscow, said he expects the Biden administration will designate Gershkovich as wrongfully detained fairly quickly and seek a prisoner exchange alongside Whelan.“Despite tremendous efforts they have not been able to get Whelan out,” Firestone said. “Now they’re going to have to double those already substantial efforts to try to get two people accused of espionage out.”A State Department spokesperson did not respond to a question about the additional efforts now required. — Reuters

A relatively small-scale banking crisis has been sufficient to demonstrate the fragility of multilateralism today. Bank failures in the United States and Europe have upended expectations, because governments did not even pretend to be following any shared rulebook in handling the fallout. While the world’s banking system is in better shape than it was just before the 2008 financial crisis, the mechanisms established over the past 15 years to cope with financial strain have proved insufficient.The latest crisis has broader implications for how the world can and should address collective problems. After all, multilateralism had already fallen on hard times. Though world leaders insisted repeatedly after the 2008 crisis that there must be no return to protectionism, the World Trade Organisation has been rendered powerless, incapable of concluding new agreements or even arbitrating conflicts on the basis of the existing ones. All the major economies – the US, China, and the European Union – have adopted various forms of protectionism.This trend can be understood as a combination of financial protectionism and arbitrary government action. A crucial lesson of the 2008 crisis was that fragmented regulatory systems are problematic, and that clear rules are needed in the event of a sudden shock or collapse. The failure of Silicon Valley Bank, however, was handled partly by the US Federal Reserve and partly by a California state regulator, which made the decision to close the bank in the middle of a trading day, precipitating a much wider run on smaller banks.After a weekend of chaos, the US Department of the Treasury coordinated an announcement guaranteeing all deposits at SVB, not just the insured deposits up to $250,000. But this response immediately raised more questions. Were US financial authorities in fact guaranteeing all US bank deposits? The Treasury said no, but it needed depositors to interpret its response as meaning yes.Another lesson from 2008 was that systemically important financial institutions should be subject to well-prepared resolution mechanisms. But endless rounds of regulatory discussions and negotiations proved completely irrelevant when the new regime was finally tested. The moment of truth arrived when Credit Suisse’s biggest investor, Saudi National Bank, declined to provide it with any more liquidity. Faced with the need to move fast, the Swiss regulator, the Swiss government, and the Swiss National Bank devised their own ad hoc response, organising a controversial buyout by UBS. All the internationally negotiated plans remained in the drawer.While Credit Suisse shareholders were paid in UBS shares, holders of Additional Tier One bonds worth $17bn were wiped out. Too many observers – not to mention those holding the AT1 bonds – this felt like a shocking violation of the implicit understanding about the hierarchy of claims. And yet the decision was entirely defensible, given the fine print of the bond contracts, and given the need for Swiss regulators to be able to set the terms of a restructuring.Wherever one looks in the current crisis, one finds governments insisting that there is no systemic threat, even as they redefine their own responses to what is clearly a systemic threat. This contradiction, together with the constantly changing response, has become a major source of uncertainty. Everything – the safety of bank deposits, the seniority of credit claims, and the likelihood of new runs – seems to be up in the air.Now that “neoliberalism” has fallen out of favour, it is worth remembering the emphasis it once placed on economic governance according to clear, predictable, generally applicable rules, without which there will always be uncertainty and a potential for panic. Moreover, in a world without rules, the strong always win at the expense of the weak.Recall the 2008 bailouts. Among other things, they showed that large countries like the US (or China, for that matter) could always step in to rescue their banking systems, whereas smaller countries had no such option. While Iceland and Ireland took this lesson to heart, Switzerland is not out of the woods yet. Having narrowly escaped a meltdown by creating a new superbank with assets twice as large as Swiss GDP, it is creating even more systemic risk.The realisation that some countries play by different rules than others is a profound threat to multilateralism. Following a disastrous pandemic and Russia’s war on Ukraine – with all its adverse global effects – is there any alternative to cumbersome international negotiations in pursuit of common frameworks and rules?One area where the standard multilateral approach might be improved is the response to climate change. For many years, economists and policymakers worked on mechanisms for carbon pricing or emissions trading, and the Europeans sought to lead the way by developing domestic carbon markets. But the US effectively abandoned this approach with the 2022 Inflation Reduction Act. Instead of negotiating with any other government, it simply enacted its own massive investment program to support domestic production and renewable energy.Though the IRA has been decried as protectionist, it could radically reduce the production costs of non-carbon energy – both in the US and globally. However one does it, non-carbon fuels need to be cheaper than carbon fuels if the price signal is going to drive the transition to a net-zero economy. If that outcome cannot be achieved by negotiating fees or taxes on emissions, progress can still be made by reducing the costs of rival fuels.Still, it isn’t clear that a beneficial race to the top is better than traditional multilateralism. Uncertainty and unclear signals lead to destructive behaviour, because they orient everyone toward the short term and sow the seeds of disillusion. Effective longer-term strategies require predictability and transparency based on simple, clear rules. A rules-based system that needs continual reinvention ultimately is unsustainable. Can banking be made less complex, less vulnerable to runs, and less in need of constant regulatory readjustments? Answering that question will be a test for governance across many issues beyond banking. — Project Syndicate? Harold James, Professor of History and International Affairs at Princeton University, is the author of The War of Words: A Glossary of Globalization.