Germany’s Dangerous Obsession

PARIS – As Germany’s Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), seek to form an unprecedented “Jamaica coalition” with the liberal Free Democrats (FDP) and the Greens, the rest of Europe anxiously awaits the government program that will result from their negotiations.

The stakes are high for Europe, because these are not ordinary times. The rise of economic nationalism, growing security threats, and the ongoing refugee crisis have made collective responses more necessary. China is becoming increasingly assertive, and US President Donald Trump’s administration has made clear its disdain for the European Union and its suspicions of Germany’s economic strength.

At home, the EU’s rationale is being tested by Brexit, and by the defiant governments of Poland and Hungary – two countries that, as Constanze Stelzenmüller of the Brookings Institution recently noted, are enjoying the benefits of EU membership and ignoring the corresponding obligations.

In this context, Emmanuel Macron’s election to the French presidency in May was a relief for Germany. Yet Macron has put Germany in the uncomfortable position of having to respond to his proposals for EU-level reforms. By calling for a common EU defense fund, tax harmonization, and a joint eurozone budget, Macron is upending the European status quo.

The question now is whether Europe’s largest and most prosperous country will provide the leadership these trying times demand. Each party in the coalition talks brings a very different perspective to the table. On European matters, Chancellor Angela Merkel’s CDU, which has been in power for 12 consecutive years, will bring continuity. But the more conservative CSU is being pulled to the right by competition from the populist Alternative für Deutschland (AfD).

As for the other two parties, the FDP has adopted a tough line toward Europe. Its leaders have suggested that Greece should leave the euro, and that the EU mechanism for bailing out struggling countries should be dismantled. The Greens, on the other hand, are keen on deepening European integration; but that is not their first priority, and they are the smallest party at the table.

Ultimately, the new government’s program will likely reflect the suspicion that other EU member states want to solve their problems with German money rather than domestic reforms. German politicians and opinion makers assess virtually every proposal for EU-level reform through this distributional prism. Schemes that are not intended to result in structural transfers are routinely dissected to confirm that they will not become cash dispensers for other EU members.

For example, Germans regard a joint budget not as a way to finance public goods such as research or infrastructure, but as a device to compel Germany to cover other countries’ expenses. Similarly, common unemployment insurance is regarded as a scheme to make Germans pay for unemployed Spanish or French workers. And a deposit-guarantee program for banks is seen as a way to force prudent German depositors to pay for non-performing loans in Italy.

To be sure, each of these concerns may be legitimate. All proposals certainly should be scrutinized to ensure that they will not be abused or introduce moral hazard. European solidarity is not a one-way street.

But, at the same time, German leaders must recognize that their exclusive focus on distributional effects is poisonous. They should recall the moment, in 1979, when British Prime Minister Margaret Thatcher marched into a European summit and said, “I want my money back.” The same logic was on display nearly 40 years later during the Brexit campaign, when “Leave” politicians falsely claimed that withdrawing from the EU would bring “money back” to the National Health Service.

Why has Gemrany become obsessed with the fear of paying too much? The EU budget contains much to criticize, but it hardly treats Germany unfairly. Germany may be the largest net contributor, but that is because it has the largest economy. As a proportion of national income, countries like Belgium, France, and the Netherlands also contribute a meaningful share of their net income.

German fears that the European Stability Mechanism serves as a channel for hidden transfers are similarly unfounded. Yes, the ESM benefits from low borrowing costs, which are essentially passed on to borrowing countries. If Greece cannot repay its debt, ESM shareholders will suffer a loss; and that risk is not priced into the interest rate Greece pays. But, so far, the ESM has continuously posted profits, and any loss it does suffer will be spread among all shareholders – including, for example, Italy. The ESM is a far cry from a subsidy machine financed by the German taxpayer.

Some in Germany also decry the so-called Target2 balances, which record bilateral surpluses and deficits of national central banks vis-à-vis the European Central Bank. The University of Munich’s Hans-Werner Sinn, for example, argues that the Target system has become a conduit for hidden operations to benefit debtor countries in southern Europe. True, in September, the Bundesbank had a net surplus of €878 billion ($1.2 trillion) vis-à-vis the ECB, whereas Italy and Spain ran deficits of €432 billion and €373 billion, respectively. These positions reflect the degree to which official flows are still substituting for private flows.

But, again, this arrangement has not cost Germany a single euro. On the contrary, the Target system is essentially a collective insurance scheme: if a national central bank were to default, the loss would be shared among all ECB shareholders. The system thus allows German exporters to continue to sell their products in southern Europe, because it guarantees that they will be paid. The claim that Germany loses from this is simply false.

It will always be in a political party’s interest to respond to the electorate’s fears. But politicians also have a duty to let voters know when their fears are excessive or unfounded. Europe needs a Germany that will veto half-baked proposals. But it also needs a Germany that can overcome its narrow obsessions and provide leadership.

With the current coalition talks, German leaders have an opportunity to assess new global developments that will have far-reaching implications for Europe and Germany alike. They must decide whether it is riskier to do nothing, or to take the initiative. No one is expecting a Damascene conversion. But one hopes for a government that will be more forthcoming in offering solutions.

Jean Pisani-Ferry is a professor at the Hertie School of Governance in Berlin and Sciences Po in Paris. He currently holds the Tommaso Padoa Schioppa chair at the European University Institute.

By Jean Pisani-Ferry

Seeing Through Big Tobacco’s Smokescreen

GENEVA – We all know how bad tobacco is, that it kills millions of people every year, and that it harms many more. We also know that tobacco companies have consistently lied about how much damage their products cause.

But now, even Big Tobacco has been forced to state the facts publicly. After losing a string of appeals following a 2006 US federal court ruling, four companies have been forced to reveal the truth behind years of deceptive marketing, by publishing advertisements containing “corrective statements” in US newspapers and on television. These public statements acknowledge that the companies – Philip Morris USA, RJ Reynolds Tobacco, Lorillard, and Altria – knew the damage their products cause but kept selling them anyway.

And it is not just courts that are taking action against the tobacco industry. The recent decision by French bank BNP Paribas to stop financing and investing in tobacco companies – including producers, wholesalers, and traders – is just the latest sign that public health is finally being put ahead of commercial interests.

Still, we must not be lulled into believing that these overdue confessions reflect an industry undergoing altruistic catharsis. They resulted from the combined pressure of the US justice system, tobacco-control advocates, and the sheer weight of evidence against the industry’s misleading marketing of “light” and “mild” tobacco products. They should be regarded as a warning: The industry couldn’t be trusted in the past, and it shouldn’t be trusted to do the right thing in the future.

Even today, the same tobacco companies are marketing new products that they claim are less harmful – like “heat-not-burn” devices, which vaporize tobacco to produce a nicotine-containing aerosol – and funding front groups purporting to work for a smoke-free world. The world has witnessed similar tactics elsewhere, from Uruguay to Australia, where tobacco companies launch costly legal challenges against legitimate regulation of its deadly products. Despite such losses, it will no doubt continue looking for new ways to oppose tobacco restrictions.

To be sure, the court-ordered airing of “corrective statements” in American media does represent a victory for truth. It brings closure to an important US Justice Department lawsuit, filed in 1999 under the Racketeer Influenced and Corrupt Organizations Act, and then left partly unresolved, until October 2017, during a decade of appeals and legal wrangling following the 2006 decision.

The statements detail the deadly health effects of smoking and second-hand smoke, including the fact that low-tar and “light” cigarettes are no less harmful than regular ones; that smoking and nicotine are highly addictive; and that cigarettes are “intentionally” manipulated to “maximize the ingestion of nicotine.”

Even cigarette manufacturers admit that their products contribute to 1,200 US deaths each day. Around the world, tobacco use kills more than seven million people annually.

Enough is enough; at this critical moment, we must not let the momentum slip. Governments and health organizations like ours are at war with the tobacco industry, and we will continue fighting until we beat Big Tobacco.

If national leaders, health ministers, and finance chiefs ever wondered how far they should go to regulate tobacco products, Big Tobacco’s admissions, together with investors’ second thoughts, have provided an answer: as far as necessary. Governments face a moral and legal imperative to use the strongest possible measures to protect their citizens from tobacco.

One way forward would be for more governments to implement commitments enshrined in the World Health Organization’s Framework Convention on Tobacco Control. The WHO FCTC provides guidelines on topics such as tobacco taxation, public awareness and education, and package warnings. These measures have helped save millions of lives in the last decade, not to mention hundreds of billions of dollars in health costs.

But more can be done, which is why we are calling on governments around the world to strengthen implementation of the WHO FCTC by accelerating action on the “MPOWER” tobacco control policies – measures intended to strengthen country-level implementation of the WHO FCTC. Together, these frameworks represent the strongest defense countries have against the tobacco industry.

Moreover, governments should endorse the Protocol to Eliminate the Illicit Trade in Tobacco Products, which aims to prevent illicit trade, such as smuggling. While 33 countries and the European Union have signed the protocol, it needs the support of seven more governments before it can enter into force.

And, finally, looking ahead to the UN’s High-level Meeting on Non-communicable Diseases in 2018, government leaders must be prepared to demonstrate their commitment to protecting people from heart and lung disease, cancer, and diabetes, by supporting stronger tobacco controls.

With its recent admissions, Big Tobacco has been forced to reveal its true nature. However reluctantly, these companies have called on all of us to reject their products. We think it is time to take them up on the offer.

Tedros Adhanom Ghebreyesus, a former minister of foreign affairs of Ethiopia, is Director-General of the World Health Organization. Tabaré Ramón Vázquez is President of Uruguay.

By Tedros Adhanom Ghebreyesus and Tabaré Ramón Vázquez

A Truly Global Response to Climate Change

BONN – Climate action is not just about controlling global temperatures. It can also be a driver of development and poverty reduction all over the world. At the COP 23 Climate Conference in Bonn, Germany, in November, multilateral development institutions showed themselves to be more committed than ever to the urgent and central issue of supporting and financing these critical goals.

Today’s political climate is uncertain. But climate change is not. Partnership around the world must be maintained in the global effort to achieve a smooth transition to low carbon and climate-smart development. Multilateral development institutions have never been more relevant.

Climate-smart development also makes good economic and business sense, particularly when it comes to sustainable infrastructure. We have already witnessed tremendous growth in renewable energy, creating with it new business opportunities and jobs. Many climate-smart investments can also reduce air pollution and congestion. Building resilience now saves money later. We are committed to supporting a climate-smart future.

As multilateral development institutions, we reconfirm our commitment to the Paris climate agreement. Our role is to facilitate the public and private finance that is a vital part of the climate solution.

That is why, two years after the Paris accord was successfully negotiated, we are increasingly aligning actions and resources in support of developing countries’ goals. In July, the G20 Sustainability Action Plan embedded the Paris agreement in G20 policies and noted that more effective use of financing from multilateral development institutions is key to innovation and private investment in climate action.

In 2016 alone, multilateral development institutions committed over $27 billion in climate finance, and we continue to step up our work, determined to broaden the private and public finance mobilized for climate action at COP 23.

We commit to:

• Deliver on the promises that we made in 2015 to increase our support for climate investments in developing countries by 2020, both from our direct financing and from our mobilization efforts;

• Increase mobilization of private-sector investment by supporting policy and regulatory reforms. This includes aligning price signals, making innovative use of policy and finance instruments and, as applicable, leveraging concessional (below-market-rate) finance to help scale up public and private investment in climate projects.

• Strengthen international efforts by working together and with other development finance institutions, to increase transparency and consistency in tracking climate finance tracking and reporting greenhouse-gas emissions;

• Put climate change at the heart of what we do, bringing climate policy into the mainstream of our activities, and aligning financial flows to the Paris agreement;

• Support countries, cities, and territories with their own climate action plans and build the conditions for an ambitious next generation of such contributions; and

• Work with our clients to support initiatives that protect the most climate-vulnerable areas, including small island developing states, while mobilizing more finance for developing countries to build resilience and to adapt their infrastructure, communities, ecosystems, and businesses to the consequences of climate change.

Each of these measures supports our strong commitment to the UN’s Sustainable Development Goals. By pursuing them, climate action will become a key part of the international community’s work to place infrastructure and the rollout of new technologies and policies for energy, water, and mobility at the core of sustainable development.

This is a serious response to a serious challenge. Climate change poses a grave threat to the natural environment, to economic growth, and to the lives of all people around the world, especially the poorest and most vulnerable.

It is fitting that this threat to national economies and to every person on earth, and the opportunity to counter it, should be tackled with the backing of multilateral development institutions. We call on others to join us in placing climate action at the center of their business, stepping up climate finance, and tracking its impact around the world.

Akinwumi Adesina is President of the African Development Bank. Suma Chakrabarti is President of the European Bank for Reconstruction and Development. Bandar M. H. Hajjar is President of the Islamic Development Bank. Werner Hoyer is President of the European Investment Bank. Kundapur Vaman Kamath is President of the New Development Bank. Jim Yong Kim is President of the World Bank. Jin Liqun is President of the Asian Infrastructure Investment Bank. Luis Alberto Moreno is President of the Inter-American Development Bank. Takehiko Nakao is President of the Asian Development Bank.

By Akinwumi Adesina, Suma Chakrabarti, Bandar M. H. Hajjar, Werner Hoyer, Kundapur Vaman Kamath, Jim Yong Kim, Jin Liqun, Luis Alberto Moreno, and Takehiko Nakao

Inequality in the Twenty-First Century

MUMBAI – At the end of a low and dishonest year, reminiscent of the “low, dishonest decade” about which W.H. Auden wrote in his poem “September 1, 1939,” the world’s “clever hopes” are giving way to recognition that many severe problems must be tackled. And, among the severest, with the gravest long-term and even existential implications, is economic inequality.

The alarming level of economic inequality globally has been well documented by prominent economists, including Thomas Piketty, François Bourguignon, Branko Milanović, and Joseph E. Stiglitz, and well-known institutions, including OXFAM and the World Bank. And it is obvious even from a casual stroll through the streets of New York, New Delhi, Beijing, or Berlin.

Voices on the right often claim that this inequality is not only justifiable, but also appropriate: wealth is a just reward for hard work, while poverty is an earned punishment for laziness. This is a myth. The reality is that the poor, more often than not, must work extremely hard, often in difficult conditions, just to survive.

Moreover, if a wealthy person does have a particularly strong work ethic, it is likely attributable not just to their genetic predisposition, but also to their upbringing, including whatever privileges, values, and opportunities their background may have afforded them. So there is no real moral argument for outsize wealth amid widespread poverty.

This is not to say that there is no justification for any amount of inequality. After all, inequality can reflect differences in preferences: some people might consider the pursuit of material wealth more worthwhile than others. Moreover, differential rewards do indeed create incentives for people to learn, work, and innovate, activities that promote overall growth and advance poverty reduction.

But, at a certain point, inequality becomes so severe that it has the opposite effect. And we are far beyond that point.

Plenty of people – including many of the world’s wealthy – recognize how unacceptable severe inequality is, both morally and economically. But if the rich speak out against it, they are often shut down and labeled hypocrites. Apparently, the desire to lessen inequality can be considered credible or genuine only by first sacrificing one’s own wealth.

The truth, of course, is that the decision not to renounce, unilaterally, one’s wealth does not discredit a preference for a more equitable society. To label a wealthy critic of extreme inequality as a hypocrite amounts to an ad hominem attack and a logical fallacy, intended to silence those whose voices could make a difference.

Fortunately, this tactic seems to be losing some of its potency. It is heartening to see wealthy individuals defying these attacks, not only by openly acknowledging the economic and social damage caused by extreme inequality, but also by criticizing a system that, despite enabling them to prosper, has left too many without opportunities.

In particular, some wealthy Americans are condemning the current tax legislation being pushed by Congressional Republicans and President Donald Trump’s administration, which offers outsize cuts to the highest earners – people like them. As Jack Bogle, the founder of Vanguard Group and a certain beneficiary of the proposed cuts, put it, the plan – which is all but guaranteed to exacerbate inequality – is a “moral abomination.”

Yet recognizing the flaws in current structures is just the beginning. The greater challenge is to create a viable blueprint for an equitable society. (It is the absence of such a blueprint that has led so many well-meaning movements in history to end in failure.) In this case, the focus must be on expanding profit-sharing arrangements, without stifling or centralizing market incentives that are crucial to drive growth.

A first step would be to give all of a country’s residents the right to a certain share of the economy’s profits. This idea has been advanced in various forms by Marty Weitzman, Hillel Steiner, Richard Freeman, and, just last month, Matt Bruenig. But it is particularly vital today, as the share of wages in national income declines, and the share of profits and rents rises – a trend that technological progress is accelerating.

There is another dimension to profit-sharing that has received little attention, related to monopolies and competition. With modern digital technology, the returns to scale are so large that it no longer makes sense to demand that, say, 1,000 firms produce versions of the same good, each meeting one-thousandth of total demand.

A more efficient approach would have 1,000 firms each creating one part of that good. So, when it comes to automobiles, for example, one firm would produce all of the gears, another producing all of the brake pads, and so on.

Traditional antitrust and pro-competition legislation – which began in 1890 with the Sherman Act in the US – prevents such an efficient system from taking hold. But a monopoly of production need not mean a monopoly of income, as long as the shares in each company are widely held. It is thus time for a radical change, one that replaces traditional anti-monopoly laws with legislation mandating a wider dispersal of shareholding within each company.

These ideas are largely untested, so much work would need to be done before they could be made operational. But as the world lurches from one crisis to another, and inequality continues to deepen, we do not have the luxury of sticking to the status quo. Unless we confront the inequality challenge head on, social cohesion and democracy itself will come under growing threat.

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

By Kaushik Basu

Learning from Russia’s Other Media War

WASHINGTON, DC – Misinformation and propaganda have been around for as long as mass communication. What has changed is the speed and scale of the delivery. Social media platforms have intensified the spread of pseudoscience and conspiracy theories, threatening democratic institutions in frightening new ways. One only has to Google “Russia” and “Trump” to see the impact of so-called fake news on democracy. But the best way to fight disinformation may be to follow the example set by Ukraine, a country that has faced its own barrage of Russian-funded deceit.

Around the world, people who believe that facts still matter are fighting back. US news organizations are fortifying their positions by emphasizing core journalistic practices such as source verification and fact checking. Independent verifiers and fact checkers have also become important resources for the public.

But as the line between news producer and consumer blurs, it is becoming increasingly difficult to navigate the swamp of misinformation. While a number of new initiatives – such as the News Literacy Project’s Checkology training courses, and Factitious, an online game that tests users’ ability to identify fake news – are trying to bolster the public’s filtering capacity, the impact has so far been limited. Owing to confirmation bias, exposure to concepts that conflict with ingrained beliefs may entrench assumptions, rather than leading us to revise them. And, in a media landscape where even politicians rely on data mining and neuroscience to craft messages based on voters’ state of mind, it is hard to separate truth from falsehood.

Against this background, training in “media literacy” – skills to help analyze and evaluate news – has become almost sexy. Media literacy programs have been around for decades in the US, focusing on issues like media bias and the impact of violence on children. But media literacy for today’s world means equipping people of all ages with the means to navigate an increasingly convoluted information ecosystem. And, as my organization’s recent experience in Ukraine demonstrates, formal training in media literacy may be the best means of winning the war on state-sponsored, politically motivated propaganda.

Russia’s propaganda war on Ukraine – a well funded, widely distributed, and highly sophisticated media drive meant to undermine the Ukrainian government’s legitimacy – has been ongoing for years. The Russian effort has been so aggressive that, in 2015, the Ukrainian government reportedly warned officials at Facebook and within the US government that a similar strategy could be used against the US.

Facebook appears to have dismissed that warning, but media development organizations like mine did not. In October 2015, experts from IREX – backed by funding from the Canadian government and the support of local Ukrainian organizations – launched a nine-month media literacy-training course called Learn to Discern (L2D). Through skills-based workshops and fake news awareness campaigns, we sought to equip citizens with tools to identify Russia’s fabricated stories. The results were encouraging.

Program participants reported gaining a deeper appreciation of what is needed to consume news wisely. For example, when we surveyed people at the beginning of the course, only 21% said that they “almost always” crosschecked the news they consume, a troubling rate for a country where trust in media is low but consumption is high. After the training, the percentage surged to 81%.

We also found that the program produced ripple effects: 91% of trainees shared the knowledge they received with an average of six people, such as family members and co-workers. An estimated 90,000 Ukrainians were reached indirectly.

The L2D training drew on principles developed in the US, but built the methodology from the ground up. Collaborating with Ukrainian experts, we incorporated actual media consumption, sharing, and production patterns into the course design. Most important, we imparted critical thinking skills, teaching participants how to select and process media, not what to consume.

L2D trainers worked across peer networks, building knowledge and skills on the basis of trusted relationships. Research shows that loyalty to social groups, plus shared identity and values, have an outsize influence on what we discern to be true.

Perhaps the program’s most innovative feature was its focus on teaching consumers how to detect emotional manipulation, and how to disengage from such information. In a country where emotions regarding Russian influence run high, this skill is essential. Long after L2D formally ended, trainers have continued running programs independently, reflecting growth in demand for their services. Surveys conducted this year indicate that trainees, too, remain engaged in combating the fake news phenomenon in their country.

Our experience in Ukraine demonstrates that a multi-layered approach, working at the levels of critical thinking, individual and group psychology, and social trust, provides a better defense against fake news than simple fact checking.

Clearly, more work must be done to boost healthy skepticism among news consumers and increase demand for factual information. But media literacy training, if organized with local needs in mind, can help. As disinformation amplifies threats to democracy, and the debate about how to defuse fake news intensifies, consumers can take comfort in knowing that with a little practice, it is possible to discern fact from well-concealed fiction.

Tara Susman-Peña is a senior technical adviser for media at the IREX Center for Applied Learning and Impact.

By Tara Susman-Peña

Trump’s Jerusalem Rationale and its Consequences

NEW YORK – It is 50 years since the Six-Day War – the June 1967 conflict that, as much as any other event, continues to define the Israeli-Palestinian impasse. After the fighting was over, Israel controlled all of the West Bank, Gaza, and Jerusalem, in addition to the Sinai Peninsula and the Golan Heights.

Back then, the world saw this military outcome as temporary. United Nations Security Council Resolution 242, the backdrop to what was to become a diplomatic solution to the problem of the stateless Palestinians, was adopted some five months after the war ended. But, as is often the case, what began as temporary has lasted.

This is the context in which President Donald Trump recently declared that the United States recognized Jerusalem to be Israel’s capital. Trump stated that the US was not taking a position on the final status of Jerusalem, including “the specific boundaries of the Israeli sovereignty” there. He made clear that the US would support a two-state solution if agreed to by both sides. And he chose not to begin actually moving the US embassy from Tel Aviv, even though he could have simply relabeled what is now the US consulate in Jerusalem.

The attempt to change US policy while arguing that little had changed did not persuade many. Most Israelis were pleased with the new US stance, and most in the Arab world and beyond were incensed.

Just why Trump chose this moment to make this gesture is a matter of conjecture. The president suggested it was simply recognition of reality and that his predecessors’ policy failure to do so had failed to yield any diplomatic benefits. This is true, although the reason diplomacy failed over the decades had nothing to do with US policy toward Jerusalem, and everything to do with divisions among Israelis and Palestinians and the gaps between the two sides.

Others have attributed the US announcement to American domestic politics, a conclusion supported by the unilateral US statement’s failure to demand anything of Israel (for example, to restrain settlement construction) or offer anything to the Palestinians (say, supporting their claim to Jerusalem). Although the decision has led to some violence, it looks more like an opportunity lost than a crisis created.

What made this statement not just controversial but potentially counterproductive is that the Trump administration has spent a good part of its first year putting together a plan to resolve the Israeli-Palestinian conflict. This announcement could well weaken that plan’s already limited prospects.

What the Trump administration seems to have in mind is to give outsiders, and Saudi Arabia in particular, a central role in peacemaking. Informing this approach is the view that Saudi Arabia and other Arab governments are more concerned with the perceived threat from Iran than with anything to do with Israel. As a result, it is assumed that they are prepared to put aside their long-standing hostility toward Israel, a country that largely shares their view of Iran.

Progress on the Israeli-Palestinian issue would create a political context in the Arab world that would allow them to do just this. The hope in the Trump administration is that the Saudis will use their financial resources to persuade the Palestinians to agree to make peace with Israel on terms Israel will accept.

The problem is that the only plan to which this Israeli government is likely to agree will offer the Palestinians far less than they have historically demanded. If so, the Palestinian leaders themselves may well determine it is safer to say no than to sign on to a plan sure to disappoint many of their own people and leave them vulnerable to Hamas and other radical groups.

The Saudis, too, may be reluctant to be associated with a plan that many will deem a sellout. The top priority for the new Saudi leadership under Crown Prince Mohammed bin Salman is to consolidate power, which the prince is doing by associating himself with an effort to attack corruption in the Kingdom and by pursuing a nationalist, anti-Iranian foreign policy.

But neither tactic is going entirely according to plan. The anti-corruption effort, while so far popular, risks being tarnished by selective prosecution of offenders (which suggests that it is more about power than reform) and reports about the crown prince’s own lifestyle. And the anti-Iran efforts have become inseparable from what has become an unpopular war in Yemen and diplomatic embarrassments in Lebanon and Qatar. Meanwhile, ambitious plans to reform the country are proving easier to design than to implement, and are sure to alienate more conservative elements.

The problem for Trump and Jared Kushner, his son-in-law who leads US policy in this area, is that the Saudis are likely to prove much less of a diplomatic partner than the White House had counted on. If the new crown prince is worried about his domestic political standing, he will be reluctant to stand shoulder to shoulder with an American president seen as too close to an Israel that is unwilling to satisfy even minimal Palestinian requirements for statehood.

All of which brings us back to Jerusalem. Trump argued that recognizing the city as Israel’s capital was “a long overdue step to advance the peace process and the work towards a lasting agreement.” More and more it appears that Trump’s move will have just the opposite effect.

Richard N. Haass is President of the Council on Foreign Relations and the author of A World in Disarray.

By Richard N. Haass

Financial Investors’ Wish List for 2018

NEWPORT BEACH – If financial investors were to write letters to Santa Claus this Christmas, they would probably be tempted to ask for the continuation of the unusual combination of factors that has dominated over the last year: ultra-low market volatility, booming financial-asset values, correlations that lower the cost of portfolio risk mitigation, and promising new opportunities (such as Bitcoin). But before making their wish list, investors should consider the longer-term risks associated with the decoupling of financial markets from economic and policy fundamentals.

Investors could be forgiven for hoping for more of the same. After all, with less than a month to go, 2017 is on course to be a hugely, if not historically rewarding year for them. As of December 12, global stock markets, and in particular the S&P index, had returned around 20% for the year – and this on top of an already-strong multi-year run. Add to that unusually low volatility – in the US, 2017 so far has shown the lowest daily loss in the entire history of the S&P 500 index – and there has been little to keep investors up at night.

Usually, such strong stock returns are accompanied by lower prices for government bonds – the so-called negative correlation between risky and safe assets. Not so in 2017. Despite the impressive equity rally, the price of longer-term US Treasury bills was higher at the beginning of December than at the start of the year.

And then there is the precipitous rise of the crypto-currency Bitcoin. With its price having surged by an eye-popping amount this year (from around $1,000 to over $16,000 as of December 12), even a small allocation of Bitcoin has made a material difference in investors’ portfolios.

Five main factors have enabled this unusual situation.

• A synchronized pickup in global economic growth, which continues to strengthen.

• Progress in the United States on pro-growth policies.

• Skillful normalization of monetary policy (which is still ongoing) by the US Federal Reserve.

• Passive investment products attracting large inflows.

• Continued large liquidity injections from three big central banks – the Bank of Japan (BOJ), the European Central Bank (ECB), the People’s Bank of China (PBOC) – which, together with cash-rich corporate balance sheets, have served to lower funding costs for a significant set of households and corporates.

Now for the less exuberant news: without continued economic and policy improvements, the factors that have delighted investors in 2017 risk generating an unpleasant reversal of fortune. This year’s strong performance has, after all, been buoyed significantly by “borrowed” returns from future years.

With regard to mitigating portfolio risk, the increase in government bond prices leaves little room for this traditionally safe asset to compensate for a possible decline in stocks. Given how many value-at-risk-based models work, the persistence of low volatility has resulted in a crowded trade in a number of areas, which could turn out to be technically fragile.

As for Bitcoin, its vertiginous rise – fueled in part by the growing participation of institutional investors – may imply that it is on the path toward broad acceptance. But it may also turn out to be little more than a large financial bubble, implying serious damage when it inevitably collapses.

What, then, should investors really be hoping for in the coming year? In general, the top priority must be improvement in economic and policy fundamentals to the point that they better validate existing elevated asset prices, while laying a foundation for greater gains over time.

Achieving this would require, in the US, the expansion of pro-growth policies, which, as recently announced by Donald Trump’s administration, would include adding an infrastructure plan to deregulation and tax measures. European countries should also pursue more focused pro-growth measures at the national level, while supporting stronger regional efforts, facilitated by a reinvigorated reform-minded Franco-German leadership and a relatively orderly Brexit process.

As for Japan, Prime Minister Shinzo Abe should take advantage of his commanding majority in the Diet, won in October’s snap general election, to implement the third “arrow” of Abenomics: pro-growth structural reforms. Finally, to promote stable growth, all of the world’s systemically important central banks – notably, the Fed, the BOJ, the ECB, and the PBOC – would need to continue coordinating their strategies, with a view to ensuring consistent monetary-policy stances.

Only with such efforts can the current pickup in global growth develop the structural roots that are needed to make it durable, balanced, and inclusive over the medium term. This is all the more critical at a time of fluid geopolitical risk and uncertain productivity, wage, and inflation dynamics.

However tempting it may be to focus our holiday wishes on our own immediate desires, it is imperative this year that investors’ wish lists take into account the big economic and policy picture.

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, was Chairman of US President Barack Obama’s Global Development Council and is the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

By Mohamed A. El-Erian

AIDS, NCDs, and the ABCs of Organizing

GENEVA – Non-communicable diseases (NCDs), like heart disease, stroke, cancer, diabetes, and chronic lung disease, are responsible for 70% of all deaths. There is incontrovertible evidence that tobacco use, inactivity, unhealthy diets, and excessive alcohol consumption increase the odds of dying prematurely from an NCD.

And yet, despite widespread knowledge of the risks, global obesity goes largely unchecked, while tobacco and alcohol use continue to rise. It is against this backdrop that networks of NCD alliances met December 9-11 at the second Global NCD Alliance Forum, in the United Arab Emirates.

As they search for solutions to bring NCDs under control, they should look for inspiration to the movement to fight AIDS. People living with and affected by HIV continue to drive response efforts, and their unique form of mobilization has been instrumental to progress. While the battle is not over, AIDS activists know that it can be won.

Similarly, a mobilized NCD movement can turn the tide against that epidemic. Yet, in 2015, Richard Horton, the editor of The Lancet, described the NCD community as needing an “electric shock to its semi-comatose soul.” He added: “But who has the courage to deliver it?”

We believe there are lessons to be learned from AIDS activists. As global attention focuses on NCD prevention, those seeking to control preventable illnesses should look to the “ABCs” of AIDS organizing for guidance.

The first letter that the NCD community should consider is “A,” for activism. Anyone over 40 will recall images of AIDS activists performing “die-ins” at scientific meetings around the world. In the United States, AIDS activists took to the streets, even shutting down the Food and Drug Administration’s headquarters for a day in October 1988. Globally, activists lobbied governments and pharmaceutical companies to make medicines more affordable. This activism continues, and should serve as a model for action on NCDs.

Next, the NCD community must adopt a bolder approach to budgets – the “B” of the AIDS movement’s strategy. Civic organizing and grassroots activism may fuel early energies, but organizing and sustaining a broad-based coalition takes money. The AIDS movement was clear about this from the beginning, and lobbied for resources to support its advocacy and accountability effectively.

“C” is for coalitions: the AIDS movement was quick to understand that progress would come only with diverse support. Activists established links between people living with HIV and those with other concerns, such as women’s rights, intellectual property, nutrition, and housing. Issue-specific coalitions and campaigns work best when they bring together government insiders and outsiders, to combine perspectives and expertise.

The AIDS movement also understood that a holistic response to the epidemic was essential if support was to spread. Thus, “D,” the determinant of success, was to draw attention to the interconnectivity of the challenge. For example, lobbying education leaders to keep girls in school longer has contributed to providing young people with the knowledge and agency to make smart decisions about when and with whom to negotiate safe sex. Similarly, links were forged between groups working on poverty, gender, and nutrition – factors that played a role in driving the AIDS crisis. NCDs are no less isolated in their causality, and similarly require a multi-sector approach to prevention.

Engagement – “E” – was what helped the AIDS movement become so influential. By borrowing from the playbook of the disability rights movement, which championed the mantra “Nothing About Us Without Us,” AIDS advocates demanded representation on the bodies established to address the disease. For example, UNAIDS remains the only United Nations agency with seats on its board for representatives from civil society. This norm is so powerfully embedded in the AIDS movement that it would be almost unthinkable for an AIDS meeting to take place without representation from the community.

Disease prevention movements must also develop persuasive narratives, and “F” – framing the issue – was essential to the AIDS community’s effort to gain support from political leaders. In particular, access to AIDS treatment was framed as a matter of economic justice. Framing the narrative this way led to a dramatic reduction in the price of medicines, so much so that more than half of people living with HIV in low- and middle-income countries are in treatment.

An equally important framing issue for AIDS, which is highly relevant to the NCDs movement, is that of responsibility. The AIDS community worked hard to shift the focus from blaming individuals’ lifestyle choices to putting the onus on the state for providing health care and removing legal discrimination.

In the AIDS debate, gender – our movement’s “G” – was a significant focal point. HIV was initially seen as a “gay disease,” and gender identity was embedded in the DNA of the AIDS movement early on. Gender dimensions of NCDs are no less important; one only has to consider how alcohol and tobacco are marketed to understand that. Gender, therefore, must become a focus of NCDs prevention efforts.

Finally, “H” – human rights – was the bedrock of the AIDS response. Campaigns were launched against discrimination in workplaces, schools, and health centers. Strategic litigation helped ensure equality under the law. The AIDS movement refused to hold major conferences in countries with punitive laws against people living with HIV. The NCD movement could take a similar tack by, for example, refusing to meet in countries that fail to restrict advertising of junk food to children.

The list of AIDS lessons could continue throughout the alphabet, but ending with “H” is apt, given that human rights drove the response, and should drive the response to NCDs. Poverty, exclusion, and social and economic marginalization put people at higher risk for HIV. It is no different for NCDs.

The early mainstream reaction to the AIDS epidemic was to ask, “Why don’t those people make better choices?” The AIDS movement made clear that that was the wrong question. Today, with 70% of the planet at risk of premature death from preventable illnesses, “those people” are many of us. The NCD and AIDS communities can learn from one another. We are a stronger movement when we join forces.

The views expressed here do not necessarily reflect those of UNAIDS.

Kent Buse is Chief of Strategic Policy Directions at UNAIDS. Laurel Sprague is Executive Director of the Global Network of People Living with HIV.

By Kent Buse and Laurel Sprague

The Climate-Change Fight Returns to Paris

PARIS – Nearly two years have passed since France’s then-foreign minister, Laurent Fabius, struck his gavel and declared: “The Paris agreement for the climate is accepted.” Next week, President Emmanuel Macron and the French government will host world leaders and non-state actors for the One Planet Summit. The purpose of this gathering is to celebrate climate gains made since 2015, and to boost political and economic support for meeting the goals and targets of the Paris agreement.

The Paris climate agreement, a historic feat of diplomacy that ushered in a new era of international climate collaboration, was facilitated by a number of political and social forces. One of the most influential of these was a group of more than 100 countries known as the “high ambition coalition,” which helped finalize the deal in the waning days of the 2015 United Nations Climate Change Conference (COP21). This diverse coalition of leaders – from the richest countries to the most vulnerable Pacific island states – broke a political deadlock that had impeded climate progress for years, if not decades.

As we reflect on that success, one thing is abundantly clear: the need for ambitious coalitions has returned. Strong global leadership on climate change scored a diplomatic victory two years ago, and today, new economic and political alliances are needed to turn those commitments into action.

The diplomatic success of the Paris accord is worthy of praise in its own right; it was a remarkable leap forward in the fight against climate change. But we must not rest on our laurels. With the United States, the world’s largest historical emitter of greenhouse gases, dismissive of the accord, the rest of the global community must reaffirm its commitment to reducing carbon dioxide emissions. Dramatic, meaningful, and immediate steps must be taken.

The best available science estimates that the world has only three years to begin a permanent reduction in greenhouse-gas emissions if there is to be any hope of achieving the Paris accord’s goal of keeping warming to “well below 2°C” relative to pre-industrial levels. And, whatever urgency science cannot convey is being communicated by the planet itself – through a ferocious display of hurricanes, floods, wildfires, and deadly droughts.

Given the immediacy of the challenge, what can and should be done to avert crisis?

Solutions start with money, and a main objective of the One Planet Summit is to mobilize public and private financing to fund projects that can reduce climate-changing pollution today. During the summit’s “Climate Finance Day,” companies, banks, investors, and countries will announce new initiatives to help fund the costly transition to a carbon-free future.

Hollow promises will have no place at this gathering; only real commitments of real money for tangible projects will be discussed. As a result, we hope to see hundreds of millions of dollars committed by governments to fund solutions across all fronts of the climate-change battle. Plenty will go to renewable-energy projects, but money will also be committed to clean transportation, agriculture, infrastructure, and urban systems. Funding will also be earmarked for projects that help protect communities that are most vulnerable to the impact of global warming.

The One Planet Summit will be an occasion for countries, companies, and private institutions to forge concrete strategies to shift away from fossil fuels. At the UN climate talks in Bonn, Germany, last month, 20 countries, led by Canada and the United Kingdom, announced plans to phase out coal from electricity generation. The gathering in Paris will provide an opportunity for other countries to join the Powering Past Coal Alliance, which aims to formalize a deliberate transition from coal, and to help companies achieve net-zero emissions.

Ultimately, next week’s summit should be a place where governments, businesses, investors, and other key stakeholders collaborate and share ideas, showcase successful projects, and coordinate goals. This event should not stand alone, but rather serve as a springboard for international meetings that will take place over the next few years. After all, it is during this short timeframe that the fate of the Paris accord’s temperature targets will be determined.

Two years after the adoption of a groundbreaking climate agreement, global leaders are set to reconvene in the City of Light. When they arrive, their collective ambition will be needed once more. This time, however, the goal must be to ensure that past agreements amount to more than just words on a page.

Laurence Tubiana, a former French ambassador to the UN Framework Convention on Climate Change, is CEO of the European Climate Foundation and a professor at Sciences Po, Paris.

By Laurence Tubiana

Refugee Doctors for Refugee Health

TORONTO – Syrian refugees are often portrayed as an unwelcome drain on the communities to which they relocate, especially with regard to health care. But, for those escaping Syria’s civil war, ignorance of their plight is overshadowed only by the reality of their needs – and the diversity of their expertise. Although refugees do bring with them extensive health-care issues, they also bring years of experience in the medical profession that, if put to proper use, could be a boon to the communities that receive them, not to mention for other refugees.

One of the biggest challenges for refugees anywhere is finding a doctor. In many host countries, inadequate treatment is the result of xenophobia, language barriers, or insufficient supply of medical staff. This is especially true for Syrians, who are scattered across the Middle East, North Africa, Europe, and North America.

But many Syrian refugees are also highly educated. As they settle in places far from the hospitals and clinics in which they once practiced, Syria’s doctors simply want to get back to work. Isn’t it time that they did?

In the United Kingdom, efforts are underway to make that happen. The National Health Service and the British Medical Association have begun retraining refugee doctors, including many from Syria and Afghanistan, to fill the ranks of depleted clinics in UK. Through English-language training, postgraduate study, and professional registration, programs in London, Lincolnshire, and Scotland aim to reintegrate refugee doctors into the medical profession. These efforts should be lauded.

Retraining refugee doctors is not only a moral exercise; it also makes practical sense. Displaced doctors are better able to treat refugee patients’ ailments. Refugee doctors can also help ensure that the flood of new patients does not overwhelm host countries’ health-care systems. And retraining a refugee doctor is cheaper and faster than educating a new medical student. With approximately 600 refugee doctors living in Britain, the well of untapped talent in the UK is deep.

Moreover, refugee patients benefit when treated by doctors who understand their circumstances, including the enormous psychosocial stress that displacement causes. Translators can help, but they are not always available in crisis settings. Doctors who understand refugees emotionally and culturally are better equipped to put patients at ease.

Britain is not alone in recognizing the potential of refugee doctors. In Turkey, Syrian doctors and nurses have received training to help them become familiar with the Turkish health-care system. The goal is to enable qualified Syrian professionals to treat refugee patients, thus mitigating the language and logistical barriers to effective, accessible, and dignified care.

But other host countries have not been as forward thinking. In Lebanon and Jordan, for example, where more than 1.6 million registered Syrian refugees currently live, efforts to allow Syrian doctors to care for refugee patients have been criminalized. Doctors ignoring the law face arrest and possible deportation. Even Canada, a country that generally welcomes diversity and values human rights, is behind the curve on innovative approaches to refugee health. Syrian doctors face “many, many years” of retraining in Canada, and often struggle to fund the high cost of recertification.

Amid this resistance, refugee health care should be viewed as more than a set of logistical and operational challenges, but also as an inherently political process. Two dimensions of the issue must be addressed if refugee patients are ever to be properly cared for, and refugee doctors properly deployed.

For starters, refugee doctors may struggle to be accepted by their local colleagues, owing to political or personal bias. Recognizing the potential for local resistance to integration programs for refugee doctors is essential to develop proactive policies that ensure success.

Moreover, refugee doctors must be trained to address the diversity of medical needs they will face in their adoptive homes. For example, in many countries where refugees originate, lesbian, gay, bisexual, transgender, and intersex (LGBTI) health concerns remain taboo, even among medical professionals. For refugee doctors relocating to countries where LGBTI health and rights are recognized, integration curricula should include training on LGBTI health, particularly the rights of exceptionally vulnerable LGBTI refugees. Improving health for LGBTI refugees can serve as a foundation for a more open society.

The refugee crisis that has engulfed Syria is just one ripple in a tidal wave of global displacement. Around the world, some 22.5 million people are officially registered as refugees, and nearly 66 million have been forced from their homes. These numbers are unlikely to fall in the near term, as calamities caused by climate change, and by human and natural disasters, continue to push even more people from their communities.

Every one of these future refugees will need access, at some point, to medical professionals trained in refugee health, diversity, and inclusion. Empowering refugee doctors to become part of the solution will help overcome entrenched dogmas toward refugee diversity and social identities. But, just as important, it will mark a crucial step forward in ensuring more inclusive refugee health.

Vural Özdemir is a medical doctor, independent writer, and adviser on technology, society, and democracy.

By Vural Özdemir

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