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12LeadersTheEconomistMay23rd2015economy.AspartofitsfinancingprogrammewiththeIMr,thechanges.Tax evasionisgettingmore difficult.Toimprovethefi-Ukrainiangovernmentisnegotiatingwithitscreditorstore-nancesof thestategasmonopoly,Naftogaz,householdgasduce its debt-service burden (see page 58).Ratherthan just ex-prices are rising fourfold. That has saved the state money: intendingdebtmaturities,Ukrainemustbeallowedtoimposeathefirstquarterofthis yearUkrainepostedabudget surplus.write-off onmostof theprincipal that itsprivatecreditors areButmuchmoreneedstobedone.StationsusedbyNaftogazowed,withoutjeopardisingexternalfunding.tomeasuregas floware inside Russia, meaningthat no oneisPoland also points to the need for generousfunding.Thesure how much passes into Ukraine: that creates huge scopeWest spentheavilytodragPoland intomodernity.From199oforgastobesiphonedoffand sold illicitly.Ukraine'smurkyle-to 2ooo,only China, India and Egypt received more foreigngal system,a turn-offfor business,resists change.Theappara-tus of corruption remains intact. And righting the public fi-aid.InUkrainetheIMrhassofarbeentheonlylargesourceoffunds.It saysUkraineneedsabouts4obillion of help inthenancesshouldnotcomeattheexpenseofspendingonhealthformofdebtreliefandloans;thetrueneeds arehigherstillcareandeducation,whichhasbeen cut.Yetthesumsonofferfromtheoutsideworldhavebeenpiti-Themartialplanfully small.America couldsupplyfarmorethanthes2billion-The parallels between Ukraine and Poland are not exact. Po-worthofloanguaranteesithassofarpromised,atlittlerisktoitstaxpayers.TheEuropeanshavebeenevenstingier.Bymid-landinthei99oshadnotjustlostterritorytoinvasion,norwasMaytheEuhaddisbursedi6billion ($i8billion)of eco-itvulnerabletoRussia'seconomicblackmail.TheWestcannotnomicassistance.That is contemptible.It is alsoamissed op-pourlimitlessamountsofmoneyintoUkrainewithoutsettingportunity:annualinvestmentof s6billion couldhelpUkraineconditions.Norcanitcutoffacountrythathasbeendeprivedofitsindustrialbasebyforce,thathasseen2minhabitantsdis-loosenRussia'sgripbymakingitnearlyself-sufficientingasby2030.MostperverseistheEu'sinsistenceinOctoberthattheplaced and whose economicfaterestsin largeparton theUkrainiangovernmentmustpay$3billion indisputedarrearsmachinations of theKremlin.Ameaningful packageof hu-forgas importstoGazprom,Russia'senergygiant.BecauseofmanitarianaidtoUkraineshouldbeofferedindependentlyofthat,infinancialterms,theclubthatUkrainewantstojoinhasreform-linked funding.Sincethe crisis began,theEu and itshurtmorethan ithashelped.memberstateshavecontributed justE139m-worth of aid.InAs inPoland,fundingmustbetiedtolong-termstructural2oitheEuropeanCommissionofferedmoremoneytohelpreforms.Ukraine's governmentis already making someusefulsaladfarmersaffectedbvanoutbreakofE.coli.Geopolitics inthe GulfThe new SaudisChaosintheMiddleEastcastsSaudiArabiaastheArabworld'sleader.ButitmustreformfasterCAUDI ARABIA'S rulers havearmy coup that toppled the president, Muhammad Morsi;longwieldedtheirinfluencetheyhavebankrolledthegeneralseversince.And when Iranidiscreetly. They used petro-an-backed Houthi rebels threatened to take over Yemen thisdollars tobuy stabilityat home,year, Saudi Arabia wentto war.tamegovernments abroad andAthome,King Salman (pictured left)isoverseeingaconsti-spreadapuritanical brandof Is-tutional revolution.Instead of passing the crown along thelam.But now,amid theviolentlineofgerontocraticsonsofAbdelAzizbin Saud,thedynasty'smess of the MiddleEast andfounder,heisfavouringanewgeneration-aboveall,hisowntheir growing rivalry with Iran, the Saudis are acting with un-son (see pages 17-20).Aged about 30, Muhammad (picturedcharacteristic boldness across the whole range of domestic,right) has becomethe central economic policymaker;as de-fenceminister,heembodiestheswordoftheSaudiflag.foreignandeconomicpolicies.Whetherbydesign ordefault,theystand outas the leadingforce intheArabworld.This amountstoradical changefromtheretiring,conserva-Arabs badly need modern,dynamic leaders. But much oftive,consensus-buildinghabitsofthepast.Butthen SaudiAra-what the new Saudi rulers are doing looks like a rash gamblebiaisgrapplingwiththreenewfactors.Allaround,Arabstatesrather than an attemptto deal withthe real problems of theirhave collapsed or faded away.Irag,once the Arab bulwarkcountry, let alone the region.If Saudi leadership is to workagainstIran,isdevastated,asis Syria.Egypt,themostpopulouswell,thenitneedstotakeadifferentform.Arab country,is busyconsolidatingits counter-revolution.That leaves Saudi Arabia as the only state with the standing,Whythesheikhs are stirringsizeand wealthtosalvage somethingfromthewreckage.Asthecustodianofislam'stwoholiestplacesand,untilrecent-Asecondfactorisgeopolitical realignment:theAmericanlytheworld'slargestoilproducer,Saudi Arabiaisboundtooc-protectorwantstoretreatfromthechaos,andtheIranian arch-cupyan importantplaceintheArab and Islamicworlds.Butenemyissurgingforward.Bynegotiatinganucleardeal withtoday'sunusualtimeshaveledtoaburstofunusualactivism.Iran,AmericahasdeepenedArabmonarchs'fearofabandonWhenoilpricesfell,SaudiArabianolongersacrificeditsout-ment.Theythinktheymustfendforthemselvesputto stabilise themarket; instead itkeptpumping oil todriveThethird factoristheneweconomicsofshale:America hasoutrivals.WhenIslamistswereelected topowerinEgyptafterdisplaced Saudi Arabia as the world's biggest oil producer.Asapopularrevolt,Saudi ArabiaandotherGulf statesbackedthethepricefalls,Saudi Arabia isfightingto retain its shareofthew
12 Leaders The Economist May 23rd 2015 1 2 economy. As part ofits financingprogramme with the IMF, the Ukrainian government is negotiating with its creditors to reduce its debt-service burden (see page 58). Rather than just extending debt maturities, Ukraine must be allowed to impose a write-off on most of the principal that its private creditors are owed, without jeopardising external funding. Poland also points to the need for generous funding. The West spent heavily to drag Poland into modernity. From 1990 to 2000, only China, India and Egypt received more foreign aid. In Ukraine the IMF has so far been the only large source of funds. It says Ukraine needs about $40 billion of help in the form ofdebt reliefand loans; the true needs are higher still. Yet the sums on offerfrom the outside world have been pitifully small. America could supply far more than the $2 billionworth of loan guarantees it has so far promised, at little risk to its taxpayers. The Europeans have been even stingier. By midMay the EU had disbursed €1.6 billion ($1.8 billion) of economic assistance. That is contemptible. It is also a missed opportunity: annual investment of$6 billion could help Ukraine loosen Russia’s grip by making it nearly self-sufficient in gas by 2030. Most perverse is the EU’s insistence in October that the Ukrainian government must pay $3 billion in disputed arrears for gas imports to Gazprom, Russia’s energy giant. Because of that, in financial terms, the club that Ukraine wants to join has hurt more than it has helped. As in Poland, funding must be tied to long-term structural reforms. Ukraine’s government is already making some useful changes. Taxevasion isgettingmore difficult. To improve the fi- nances of the state gas monopoly, Naftogaz, household gas prices are rising fourfold. That has saved the state money: in the first quarter ofthis year Ukraine posted a budget surplus. But much more needs to be done. Stations used by Naftogaz to measure gas flow are inside Russia, meaning that no one is sure how much passes into Ukraine: that creates huge scope for gas to be siphoned offand sold illicitly. Ukraine’s murky legal system, a turn-off for business, resists change. The apparatus of corruption remains intact. And righting the public fi- nances should not come at the expense of spending on health care and education, which has been cut. The martial plan The parallels between Ukraine and Poland are not exact. Poland in the 1990s had not just lost territory to invasion, nor was it vulnerable to Russia’s economic blackmail. The West cannot pourlimitless amounts ofmoney into Ukraine without setting conditions. Nor can it cut off a country that has been deprived ofits industrial base by force, that has seen 2m inhabitants displaced and whose economic fate rests in large part on the machinations of the Kremlin. A meaningful package of humanitarian aid to Ukraine should be offered independently of reform-linked funding. Since the crisis began, the EU and its member states have contributed just €139m-worth of aid. In 2011 the European Commission offered more money to help salad farmers affected by an outbreakofE. coli. 7 SAUDI ARABIA’S rulers have long wielded their influence discreetly. They used petrodollars to buy stability at home, tame governments abroad and spread a puritanical brand of Islam. But now, amid the violent mess of the Middle East and their growing rivalry with Iran, the Saudis are acting with uncharacteristic boldness across the whole range of domestic, foreign and economic policies. Whether by design or default, they stand out as the leading force in the Arab world. Arabs badly need modern, dynamic leaders. But much of what the new Saudi rulers are doing looks like a rash gamble rather than an attempt to deal with the real problems of their country, let alone the region. If Saudi leadership is to work well, then it needs to take a different form. Why the sheikhs are stirring Asthe custodian ofIslam’s two holiestplacesand, until recently, the world’s largest oil producer, Saudi Arabia is bound to occupy an important place in the Arab and Islamic worlds. But today’s unusual times have led to a burst of unusual activism. When oil prices fell, Saudi Arabia no longer sacrificed its output to stabilise the market; instead it kept pumping oil to drive out rivals. When Islamists were elected to power in Egypt after a popularrevolt, Saudi Arabia and otherGulfstates backed the army coup that toppled the president, Muhammad Morsi; they have bankrolled the generals ever since. And when Iranian-backed Houthi rebels threatened to take over Yemen this year, Saudi Arabia went to war. At home, King Salman (pictured left) is overseeing a constitutional revolution. Instead of passing the crown along the line ofgerontocraticsonsofAbdel Azizbin Saud, the dynasty’s founder, he is favouring a new generation—above all, his own son (see pages 17-20). Aged about 30, Muhammad (pictured right) has become the central economic policymaker; as defence minister, he embodies the sword ofthe Saudi flag. This amounts to radical change from the retiring, conservative, consensus-building habits ofthe past. But then Saudi Arabia is grappling with three new factors. All around, Arab states have collapsed or faded away. Iraq, once the Arab bulwark againstIran, isdevastated, asisSyria. Egypt, the most populous Arab country, is busy consolidating its counter-revolution. That leaves Saudi Arabia as the only state with the standing, size and wealth to salvage something from the wreckage. A second factor is geopolitical realignment: the American protector wants to retreat from the chaos, and the Iranian archenemy is surging forward. By negotiating a nuclear deal with Iran, America has deepened Arab monarchs’ fear of abandonment. They thinkthey must fend for themselves. The third factor is the new economics ofshale: America has displaced Saudi Arabia as the world’s biggest oil producer. As the price falls, Saudi Arabia is fighting to retain its share of the Geopolitics in the Gulf The new Saudis Chaos in the Middle East casts Saudi Arabia as the Arab world’s leader. But it must reform faster
TheEconomistMay23rd2015Leaders13+market and puthigher-cost producersoutof business.of theirmunificent,American-protected rulers,isreachingaThetroubleisthattheplanisnotworking.ThewarinYe-dead end.Thekingdom can nolongerkeep handing out do-men,though popular at home,is going badly.After weeks ofnothinggovernmentjobstoitsmen;itswomenareincreasingbombing,theHouthis are still advancing.Anaval blockadelyeducatedbutwoefullyunderemployedbecauseofoutdatedhas led to a humanitarian crisis thatis causing outrage.socialrestrictions.Findingalternative livelihoods requires anThewar,and therushtobuyWesternweapons,areburn-economythatisopentotheoutsideworldandapopulationingaholeinthepublicfinances.SaudiArabiaisrunningadou-educatedtodomorethanreadtheKoran.Lookaround:Riyadhble-digitbudgetdeficitatatimewhentheoilpriceshowslittleisdrab,whileacrosstheborderDubaiisglistening.Saudi Arabia needs to diversify away from oil. Citizensprospect of further recovery.Although theprinces are chang-shouldbe taxed ratherthan subsidised.That would helptheingthepeckingorderintheirpalaces,theyarenotgivingthepeopleanymore of a voice.On the contrary,Bedouin-stylepublicfinances,andmakeforhealthierrelationsbetweentheconsultationhasyielded to top-downdirection.Theyhaverulersand theruled.One way or another, change will force itdonenothingtorevisetheirunholypactwithWahhabiclerics,self on the country Those in power should use that to bringwhose puritanism helps underpin jihadist ideology-aboutreform.Thatwouldalsobethebestwaytoshowleader-indeed,publicbeheadingsaremorefrequent.ship,standuptoIran,resistradicalism-andpreservethefrayTheoldSaudimodel,inwhichthepeopleasknoquestionsingalliancewiththeWest.FinancialcrimesUnfair copAmerica'sapproachtopunishingfinancialcrimeismuddled,lenientandself-defeatingFHE message to every WallaminationofthemeritsofthecasesorthecalculusbehindtheL Street banker is loud andpenalties; nofirmprecedentsare set indicatinghowbanksclear," cried Elizabeth Warren,ashould behaveinfuture and whatpenaltiestheycanexpectifsenator from Massachusetts,theytransgresslast year."If you break the law,Yet this is the way the Obama administration has handledyou are not going to jail."Afterall mannerofallegedmisdeedsatbanks,from turningablindthe savings-and-loan crisis ofeye to money-laundering to helping customers get roundtheearly1990s,MsWarrenAmerican sanctions.Even its campaign againstbanks thatpointed out,over1,ooopeoplewereprosecuted,andmoreabettaxevasion,theonefinancial crimeitiswidelyreckonedthan 800 convicted.Yet since the financial crisis of 2007-08,tohavetackledwithfirmnessandconsistency,looksmuddledwhich didfarmoredamagetotheeconomy,no senior bankeronclosescrutiny(seepage62).The wooliness ofthegovernment'sapproachhas sparkedahas been convicted of anycrimerelatedtoit.America'sregu-politicalbacklash.MsWarren,aformeracademic,securedherlatorsandprosecutors,MsWarrencomplained,werenotonlyfailingtopursuethoseresponsible;theywerealsodecliningtoseat in the Senateand becamea heroof left-wingDemocratstake thebanks themselves to court.Instead, they were negoti-by harrumphing about it (seepage 26).It isnot justtheleft thatis outraged, however: anger at the lenient treatment of bigatingmurkysettlements,inwhichfinancialfirmsagreetopaybigfinesifprosecutorspromisenottopresscharges.banks has been oneof themain factors animating the rightEvents this week have only made the senator more apo-wingTea Partymovement.plectic.Regulators andprosecutorsannounced settlementsNoone'shappy-they'redoingsomethingwrongwith sixinternationalbanksforalleged manipulationof cur-rencymarkets (seepage6i1).The six agreed to pay some $5bil-Evenbankersbalk attoday's arrangements.They saytheycanlioninfines.Twodid notadmittoanycrimes related to thisnevercontestcriminal charges,becausetheywill losetheir li-abuse;theotherfour did,butreceivedwaivers shielding themcences if found guilty.Afew small banks that have incurredfromtheconsequencethatwouldnormallyfollow-thelossoftheir prosecutors'irehave indeed gone out of business.Thatanall-importantbankinglicence.Thisweekalsomarkedthegivesthebigonesastrongincentivetoagreetowhateversettle-endofago-dayperiodtheDepartmentofJustice(DoDhadgiv-menttheDoJproposes.Sincebanksremainunsurewhichac-enitselftodecideonceandforall whetheritcouldlaunchanytivities will lead to which punishment, they are respondingprosecutions related tothefinancial crisis.TheDoJ says onlylessbyalteringtheirbehaviourthanbyhiringformerprosecu-thatitisreviewingtheresultsofthereview.tors and regulators and lobbying forleniency. Smaller foreignMs Warren iswrongonmanythings;on this,sheisspoton.banksaretryingtolimittheiractivitiesinAmericain thehope(Well almost: onesenior bankerhas been convicted of fraudofescapingthiscapricioussystem.linked to thefinancial crisis.)If banks havebeen involved inItneed notbethis way.Thereisnothingtostopprosecutorsactsseriousenoughtoqualifyforbillions ofdollars inpenal-pursuingindividuals,andbeingmoreopen and consistentties,thenafewmoreexecutivesmustsurelyhavecommittedaabouthowtheystrikedeals.Atleast some cases should gotocrime.Negotiated settlements are no substitutefor criminaltrial.Inthelongerterm,Congressshould maketheconseproceedings. For one thing, the punishment falls on share-quencesfor banks of a criminal conviction commensuratewith the gravity of the crime.That would both serve justiceholders,sincethebumperfinescomestraightoutofprofits.Foranother, the lack of trials means there is no proper public ex-andmakeAmericaamore attractivefinancialcentre
The Economist May 23rd 2015 Leaders 13 2 market and put higher-cost producers out ofbusiness. The trouble is that the plan is not working. The war in Yemen, though popular at home, is going badly. After weeks of bombing, the Houthis are still advancing. A naval blockade has led to a humanitarian crisis that is causing outrage. The war, and the rush to buy Western weapons, are burninga hole in the publicfinances. Saudi Arabia is running a double-digit budget deficit at a time when the oil price shows little prospect of further recovery. Although the princes are changing the pecking order in their palaces, they are not giving the people any more of a voice. On the contrary, Bedouin-style consultation has yielded to top-down direction. They have done nothingto revise theirunholy pact with Wahhabi clerics, whose puritanism helps underpin jihadist ideology— indeed, public beheadings are more frequent. The old Saudi model, in which the people askno questions of their munificent, American-protected rulers, is reaching a dead end. The kingdom can no longer keep handing out donothing government jobs to its men; its women are increasinglyeducated butwoefullyunderemployed because ofoutdated social restrictions. Finding alternative livelihoods requires an economy that is open to the outside world and a population educated to do more than read the Koran. Lookaround: Riyadh is drab, while across the border Dubai is glistening. Saudi Arabia needs to diversify away from oil. Citizens should be taxed rather than subsidised. That would help the public finances, and make for healthier relations between the rulers and the ruled. One way or another, change will force itself on the country. Those in power should use that to bring about reform. That would also be the best way to show leadership, stand up to Iran, resist radicalism—and preserve the fraying alliance with the West. 7 “THE message to every Wall Street banker is loud and clear,” cried Elizabeth Warren, a senator from Massachusetts, last year. “If you break the law, you are not going to jail.” After the savings-and-loan crisis of the early 1990s, Ms Warren pointed out, over 1,000 people were prosecuted, and more than 800 convicted. Yet since the financial crisis of 2007-08, which did far more damage to the economy, no senior banker has been convicted of any crime related to it. America’s regulators and prosecutors, Ms Warren complained, were not only failing to pursue those responsible; they were also declining to take the banks themselves to court. Instead, they were negotiating murky settlements, in which financial firms agree to pay big fines ifprosecutors promise not to press charges. Events this week have only made the senator more apoplectic. Regulators and prosecutors announced settlements with six international banks for alleged manipulation of currency markets (see page 61). The six agreed to pay some $5 billion in fines. Two did not admit to any crimes related to this abuse; the other four did, but received waivers shielding them from the consequence thatwould normallyfollow—the loss of an all-important banking licence. This week also marked the end ofa 90-dayperiod the DepartmentofJustice (DoJ) had given itselfto decide once and for all whether it could launch any prosecutions related to the financial crisis. The DoJ says only that it is reviewing the results ofthe review. Ms Warren is wrong on many things; on this, she is spot on. (Well almost: one senior banker has been convicted of fraud linked to the financial crisis.) If banks have been involved in acts serious enough to qualify for billions of dollars in penalties, then a few more executives must surely have committed a crime. Negotiated settlements are no substitute for criminal proceedings. For one thing, the punishment falls on shareholders, since the bumperfinescome straightoutofprofits. For another, the lack of trials means there is no proper public examination ofthe merits ofthe cases or the calculus behind the penalties; no firm precedents are set indicating how banks should behave in future and what penalties they can expect if they transgress. Yet this is the way the Obama administration has handled all manner of alleged misdeeds at banks, from turning a blind eye to money-laundering to helping customers get round American sanctions. Even its campaign against banks that abet tax evasion, the one financial crime it is widely reckoned to have tackled with firmness and consistency, looks muddled on close scrutiny (see page 62). The wooliness ofthe government’s approach has sparked a political backlash. Ms Warren, a former academic, secured her seat in the Senate and became a hero of left-wing Democrats by harrumphing about it (see page 26). It is not just the left that is outraged, however: anger at the lenient treatment of big banks has been one of the main factors animating the rightwing Tea Party movement. No one’s happy—they’re doing something wrong Even bankers balk at today’s arrangements. They say they can never contest criminal charges, because they will lose their licences if found guilty. A few small banks that have incurred their prosecutors’ ire have indeed gone out of business. That givesthe bigonesa strongincentive to agree to whatever settlement the DoJ proposes. Since banks remain unsure which activities will lead to which punishment, they are responding less by altering their behaviour than by hiring former prosecutors and regulators and lobbying for leniency. Smaller foreign banks are trying to limit their activities in America in the hope ofescaping this capricious system. It need not be this way. There is nothing to stop prosecutors pursuing individuals, and being more open and consistent about how they strike deals. At least some cases should go to trial. In the longer term, Congress should make the consequences for banks of a criminal conviction commensurate with the gravity of the crime. That would both serve justice and make America a more attractive financial centre. 7 Financial crimes Unfair cop America’s approach to punishing financial crime is muddled, lenient and self-defeating
The Economist May 23rd 201514LettersLocal consumption of illicitThe best we can hope forisExperimenting withdrugsAmtrakofftrackdrugs has also increased,butthought-leadership as it ap-You are right to suggest that thethe region is neither preparedAmerica usedtohave thebestpliestoaproblemthatisnarUn's special meeting on drugsnor equipped to deal with thepassengertrainsin the worldrowly defined.So,for example,("Derailed",May16th).Legendnext year should provide aproblem.Rich countriesAndrewMcAfee'sandErikcritical opportunityto reviewwhose citizens consumelargehas it that American railroadsBrynjolfsson's"The Secondthe war on drugs ("The warsamounts ofdrugsmustshareabandonedpassengerservicesMachine Age"takes on onlythe burden and seekhumanebecauseofcompetitionfromdon't work",May 2nd).Theone issue: changes in work as aways to reduce the demandresult of advanced technology.meeting is taking place threecars and aeroplanes, and thatyears earlier than planned at(prevention,harmreduction,is indeed part of the story. ButLet's face it, the heyday ofthe behestof Colombia,treatment).They mustalso domisguided regulationoffares,managementgurus isoverGuatemala and Mexico,forever.Leading and managingmoreto supportcountriesandrestrictions onmergerscountries thathave suffered"caught in the middle".clearly played arole.no longerlend themselves toappallinglyfromthewaronAfrican delegations recent-Only when freightservicesmonolithic interpretations ofdrugs. They deserve the suplycaused thewithdrawal ofawerealsothreatenedwasthehowothers should beherdedgovernmentpersuadedtoportofEuropeangovernmentsvote onketamineat the UN,atogetthemtotoethecompanythat havelargelyaccepted dehopeful signthatthe continentderegulate.American freightline.Instead,thinkingaboutfacto,butonlyintheis waking uptothe issues andrailroads arenow amongtheleadershipin thesecond dePortuguese case de jure,thatmostefficientintheworld,butlearningfrommistakesmadecade of the 2istcenturyre-drugs arebest dealt with as aelsewhere.The WestAfricathe commercial skillsthatquiresamoresystemicaphealthproblem ratherthanasCommissiononDrugs,whichlmadepassengerrailwork wereproach,in which leaders andalaw-enforcementissue.chair,doesnotwanttheregionentirelylost.Passengerrail isfollowersandthecontextsApragmatic"harmreduc-tobecomeanewfrontlineintrapped inthe public sector,withinwhich they are locatedtion"approachfordrugusersthefailed war on drugs.Iwith highcosts,inefficientall getequal time.arguably falls within the uN'ssincerelyhope that neitherworkingpracticesandpricingBARBARAKELLERMANwill Asia,which wasthefocusLecturerin leadershipconventions.But harmreduc-structures designedby poli-of your article.tionfordrug-producingcoun-ticians.DespitemassivesubHarvardKennedySchooltries can only taketheformofOLUSEGUNOBASANJOsidies,equipmentis oftenCambridge,MassachusettsregulatingproductionandFormer president of Nigeriaobsoleteand sometimessupply,whichtheconventionspoorly maintained.OnetraditionaldefinitionofAbeokuta,Nigeriaoutlaw.However,UruguayGovernmenthas arolein"management"in older Eng-nowhassucharegulatoryregulatingrail,butuntil Amerilishdialects was,accordingtoToilandtroublethe Oxford English Dictionary,regimeforcannabis,asdoca finds a waytobring privateseveral American states.Thisenterpriseback,mostpas"tospreadmanure".ThishasmeansthattheUnited States,sengers will driveorfly evennotbeenlostonthoseofusthearchitectandenforcerofon routes thatareservedmorewhohaveobserved,andthe conventions,isitselfineffectivelyby rail elsewhere.misguidedly sometimes em-breachofthemandwouldfindMICHAELSCHABASployed,managers trainedinPartnerpunditrywhohave pursuedithardtoopposeamendmentsFCPRail Consultantsagendas consistentwiththatto,oracreativeinterpretationLondonof,theconventionsthatwouldancientdescription.allow othercountriesto exBRIANDAYperimentsimilarlyVancouverFollowyou,followmeWith the new championsIf themanagement-punditof prohibition-China,RussiaCobblersindustryis a"shadow ofitsandIndonesia-proposinganDavid Cameron'snamereeksformerself"(Schumpeter,Yourarticleon thesuccess ofeverharderline,thismakesitallthe more importantthat theof Scottishnobility("AjockaApril 25th),it isnotbecauseofBritain's luxury shoe industryEuropeanstakeafirmstandforlypsenow",May9th).Allthreea"lethargy"in the"thought-("Asianbrogue",May 9th)wasof his Christiannames (David,leadership"industry.Rather ittheprincipleofharmreduc-mostheartening.Things havetion and backthemovesbytheWilliam,Donald)werekingsisbecauseleadership,andyes,clearlyprogressedsincethisLatin Americansforflexibilityof Scotlandand hissurnameisfollowership,have changedcommentfrom Margaretradically.Changing culturesintheUN'sconventionsfamouslyScottish.NicolaHalsey,alate American writer:"Englishwomen's shoeslookSIRKEITHMORRISSturgeon,the leader of theandtechnologieshaveaffectedBritishambassadorto Colombia,ScottishNationalParty,hasarelationshipsbetweenleadersasiftheyhavebeenmadeby1990-94namethatisabout as Scottishandfollowers inwaysthatsomeone who had often heardLondonmake them more fraughtandshoesdescribed,buthadneverasaDorsetcreamtea.Nicolaisof Italian origin,and Sturgeonlesssatisfactory.Bothpoweractually seen any".West Africa,too,has becomeahas French/Germanicroots.and authorityhavebeen diCRISPIN D'APICEWindsor,BerkshiresignificanttransitroutetoTrue, hermiddlename, Ferguminished,whichnecessitatesEurope andNorthAmericaforson,is Scottish/lrish,but thenew rules of the game that aredrugs,astraffickingnetworksprime minister'sclaimtonoteasytodiscern orapply.Lettersarewelcomeand should beestablishfootholds byexploit-Scottishness is surely stronger.Single,simple sets ofideasaddressedtothe Editoratingweakgoverningsystems.Perhapsa change of nameonhowtheworldworks(dis-TheEconomist,25StJames'sStreet,Drug-related violence has notis needed for Ms Sturgeonruptiveinnovation,forexLondon SWIA 1HGbecomeabigfeatureoftheLady Macbeth perhaps?ample),and whatleaders andE-mail:letters@economist.comMoreletters areavailable at:drug trade in the region so far,BOBSEARLEmanagers should do in re-Economist.com/lettersKualaLumpurbutthatmayyetchange.sponsearenolongeradequate
14 The Economist May 23rd 2015 Letters are welcome and should be addressed to the Editor at The Economist, 25 St James’s Street, London sw1A 1hg E-mail: letters@economist.com More letters are available at: Economist.com/letters Experimenting with drugs You are right to suggest that the UN’s special meeting on drugs next year should provide a critical opportunity to review the war on drugs (“The wars don’t work”, May 2nd). The meeting is taking place three years earlier than planned at the behest ofColombia, Guatemala and Mexico, countries that have suffered appallingly from the war on drugs. They deserve the support ofEuropean governments that have largely accepted de facto, but only in the Portuguese case de jure, that drugs are best dealt with as a health problem rather than as a law-enforcement issue. A pragmatic “harm reduction” approach for drug users arguably falls within the UN’s conventions. But harm reduction for drug-producing countries can only take the form of regulating production and supply, which the conventions outlaw. However, Uruguay now has such a regulatory regime for cannabis, as do several American states. This means that the United States, the architect and enforcer of the conventions, is itselfin breach ofthem and would find it hard to oppose amendments to, or a creative interpretation of, the conventions that would allow other countries to experiment similarly. With the new champions ofprohibition—China, Russia and Indonesia—proposing an ever harder line, this makes it all the more important that the Europeans take a firm stand for the principle ofharm reduction and backthe moves by the Latin Americans for flexibility in the UN’s conventions. SIR KEITH MORRIS British ambassador to Colombia, 1990-94 London West Africa, too, has become a significant transit route to Europe and North America for drugs, as trafficking networks establish footholds by exploiting weakgoverning systems. Drug-related violence has not become a big feature ofthe drug trade in the region so far, but that may yet change. Local consumption ofillicit drugs has also increased, but the region is neither prepared nor equipped to deal with the problem. Rich countries whose citizens consume large amounts ofdrugs must share the burden and seekhumane ways to reduce the demand (prevention, harm reduction, treatment). They must also do more to support countries “caught in the middle”. African delegations recently caused the withdrawal of a vote on ketamine at the UN, a hopeful sign that the continent is waking up to the issues and learning from mistakes made elsewhere. The West Africa Commission on Drugs, which I chair, does not want the region to become a new front line in the failed war on drugs. I sincerely hope that neither will Asia, which was the focus ofyour article. OLUSEGUN OBASANJO Former president of Nigeria Abeokuta, Nigeria Toil and trouble David Cameron’s name reeks ofScottish nobility (“Ajockalypse now”, May 9th). All three ofhis Christian names (David, William, Donald) were kings ofScotland and his surname is famously Scottish. Nicola Sturgeon, the leader ofthe Scottish National Party, has a name that is about as Scottish as a Dorset cream tea. Nicola is ofItalian origin, and Sturgeon has French/Germanic roots. True, her middle name, Ferguson, is Scottish/Irish, but the prime minister’s claim to Scottishness is surely stronger. Perhaps a change ofname is needed for Ms Sturgeon. Lady Macbeth perhaps? BOB SEARLE Kuala Lumpur Amtrak off track America used to have the best passenger trains in the world (“Derailed”, May16th). Legend has it that American railroads abandoned passenger services because ofcompetition from cars and aeroplanes, and that is indeed part ofthe story. But misguided regulation offares, and restrictions on mergers clearly played a role. Only when freight services were also threatened was the government persuaded to deregulate. American freight railroads are now among the most efficient in the world, but the commercial skills that made passenger rail workwere entirely lost. Passenger rail is trapped in the public sector, with high costs, inefficient working practices and pricing structures designed by politicians. Despite massive subsidies, equipment is often obsolete and sometimes poorly maintained. Government has a role in regulating rail, but until America finds a way to bring private enterprise back, most passengers will drive or fly even on routes that are served more effectively by rail elsewhere. MICHAEL SCHABAS Partner FCP Rail Consultants London Follow you, follow me Ifthe management-pundit industry is a “shadow ofits former self” (Schumpeter, April 25th), it is not because of a “lethargy” in the “thoughtleadership” industry. Rather it is because leadership, and yes, followership, have changed radically. Changing cultures and technologies have affected relationships between leaders and followers in ways that make them more fraught and less satisfactory. Both power and authority have been diminished, which necessitates new rules ofthe game that are not easy to discern or apply. Single, simple sets ofideas on how the world works (disruptive innovation, for example), and what leaders and managers should do in response are no longer adequate. The best we can hope for is thought-leadership as it applies to a problem that is narrowly defined. So, for example, Andrew McAfee’s and Erik Brynjolfsson’s “The Second Machine Age” takes on only one issue: changes in workas a result ofadvanced technology. Let’s face it, the heyday of management gurus is over forever. Leading and managing no longer lend themselves to monolithic interpretations of how others should be herded to get them to toe the company line. Instead, thinking about leadership in the second decade ofthe 21st century requires a more systemic approach, in which leaders and followers and the contexts within which they are located all get equal time. BARBARA KELLERMAN Lecturerin leadership Harvard Kennedy School Cambridge, Massachusetts One traditional definition of “management” in older English dialects was, according to the Oxford English Dictionary, “to spread manure”. This has not been lost on those ofus who have observed, and misguidedly sometimes employed, managers trained in punditry who have pursued agendas consistent with that ancient description. BRIAN DAY Vancouver Cobblers Your article on the success of Britain’s luxury shoe industry (“Asian brogue”, May 9th) was most heartening. Things have clearly progressed since this comment from Margaret Halsey, a late American writer: “Englishwomen’s shoes look as ifthey have been made by someone who had often heard shoes described, but had never actually seen any”. CRISPIN D’APICE Windsor, Berkshire 7 Letters
15ExecutiveFocusGHANIM INTERNATIONALGUWildlife Justice Commission (WJC)CORPORATIONSDNBHDTheHagueTheNetherandsbruneihalalCoseiGhanim International Corporation Sdn Bhd (Ghanim), a government-ownedTheewtyestablishedWidifeJusticeCommission(WC)isaninnovativeorganisationtcompany that has been mandated to manage the bruneihalal brand in theuptoexposeanddisruptcrieninatnetworksthutareinvotved intransnational,organisedfood and beverage category, is seeking a qualified, experienced, highlywidifecrime.urmssionsoimpodeeposeanddumotivated and dynamic individual to join as Chief Executive Officer.The Chief Executive Officer's primary responsibilities includeWie welcomie applications fruen Senicrintermational Exncutives for the fotlowing roles:providing overall leadership and vision in developing, in concert2with the Board of Directors, the Company's strategic direction, theDIRECTORCompany's values and the tactics and business plans necessary toAs anengagingand energeicleaderthieDirectorwilldeveloptheWC tobecomeawel-realise corporate objectives;estabilishedorganisatonHe/shewillwofkwithstskhoidestodevelopaohrentstrai)managing the overall business to ensure strategic and businessegyand tulldrelationstips withintematonalpartnerson al levetsTheDirectormustplans are effectively implemented, the results monitored andbeaninnovatoratheartatueentrereneur,aswelasdeverdplomatwtilstbeingreported to the Board, and financial and operational objectives arepassionate about justiceand widito.attained;ii)managing the business to create sustainable long-term shareholderCHIEF OF INVESTIGATIONSvalue; andTeOidmgatiosagesnd imlents ineaonsorv)ensuring the identification and communication to the Board of allHe/she is aninnovativetiinker dnven tofind smavter and more eectiveways to achievematerial risks along with mitigation plans and procedures.desiredesultsandapplyaimessandanunbiasedsearchfortruthinalprojectsheThe duties and responsibilities of the Chief Executive Officer willinclude andwillbeabletonegotiateonalevelsofleadershipandhasgreatpecpleandcommunicaare not limited to additional requirements, such as overseeing operations,tionskillkabletodoal withithemodiawhenneeddconducting financial review and analysis, sharing expert knowledge onBothpositionswil inmwoivesignificantamountsof internafievsal travntbusiness strategies and procedures, and training Ghanim personnel.AO4RequirementsLookingfoeiecemDY0NOSPCOEThe candidate will have at least 10 years of working experience in theFMCG industry. Excellent knowledge and experience in the Halal Food &Please e-mail yourCVand CoverLettertocareersewildlifejusticecommission.orgBeverage industry would be a distinct/significant advantageorvisitwwiw.wildifejusticecommissiontorgForconfidentintquestions abouttisposition,contactourconsultant,NicoleLeMaireon0044(0j2032905119Expressions of interest together with a full CV and supporting statement,highlighting your experienice and skills against the requirements of the roleThe closing date tor applications is Friday 5Juneshouldbedirectedinconfidencetorecruitment.bn@brunei-halal.comWCanourporntyEpbyitsngoetodiingtswotbClosingdateisJune25,2015TheCommonwealthChief Financial Officer (CFO)FORRESULTSAs the irter-goverrenental bodyof the Corrmonwesitht comprisingTHATMATTER53soviregnstateweprovdetechncat assustancethroughpracticalprofessional advice, transfer of best practce und the orhancorrert cl80 countrieskilsandinowodge1000projectsThisisyourcpportuntytomakeavaluablecortbitbutiontothewel-bungaf2.2bilionpeople wtsle tiking asggrificant.stepinyour carour.Based incoritrstLorndorboth new executve-levelpositionscalforatleast15UNOPS supports partners'yearssersornansgomertexpenence.ganedinagovornmertadcrirtemotiondlpeacebuilding.humanitarian andorgarisatiortwovk experionce in adeveloping courtry,andotizenship ofadevelopment projects around theCommomweathcountryworid by combining UNvalues withEachrolelinvohes leadng ard inspiring team of professiornals totiebestprivate-sectorapproaches.meetobjectives and targots whileachsevingmaxirmum impactandvolue-for-money.providng.polcy:strateccandintelectua lodershipandWe welcome yourweaithofpresentrgourperspectvesthroughthemedeandpubkcspeaiangThesakaryofE106,790paisbackedbyattractvebenefits.The cosingdatefoknowledgeandextensivebothpostssWedresday3.re.experience in financial and riskmanagement in the intemationalDirector,Oceans&NaturalResourcesAdvisoryDivisionarena,todrive strategicprocessesYoushouldhaveatleast15yeiarsOfworingepenenceatserirranogemertandhelpUNOPSreachthenextkevetardsubstantideperierceinatleasttwoofthefolowingareas ockunlevel in organizational excellence.maritime,nutural resourcemaragemert ardsustairabledeveloprpent.Bring your energy.knowledge andsupportedbyadgreeanddeslypostgaduutequalificationsinmarine.natufesourceraragemonit,eiteratiorallaw,ecoromics,ecoricricdevekopmontatdeterminationtoUNOPS!iareioted social sciernce or soernce-bised sutject.UNOPSofiers competive temsoremployment,and the csportursty toworkDirector,TradeDivisioninanintemasonaenvironmentwithYoushouidhaveat least15yearsofworking esperienceatseriormanogemertpoople.tomover159countries.levelardestensiveeapirerceinatloasttwoofthefokowingarewsoftridewww.unops.org/jobs/financealdfortrade,tradecorrpetbveressardregoralandmultiliterailtradeissuessupportedbyadogreeandkdelypostgracustequalfication.ineconomicseconoricdevelcipmeritintermatiorallaworareutedsocidscerceOUNOPSTofndotmore.pleasegotothecommomwealth.org/jobsThe Economist May 23rd 2015
15 The Economist May 23rd 2015 Ghanim International Corporation Sdn Bhd (Ghanim), a government-owned company that has been mandated to manage the bruneihalal brand in the food and beverage category, is seeking a qualifi ed, experienced, highly motivated and dynamic individual to join as Chief Executive Offi cer. The Chief Executive Offi cer’s primary responsibilities include: i) providing overall leadership and vision in developing, in concert with the Board of Directors, the Company’s strategic direction, the Company’s values and the tactics and business plans necessary to realise corporate objectives; ii) managing the overall business to ensure strategic and business plans are effectively implemented, the results monitored and reported to the Board, and fi nancial and operational objectives are attained; iii) managing the business to create sustainable long-term shareholder value; and iv) ensuring the identifi cation and communication to the Board of all material risks along with mitigation plans and procedures. The duties and responsibilities of the Chief Executive Offi cer will include and are not limited to additional requirements, such as overseeing operations, conducting fi nancial review and analysis, sharing expert knowledge on business strategies and procedures, and training Ghanim personnel. Requirements The candidate will have at least 10 years of working experience in the FMCG industry. Excellent knowledge and experience in the Halal Food & Beverage industry would be a distinct/signifi cant advantage. Expressions of interest together with a full CV and supporting statement, highlighting your experience and skills against the requirements of the role should be directed in confi dence to recruitment.bn@brunei-halal.com. Closing date is June 25, 2015. GHANIM INTERNATIONAL CORPORATION SDN BHD Executive Focus