Newsbook

DAVOS kicks off, Greece takes steps to refinance its debt, the State of the Union address and the European Union votes on more sanctions against Iran

Brazil’s elder statesman
Fernando Henrique Cardoso brought macroeconomic stability to Brazil as finance minister and then as president. A distinguished sociologist in his former life, he shares his thoughts on Brazil’s multiracial culture, the drug war and his relationship with the current president

A long time in politics
The Republican candidates debate, the Republicans of South Carolina vote in their primary and the president delivers his state-of-the-union address. In a week teeming with politics, our correspondents and bloggers provide live commentary on all of the action

Modern tragedy
A new film version of “Coriolanus” marks the directorial debut of Ralph Fiennes, who also plays the title role. He talks to us about Shakespeare’s contemporary relevance and wonders whether people are more interested in watching tragedy during times of economic hardship

United States: The value of a good education
How much would a high school education be worth on the free market?

Asia: Media after the meltdown
Japan’s hopelessly insular press club loses a little ground, increasing candour

Asia: Yam yesterday, yam today
Nepal has ever felt itself a “yam between two boulders” (the giants India and China) yet now hopes to benefit from its situation

Europe: We’ll always have Prague
Why so many Ukrainians, including Yulia Tymoshenko’s husband, make their homes in the Czech Republic

Europe: Down to earth
A corruption case may encourage Poles to think a little more soberly about their shale-gas revolution

Business: Sharper focus
How Fujifilm managed to reinvent itself

Finance: Average common denominator
If the euro zone stays together, an opportunity for a different sort of convergence play should emerge

Technology: Difference engine
America needs to boost dwindling water supplies with reclaimed stuff from sewage works. How to sell the idea to the public?

Finance: Owe dear
An updated interactive debt graphic shows how deeply in hock the big economies are

MBA diary: Start-up school for grown ups
It is a myth that entrepreneurs and business schools are incompatible

Technology: Something bad out of Africa
Google fails to live up to its motto in Kenya

Middle East: Entering the fray
The father of Gilad Shalit is to stand for Israel’s Knesset

A FRESCO on the ceiling of Madrid's Supreme Court shows a menacing scene of Goya-inspired intensity, with knife-wielding savages and children being throttled to death. On a wall a large sculpture depicts the crucifixion of Jesus.

As the country's most famous magistrate, Baltasar Garzón, went on trial here yesterday his supporters claimed he was suffering something akin to the crucifixion scene. His enemies, who want him banished from the judiciary for 17 years for, they believe, abusing his powers, see him as more like the villains on the ceiling.

Few people divide Spanish opinion as absolutely as the slick-haired investigating magistrate. Some think he should be awarded the Nobel Peace prize. Others demand public pillory.

Mr Garzón has made many enemies. They include supporters of Augusto Pinochet, the former Chilean dictator, who was arrested in London in 1998 on Mr Garzón's orders, and backers of the military strongmen who once ran Argentina. Mr Garzón has successfully expanded international human-rights law to prosecute and jail their henchmen in Spanish courts.

If his enemies abroad are numerous, those at home are legion. Mr Garzón has taken on Socialist-led state terrorism and corruption in the conservative People's Party, which now runs Spain, as well as drugs barons, arms traffickers and ETA, the Basque terrorist group. He has trodden on many toes, including those of fellow judges.

It was no surprise, then, that while protesters chanted about “fascists and the corrupt putting the judge on trial”, viewers of Intereconomia, a conservative television channel, sent gleeful tweets accusing Mr Garzón of being “arrogant”, “overbearing” and backed by “vengeful communists”.

Mr Garzón faces not one trial, but three. In each he is charged with what Spaniards call prevaricación, or knowingly dictating unjust measures during investigations (as a magistrate he prepares cases, but does not try them). The charge is rare. To face it three times over is unknown.

The trial that began yesterday involves a PP corruption case known as “Gürtel”. During his investigation Mr Garzón ordered police to tape conversations between suspects remanded in prison and their visitors. That included their defence lawyers, some of whom the judge suspected of laundering their clients' money. The lawyers claim this damaged their clients' right to a fair defence.

In a second case due to start on January 24th, Mr Garzón stands accused of abusing his powers by opening an investigation into the deaths of 114,000 people under the dictatorship of Francisco Franco between 1936 and 1975. In that case Mr Garzón named 34 former generals and ministers, including Franco himself, who he suspected of crimes against humanity. All were already dead.

A third case alleges that Mr Garzón should have disqualified himself from court decisions involving Banco Santander. Those bringing the prosecution claim Mr Garzón had received money from the bank during a sabbatical at New York University, although the university denies this.

Some see jealous Spanish judges trying to get rid of a colleague who has outshone them. Others see a rogue magistrate getting a taste of his own medicine.

The case mostly raises questions about guarantees in Spain's judicial system. If Mr Garzón is a multiple prevaricador, why was he not stopped long ago? And if not, can Spanish judges be independent without facing prosecution?

AS THEY bounce around Tripoli in beat-up cars on potholed roads, past peeling colonial facades and breeze-block houses, Libyans often rue their country’s misspent wealth. “This should be like Dubai,” they say. Owing to decades of quixotic rule under Muammar Qaddafi, it is not. 

And it won’t be soon, despite the lifting in December of a wartime UN freeze on an estimated $168 billion of the former regime’s funds held abroad. With the world’s eighth-largest oil reserves and the removal of Colonel Qaddafi’s stifling controls, Libyans hope that foreign investment will bring rapid economic development. They will have to be patient. 

The physical damage from seven months of fighting is mostly slight, but it will take time to build the administrative capacity as well as the political skill to contain the exuberance of an estimated 250,000 militiamen who took up arms, and still often brandish them in public. The interim government, the National Transitional Council, says it hopes to have a functioning national army and police force by the spring. 

“If there’s no security, there will be no law, no development and no elections,” says Mustafa Abdel Jalil, the council’s head, complaining that too many Libyans are taking the law into their own hands. Authorities in the capital, Tripoli, have demanded that militias from other towns withdraw, leaving the city under sole command of its own, Islamist-dominated force. 

But this has not yet happened: in a serious incident on January 3rd, militiamen from Misrata, a town 200km (125 miles) to the east, which suffered the bitterest fighting of the war, clashed with local gunmen in central Tripoli, leaving four people dead. The militia in Zintan, south-west of the capital, still refuses to hand Saif al-Islam Qaddafi, a surviving son of the fallen dictator, whom they captured in November, to the central government. Human Rights Watch, a New York-based lobby that chastised the old regime, now inveighs against the new regime for failing to give the younger Qaddafi his basic rights. 

Public impatience is growing, and not only because of the lingering presence of armed men. Bound by regional and tribal loyalties, many Libyans accuse the council of favouring particular tribes and regions, of failing to act decisively or purge Qaddafi loyalists thoroughly enough, and of excessive secrecy. The council has struggled to respond, saying that some decisions must wait for an elected government, but promising greater openness. It says it will decentralise government away from Tripoli towards cities such as Benghazi and Misrata, which demand recompense for years of neglect and greater wartime sacrifice. Yet some Libyans say that shifting ministries far from the capital would be a sop to regionalism that may prove costly and inefficient in the future. 

Still, life is easier since the fighting stopped in October. Scheduled commercial flights leave from Libya’s main airports. Telephone links between east and west, severed since the start of uprising in February, have been reconnected. Internet providers are coming back online. It is still tricky to get cash; exchange rates fluctuate. But ministers note that in the capital they have restored electricity, water, sewerage and—most of the time—security. 

Yet more-entrenched obstacles to foreign investment persist. Libyans prickle at the notion of their country being treated like Iraq or Afghanistan, where the foreign powers who intervened militarily won fat reconstruction and security contracts in the ensuing chaos. Keen to ensure that Libyan businesses do well, that the government gets value for money and that dealings are seen as legitimate by a people weary of corruption, officials say that large contracts will not be awarded until after elections later this year. For the time being they are rationing business visas. Private security companies are also unlikely to make big money here, having been all but outlawed: non-Arab, non-Muslim mercenaries with guns are not what Libya needs or wants. 

Some sectors need investment so urgently that contracts can be won straightaway, though foreigners are encouraged to invest or team up with Libyan firms rather than operate alone. Some foreign companies have signed short-term deals to rebuild roads, hospitals and schools. Insurance companies and banks willing to work without paying huge risk-premiums and to give credit may also be welcomed with open arms. Big Western oil companies with an existing footprint are already back at work. Having plunged below 50,000 barrels a day (b/d) at the peak offighting, Libya’s crude production is already pushing 1m b/d, and is expected to return to the pre-war level of 1.7m by June or so. 

Those who hope to win big construction, infrastructure and oil deals next year are quietly cultivating relations with the transitional government, though some oil companies are chafing because the new people at the head of the National Oil Company bargain just as hard as the old lot. The government strongly favours working with firms from countries that backed the uprising that toppled Colonel Qaddafi. So Qatari and Turkish business delegations have been feted; Russian and Chinese visitors have been greeted frostily. 

The finance ministry is reviewing all contracts signed under the previous regime; the most corrupt will apparently not be honoured. Some construction companies may have to abandon half-finished projects. So will some oil and gas companies. Some energy giants close to the Colonel may find themselves shut out entirely.

The cost of a free ride
Thrifty car dealers like to piggyback on the ample showrooms and well-trained staff of their higher quality rivals. This is a good thing for consumers as it keeps prices down. But it also has drawbacks, which are exacerbated by the rise of online sellers and price-comparison sites

The unretouched woman
Eve Arnold found her calling aged 38 when a boyfriend gave her a $40 Rolleiflex. By the time she died earlier this year, she had spent nearly 50 years telling stories with her camera. She could always capture something fresh, whether at a civil-rights rally or in Marilyn Monroe’s face

Debate: The UK and the EU
Two British politicians discuss whether the country should leave the European Union. Daniel Hannan argues that the EU is falling behind in a competitive world; Douglas Alexander says Britain needs to be “in the room” when decisions on important matters are being made. Join the debate

United States: Candidates v private equity
What Newt Gingrich’s attacks on Mitt Romney mean for the conventions that govern primary races

Africa: Masai chefs
A new cooking school in Kenya is transforming Masai cuisine

Middle East: Don’t rip us off
Libyans are offering foreign businessmen a wary welcome

Asia: Not yet risen
A year after the devastation of Christchurch, New Zealand’s second city, its recovery has yet to get going

Asia: Big election in little China
Why election campaigning in small-town Taiwan, with its mixture of lion dances and triad connections, matters to the mainland

Business: Running out of time
Honda’s new Accord Coupe could determine whether the Japanese carmaker can recover after a devastating year

Business education: Samba management
Brazil becomes a source of inspiration for Western business schools

Language: The dreaded comma splice
Should you join two clauses with a measly comma, or is this a style crime?

Technology: Difference Engine
Civilian usage of pilotless planes has been slow to take off. What kind of rules and regulations will have to be put in place before tiny robot drones can start flying around our neighbourhood airspace?

Technology: Out of focus
In the 1990s our correspondent used the first commercially available digital camera: Kodak’s DCS100, serial number 0000001

Culture: Is “no choice” a good choice?
London is seeing a new breed of restaurants in which the chef functions as auteur

WHEN Recep Tayyip Erdoğan's Justice and Development (AK) party took office in Turkey in 2002, many feared that it had an Islamic agenda for the country. But today a bigger fear is over what many see as a creeping authoritarianism. Mr Erdoğan has justly asserted civilian rule over an army that had toppled four of his predecessors since 1960. But some believe the government has used the fear of coups to justify harassment of legitimate opposition, including the persecution of journalists. The long-running "Ergenekon" investigation into an alleged coup plot has netted hundreds of arrests but not a single conviction.

On January 10th the Council of Europe, a human-rights watchdog, released a report describing "long-standing, systemic shortcomings in the administration of justice" in Turkey. The government insists that the independent judicial system is just doing its job. But as Turkey flexes its regional muscles and continues its membership talks with the European Union, it can expect scrutiny of its attitude to criticism to grow.

ANGELA MERKEL and Nicolas Sarkozy kicked off the 2012 season of the euro soap opera with a summit meeting in Berlin today. Neither said anything startling; certainly nothing that would betoken a swift and happy conclusion to the long-running saga.

The German chancellor and the French president muted their differences over such issues as how quickly to introduce a tax on financial transactions and what the role of the European Central Bank (ECB) should be in supporting shaky members of the euro zone. “Our analysis is the same,” said Mr Sarkozy at the post-summit press conference.

This did not calm markets’ nerves. The euro dropped to its lowest level against the dollar since September 2010 ($1.266) before the summit and recovered marginally as the two leaders met. Currency traders’ biggest worry is Greece’s failure to meet its fiscal targets, which means it may not get the fresh money it needs to avoid defaulting on its debt.

At the opposite end of the confidence spectrum, investors are so eager to finance Germany that they accepted a negative interest rate on an auction of six-month paper, in effect paying Germany’s government for the privilege of lending to it. Germans will see this as vindication of their prudent policies, but it also serves to underline the dangerous economic divergences within the euro zone.

The main significance of the Merkozy summit is that it seemed to signal a shift in emphasis. True, the austerity agenda—promoted by the Germans and grudgingly accepted by the French—is still there. Indeed, Mr Sarkozy boasted that France’s fiscal deficit was smaller than expected in 2011. Europe is making swift progress towards a “fiscal pact” to limit deficits, proclaimed Mrs Merkel, including German-style “debt brakes”. A new treaty should be signed by March.

But fiscal self-denial will now be supplemented by what Mrs Merkel called a “second leg”, meaning economic growth and job creation. This is partly meant to help Mr Sarkozy, who faces a tough re-election fight this spring.

All euro-zone countries, including Germany, are “prepared to do their homework” in this area, the chancellor promised, but it is not clear that much new is on offer. A big German stimulus package to boost growth in neighbouring countries is not in prospect (that would nobble the fiscal leg).

Mrs Merkel spoke of spreading best practice in labour-market regulation across the euro zone (which is German practice, Mr Sarkozy admits) and spending existing European funds more quickly and effectively. Both ideas make sense; neither will prevent further financial turmoil, or a European recession. In the latest sign of fragility, German industrial production dropped 1% in November.

The leaders tried to seem anything but complacent. Mr Sarkozy called the situation “very tense” and Mrs Merkel said they had “understood the needs of the hour.” The intention is to keep Greece from dropping out of the euro zone, but whatever happens Greece is an exceptional case, the leaders said (perhaps fearing that a Greek default or even an exit from the euro could not be avoided). As always, the chancellor dampened expectations of a quick “one-dimensional” solution to the crisis. The problem would be solved, she said, “step by step.”

The next steps involve Italy, an indebted giant that poses a far greater threat to the euro than Greece. Mrs Merkel will meet Italy’s unelected prime minister, Mario Monti, in Berlin on Wednesday; she and Mr Sarkozy will hold a three-way summit with him in Rome on January 20^th. European heads of government are to gather, probably on January 30^th, to put the finishing touches to the fiscal pact.

Also on the agenda, no doubt, will be a proposed financial-transactions tax. Britain is threatening a veto; Mr Sarkozy has said France will go it alone at first, if need be. Mrs Merkel wants the tax but her junior coalition partner, the Free Democrats, do not unless the British get on board. As the crisis sharpens, disagreements are likely to re-emerge over the role of the ECB and how to strengthen the euro zone's bail-out funds. The soap opera has a long way to run.

REPUBLICAN primaries in New Hampshire, a final round of voting in Egypt, a verdict expected for Anwar Ibrahim and yet another euro-zone summit

Our cover leader on the search for “the right Republican” presidential candidate drew a heavy response from readers. Here is a small selection of their letters:

I would argue that the Republican Party no longer exists. There is a party that goes by that name but it is led by the heirs of the old Dixiecrats. Between roughly 1948 and 1972 the New Deal coalition of liberal northern Democrats and Jim Crow southern ones gradually split over the issue of race.

The Democrats’ lock hold on the South started to slip in 1948 when four southern states voted for Strom Thurmond’s states' rights party. By 1972, all 13 states in the South were voting for Richard Nixon. Jimmy Carter’s win in the South in 1976 was entirely due to his accent, and the Democrats have not had much victory there since. Meanwhile the Republican Party has been taken over by the Dixiecrats at all levels, and now exhibits all the pathologies of the Jim Crow era without any moderating influences of northerners. It is no coincidence that Newt Gingrich is from Georgia, Ron Paul from Texas, Mitch McConnell from Kentucky, Trent Lott from Mississippi, and so on. Their northern think-alikes are followers, not leaders.

The real Republicans have been pushed to the sidelines and tagged as RINOs - Republican In Name Only. So my real choice in November is between either a Dixiecrat or a Democrat. I miss the Republicans.

Albert Kirsch Bal Harbour, Florida

I do not tolerate the rhetoric spewing from the mouths of the social conservatives running for the presidency of the United States. There is no “war on religion”. What actually threatens our general welfare is the social conservative martyr-like evangelical crusade justified by a rigid idea of morality.

Consider their stance on gay marriage; how ironic that conservatives who advocate limiting the reach of government feel free to dictate who can marry whom, which is one of the most intrusive and oppressive interventions by government into private affairs. Quite frankly, I, along with millions of other Americans, have had enough of demagogues.

William Haugen Saint Paul, Minnesota

The right Republican you wish for is already running. He has a Lincolnian commitment to constructive nation-building, a Rooseveltian permanent pursuit of the healthiest balance between a free-market economy and regulatory norms that can help the private sector best serve society as a whole, a Reaganian charm and good humour, a Eisenhowerian inspired record of the best use of military power, a Thatcherian iron grip, and the cojones to pursue challenging causes such as health-care reform and full disclosure of all contributions to political campaigns, as well as an unquestionably powerful brain.

The right Republican you seek is clearly Barack Obama.

Fernando Sotelino New York

When constructing your ideal Republican you forgot one thing: the essential decency of Gerald Ford. You may perhaps be forgiven because the Republican Party has forgotten it entirely.

Grenville Byford London

I am sure it was unintentional, but your illustration of the “right Republican” looks more like the recently deceased professional wrestler Randy "Macho Man" Savage than Honest Abe. That seems about right. Macho Man thrived in a world of staged events, melodrama, and Kabuki theatre, which fairly describes this comical campaign to identify the least-bad choice. Also like Mr Savage, the Republican field is not afraid of a kick straight to the opponent’s groin.

Julian Swearengin New York

You portrayed Ron Paul as a candidate with eccentric theories. This is regrettable from a newspaper with liberal values, since most of his convictions on money echoes those of any respectable liberal school of economics.

If you agree that private ownership of means of production and the guarantee of freedom of individuals is the best economic order, why on earth is it eccentric to believe that “money” should also be subjected to the same principles?

Dag Dawit Geneva

Your hit piece on Ron Paul was over the top. The Fed is not a conspiracy theory. It was a conspiracy to form a cartel for private printing of money to bail out failed bankers. I will be giving up my subscription since I thought The Economist knew about the fundamentals of monetary policy. It is obvious you don’t.

Why do you believe that Mr Paul is a loony for not wanting America to be an empire on a credit card?

Anthony Tardino Phoenix

You wrote that "America’s commercial classes are fed up with a president they associate with big government, red tape and class warfare.”

America’s commercial classes are not opposed to having a class war, only to losing one.

Ed Tracey Lebanon, New Hampshire

CRITICISMS of the Arab League observer mission in Syria are mounting as Bashar Assad's regime continues to crack down on protesters. According to the plan drawn up by the league, Mr Assad—who claims his government is fighting foreign-backed terrorists—must withdraw his forces from the streets, release political prisoners and open talks with the political opposition. Few thought a regime fighting for its survival would—and indeed could—comply with all of the requirements, but many hoped it would bring a temporary halt to the bloodshed.

That has not happened. Groups keeping track of the death toll in Syria say at least 300 people have been killed since the delegation arrived last week. Syrian activists claim the league's chief, Nabil Araby, is being hoodwinked. At a press conference in Cairo, Mr Araby said the regime had withdrawn tanks from residential areas and released some 3,500 detainees. But protesters in Homs, the hub of the growing conflict, have filmed tanks on the streets or poised nearby, and rights groups say thousands or prisoners remain locked up.

Frustrated protesters say the mission was only ever going to let Mr Assad play for time. They have been angered by the mission's head, Mustafa Dabi, a Sudanese general and former intelligence chief who Amnesty International accuses of presiding over human-rights violations in the 1990s. Mr Dabi said he had seen "nothing frightening" after visiting Homs. The protesters also point out that only 70 of 150 observers (the league originally asked for 500) have arrived. Criticism is coming from closer to home too: on Sunday the Arab Parliament, which advises the league, said the monitors should be withdrawn due to the ongoing violence.

Few thought the Arab League would permanently change the dynamic on the ground, though the presence of the monitors has galvanised protesters and drawn attention to the size of the opposition. The mission could up the diplomatic ante by referring the matter to the UN Security Council, which has been blocked from acting by Russia, one of Mr Assad's few remaining allies. There are signs Moscow is getting impatient: it submitted its own draft resolution on December 15th, a weak proposal that condemned violence by both the government and the opposition and contained no threat of sanctions. It failed to pass.

For all the diplomatic efforts, the chances of a peaceful end to the conflict are growing ever slimmer. Last month the Syrian National Council, the main political opposition bloc, called for the international community to carve out safe zones in the country. Meanwhile, Riyad al-Asaad, the leader of the Free Syrian Army, a loose organisation of army defectors, has threatened to escalate attacks on the regime, after saying it would scale them back in deference to the observer mission. The combination of an increasingly desperate regime and frustrated but determined protesters sets the scene for much more bloodletting yet.

(Photo credit: AFP)

OUR correspondents discuss the business, economics and sports stories set to hit the headlines in 2012

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