Wednesday, August 10, 2022

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The attack on Gaza may bolster Israel’s prime minister

The latest Israeli offensive against Gaza was well planned and not at all surprising. On August 5th a swift series of drone raids killed a commander, and missile teams, of the Palestinian Islamic Jihad (pij). Israel said it was acting pre-emptively to prevent an imminent attack on Israelis living near Gaza’s border.The ensuing events were just as predictable. pij retaliated with barrages of rockets and mortar shells aimed at Israeli towns. Nearly all of them fell harmlessly on open land, or were intercepted by Israeli Iron Dome missile-defence batteries deployed in advance. Israel responded with more air strikes, killing another commander of pij.In nearly three days of fighting, more than 30 Palestinians are reckoned to have been killed in Gaza, with no casualties so far on the Israeli side. Israel insists that it has targeted only militants, and that most of the Gazan civilians who have been killed were victims of malfunctioning pij rockets that fell far short of their targets.This is the most serious round of warfare between Israel and Gaza since an 11-day war in May 2021, when 270 people were killed, mainly Palestinians. But this time the attacks and counter-attacks have so far been more limited. Palestinian sources speak of an imminent ceasefire to be brokered by Egypt.Hamas, the larger Palestinian movement, which has controlled Gaza for the past 15 years, has so far kept out of the fray. This is partly because it is satisfied to see its smaller rival pulverised by the Israelis, and partly because it is reluctant to jeopardise the modest improvement in Gaza’s economy since the last big bout of violence last year. Since then the Israeli government, under a policy unofficially called “shrinking the conflict”, has refused to engage with the Palestinians to seek a political solution to the century-old conflict, but has sought to create financial incentives for stability. In Gaza’s case this has meant issuing 14,000 daily work permits to bring much-needed cash into the enclave. Israel has also allowed some infrastructure to be built, and has gradually eased the border closure it and Egypt have imposed since Hamas came to power in a coup in 2007.“All of a sudden Hamas has a lot more to lose,” says an Israeli intelligence official. “They’re now in a position of responsibility for maintaining a level of economic stability. But they can afford to remain on the sidelines only for a limited time before they start being accused of collaborating with Israel.”Hamas and pij were founded in the 1980s as radical Islamist movements to resist Israel’s occupation of Gaza. In 1993, when the Palestine Liberation Organisation entered the so-called Oslo process with Israel, opening the way to setting up a semi-autonomous Palestinian Authority in parts of the West Bank and Gaza, both Islamist movements refused to join in. Instead, they stuck to their stated aim of destroying Israel. However, while pij, which is heavily funded by Iran, has remained a small outfit wedded to violence, Hamas has been trying in recent years to improve its ties with Egypt, the Saudis and other Arab regimes, agreeing in principle to a long-term truce with Israel. A short Israeli offensive that leaves pij weakened without causing too much damage in Gaza could even work in Hamas’s favour.There are political considerations on the Israeli side as well. Israel’s new prime minister, Yair Lapid, has been in office for only five weeks, and is facing a tough battle for re-election on November 1st. Unlike the two other main candidates—the former long-serving prime minister, Binyamin Netanyahu, and the current defence minister, Benny Gantz—Mr Lapid lacks a military record and experience of leading his country in war. If the current campaign against Gaza pegs back the pij, keeps Hamas out of the fray, is brief and does not result in Israeli casualties, his security credentials may be boosted. But it is a risk. Gaza has a way of sucking Israeli leaders into the maw when they least expect it. ■

Ghana, an oft-lauded African economy, is back for its 17th bailout

Enu, a shopper at Kaneshie market in Accra, the capital of Ghana, peers into a small bag of scrabbling crabs with disappointment. “Before, if I buy two cedis worth, it can make my stew for me,” she says. “Now, no.” As shoppers moan about inflation, traders grumble about slow sales. Many blame the government. “The finance minister, if I catch him, me, I will beat him,” declares Esther, a yam-seller with a twinkle in her eye. Fully 87% of Ghanaians think the country is going in the wrong direction, according to a survey in April by Afrobarometer, a pollster. The economy is a big reason. Annual inflation hit 30% in June, its highest for 18 years. This year the central bank has increased interest rates by 4.5 percentage points to 19% but the cedi has nonetheless fallen 28% against the dollar.The government has been slow to face up to the crisis. “We are not going to the imf, whatever we do, we are not”, declared Ken Ofori-Atta, the finance minister, in February. “We are a proud nation.” On July 1st the government ate its words and asked the imf for help escaping the pit of debt it has dug itself. Last year 44% of its revenue went servicing foreign loans. The unsustainable borrowing, naturally, has scared off commercial lenders, leaving it with few options.This is familiar territory for Ghana, which has been nannied by the imf for 22 of the past 35 years. The new programme will be its 17th since independence in 1957 and comes little more than three years since it graduated from its previous one. All of this might suggest Ghana has made a dog’s dinner of managing its economy. Yet its people are the richest in west Africa, measured by gdp per person. What’s more, politicians regularly and peacefully handover power at elections. This makes it both a poster child for development and democracy and also a macroeconomic basket case.The government insists that today’s crisis is exceptional and not its fault. “We were on a very positive trajectory” before the pandemic, Mr Ofori-Atta tells The Economist. The Russian invasion of Ukraine and the subsequent surge in global inflation compounded the harm, he adds. Yet Ghana was vulnerable well before covid-19 struck. The imf had already warned that it was at a high risk of debt distress before President Nana Akufo-Addo took office in 2017. Despite this, his government kept on borrowing. Ghana’s public debt rose from 56% of gdp in 2016 to 63% on the eve of the pandemic in 2019. When covid hit the following year, many African governments rightly borrowed and spent to support their economies. Yet Ghana’s budget deficit of 16% was the second-highest in sub-Saharan Africa, far above the regional average of 6%. This may have helped avoid a recession, but Ghana’s debt is now a thumping 84% of gdp, reckons the imf. Mr Ofori-Atta says it is discriminatory to suggest that Ghana’s deficit was too large, arguing that rich countries spent far more in absolute terms. “Do they have a right to do that more than we do because we are African?” But rich countries could safely spend more precisely because they raise far more tax than Ghana. Ghana takes in taxes worth only about 12% of gdp, well below the average of 15% for Africa. It is also perennially vulnerable to foreign-currency shortages because it remains largely dependent on volatile commodity exports—chiefly gold, oil and cocoa—to pay for its imports.Moreover, many worry it does not spend its money wisely. Emmanuel Gyimah-Boadi, the co-founder of Afrobarometer, who is based in Accra, argues that a good deal of spending before a general election in 2020 was aimed at helping Mr Akufo-Addo win a second term. This would fit a pattern. Before almost every election in recent decades the ruling party of the day has tended to splurge to nab votes (see chart). Graft is another recurring worry. Pollsters from Afrobarometer regularly ask Ghanaians how many people they think are involved in corruption in various institutions, such as the police or religious leaders. When they most recently asked this question in relation to “the president and officials in his office”, more than half of respondents answered “most/all”. Rich as Ghana is relative to its hard-up neighbours, many Ghanaians reckon they would be richer still had successive governments not managed the economy so poorly. Yet there may be more than meets the eye to Ghana’s unorthodox and imperfect model of big spending interspersed by imf programmes. Deficit-financed investment can pump up growth for a while. Indeed, some of the borrowed cash has gone into roads, hospitals and free secondary schooling. This may not have boosted growth enough to pay back the debt, but it still brings benefits. The spending has improved social cohesion, says Mr Ofori-Atta. That is not to be underestimated given the strife in many of Ghana’s neighbours. Perhaps one explanation for Ghana’s ability to make a success of failure has been its readiness to turn to the imf before the economy suffers serious harm. In doing so politicians are able to blame the fund for prescribing the bitter medicine they know is needed, but would not take unprompted. Ghana’s reputation for peace, democracy and, at times, rapid economic growth has helped persuade creditors and donors that the country is a worthy candidate for debt relief when crises hit, argues Bright Simons of Imani, a think-tank in Accra. Its star image has also brought creditors back after its crises, even when it has not mended its ways, allowing its unorthodox growth model to roll on. Now the government will find out if it has run out of road. Mr Ofori-Atta does not rule out another debt restructuring, but nonetheless promises that Ghana will soon resume borrowing from private creditors. Yet each bail-out dims its star. That may be why the government is so determined to pin responsibility on covid-19. Mr Ofori-Atta also blames rating agencies for forcing Ghana back to the imf: his ministry says they have an “institutionalised bias against African economies”. Even if Ghana’s odd model has had its benefits, many Ghanaians are tiring of the cycle of pork-barrel politics followed by imf interventions. Almost half of Ghanaians are unsatisfied with the way democracy works, by far the highest share since Afrobarometer began polling in 1999. Adia, who runs a tiny shop an hour outside of Accra, was once a “full supporter” of Mr Akufo-Addo. But she no longer believes in him or the system, she says, as she pounds fufu, a starchy staple. On the next election day her plan is simple. “I will pound fufu,” she says. “After eating the fufu, I will lock my door and sleep.” ■

How Ghana makes a success out of failure

Enu, a shopper at Kaneshie market in Accra, the capital of Ghana, peers into a small bag of scrabbling crabs with disappointment. “Before, if I buy two cedis worth, it can make my stew for me,” she says. “Now, no.” As shoppers moan about inflation, traders grumble about slow sales. Many blame the government. “The finance minister, if I catch him, me, I will beat him,” declares Esther, a yam-seller with a twinkle in her eye. Fully 87% of Ghanaians think the country is going in the wrong direction, according to a survey in April by Afrobarometer, a pollster. The economy is a big reason. Annual inflation hit 30% in June, its highest for 18 years. This year the central bank has increased interest rates by 4.5 percentage points to 19% but the cedi has nonetheless fallen 28% against the dollar.The government has been slow to face up to the crisis. “We are not going to the imf, whatever we do, we are not”, declared Ken Ofori-Atta, the finance minister, in February. “We are a proud nation.” On July 1st the government ate its words and asked the imf for help escaping the pit of debt it has dug itself. Last year 44% of its revenue went servicing foreign loans. The unsustainable borrowing, naturally, has scared off commercial lenders, leaving it with few options.This is familiar territory for Ghana, which has been nannied by the imf for 22 of the past 35 years. The new programme will be its 17th since independence in 1957 and comes little more than three years since it graduated from its previous one. All of this might suggest Ghana has made a dog’s dinner of managing its economy. Yet its people are the richest in west Africa, measured by gdp per person. What’s more, politicians regularly and peacefully handover power at elections. This makes it both a poster child for development and democracy and also a macroeconomic basket case.The government insists that today’s crisis is exceptional and not its fault. “We were on a very positive trajectory” before the pandemic, Mr Ofori-Atta tells The Economist. The Russian invasion of Ukraine and the subsequent surge in global inflation compounded the harm, he adds. Yet Ghana was vulnerable well before covid-19 struck. The imf had already warned that it was at a high risk of debt distress before President Nana Akufo-Addo took office in 2017. Despite this, his government kept on borrowing. Ghana’s public debt rose from 56% of gdp in 2016 to 63% on the eve of the pandemic in 2019. When covid hit the following year, many African governments rightly borrowed and spent to support their economies. Yet Ghana’s budget deficit of 16% was the second-highest in sub-Saharan Africa, far above the regional average of 6%. This may have helped avoid a recession, but Ghana’s debt is now a thumping 84% of gdp, reckons the imf. Mr Ofori-Atta says it is discriminatory to suggest that Ghana’s deficit was too large, arguing that rich countries spent far more in absolute terms. “Do they have a right to do that more than we do because we are African?” But rich countries could safely spend more precisely because they raise far more tax than Ghana. Ghana takes in taxes worth only about 12% of gdp, well below the average of 15% for Africa. It is also perennially vulnerable to foreign-currency shortages because it remains largely dependent on volatile commodity exports—chiefly gold, oil and cocoa—to pay for its imports.Moreover, many worry it does not spend its money wisely. Emmanuel Gyimah-Boadi, the co-founder of Afrobarometer, who is based in Accra, argues that a good deal of spending before a general election in 2020 was aimed at helping Mr Akufo-Addo win a second term. This would fit a pattern. Before almost every election in recent decades the ruling party of the day has tended to splurge to nab votes (see chart). Graft is another recurring worry. Pollsters from Afrobarometer regularly ask Ghanaians how many people they think are involved in corruption in various institutions, such as the police or religious leaders. When they most recently asked this question in relation to “the president and officials in his office”, more than half of respondents answered “most/all”. Rich as Ghana is relative to its hard-up neighbours, many Ghanaians reckon they would be richer still had successive governments not managed the economy so poorly. Yet there may be more than meets the eye to Ghana’s unorthodox and imperfect model of big spending interspersed by imf programmes. Deficit-financed investment can pump up growth for a while. Indeed, some of the borrowed cash has gone into roads, hospitals and free secondary schooling. This may not have boosted growth enough to pay back the debt, but it still brings benefits. The spending has improved social cohesion, says Mr Ofori-Atta. That is not to be underestimated given the strife in many of Ghana’s neighbours. Perhaps one explanation for Ghana’s ability to make a success of failure has been its readiness to turn to the imf before the economy suffers serious harm. In doing so politicians are able to blame the fund for prescribing the bitter medicine they know is needed, but would not take unprompted. Ghana’s reputation for peace, democracy and, at times, rapid economic growth has helped persuade creditors and donors that the country is a worthy candidate for debt relief when crises hit, argues Bright Simons of Imani, a think-tank in Accra. Its star image has also brought creditors back after its crises, even when it has not mended its ways, allowing its unorthodox growth model to roll on. Now the government will find out if it has run out of road. Mr Ofori-Atta does not rule out another debt restructuring, but nonetheless promises that Ghana will soon resume borrowing from private creditors. Yet each bail-out dims its star. That may be why the government is so determined to pin responsibility on covid-19. Mr Ofori-Atta also blames rating agencies for forcing Ghana back to the imf: his ministry says they have an “institutionalised bias against African economies”. Even if Ghana’s odd model has had its benefits, many Ghanaians are tiring of the cycle of pork-barrel politics followed by imf interventions. Almost half of Ghanaians are unsatisfied with the way democracy works, by far the highest share since Afrobarometer began polling in 1999. Adia, who runs a tiny shop an hour outside of Accra, was once a “full supporter” of Mr Akufo-Addo. But she no longer believes in him or the system, she says, as she pounds fufu, a starchy staple. On the next election day her plan is simple. “I will pound fufu,” she says. “After eating the fufu, I will lock my door and sleep.” ■

Beirut marks an awful anniversary with more disaster

Few bits of infrastructure are as unremarkable as grain silos. No one paid much attention to the ones looming over Beirut’s port, the rows of tubes inside a hulking white edifice that held 120,000 tonnes of grain. Drivers zipped past on the coastal road en route to the mountains or the beach. Locals with a sea view (and your correspondent) took no notice of them while sipping coffee on their balconies. Until the port exploded, that is.The blast on August 4th 2020, caused by thousands of tonnes of ammonium nitrate stored improperly for almost seven years, turned the silos into both shield and symbol. They served as a giant blast wall, absorbing some of the fury and sparing west Beirut the level of devastation wrought in the east. It left them almost unrecognisable, an iconic image of that day, a drooping monolith that resembled a cake melted by too long in the sun.The government wanted to demolish the silos. Many Lebanese thought them a symbol worth saving. Families of the more than 200 people killed lobbied to preserve them as a memorial.As ever in Lebanon, the state did nothing. Entropy won out. Last month the silos started to burn: grain trapped inside for two years and fermented in summer heat caught fire. As the anniversary neared, residents who survived the explosion were made to relive their trauma, watching as smoke again billowed over the port. On July 31st, four of the silos collapsed. Engineers say more will follow. Experts worry this will spew a plume of fungus-laden dust over the city.The explosion came one year into a grinding economic crisis caused by decades of a state run like a giant Ponzi scheme. Thousands of homes and offices were destroyed; their owners struggled to get access to cash to rebuild. Hospitals were wrecked. Streets that were hubs of Beirut’s once-vibrant nightlife became corridors of mangled rubble. For many citizens it was a breaking point that helped trigger an exodus to the Gulf states, Europe, Canada—anywhere without a government so negligent as to leave a massive bomb lying around the capital.Two years later, no one powerful has been held to account. Tarek Bitar, the judge leading an official investigation, has had his work repeatedly obstructed by politicians, most vocally those from Hizbullah, the Shia militia-cum-political party, and Amal, a faction that is a byword for corruption. Everyone has a theory about what happened. No one expects to receive a satisfactory answer.The economic crisis grinds on. The currency is all but worthless, the banks zombies. Shortages of fuel and, more recently, bread recur. Around 80% of Lebanese now live in poverty. The government is discussing a $3bn loan with the imf but has failed to act on most of its demands for reform. Parliament has legislated just one, passing amendments to the banking-secrecy law last month. Even this fell short of what the imf had requested.The politicians who oversaw all this are still in charge: in Lebanon, the past is not even past. Though parliamentary elections in May brought a crop of independent lawmakers, the legislature is still dominated by the warlords and crooks who have dominated it for decades. The central-bank governor who supervised the economic collapse still has his job. Nothing has been fixed; no one has been punished.Ghosts loom everywhere in the Middle East, recent horrors unacknowledged by governments that prefer to forget. Bahrain bulldozed the monument at the centre of the Pearl roundabout in Manama, site of anti-government protests in 2011, pour décourager les autres. Tahrir square, the beating heart of Egypt’s revolution that same year, has been transmogrified into a sterile space where citizens are not allowed to linger.Stroll through Rabaa al-Adawiya square in Cairo, where in 2013 security forces massacred hundreds of protesters after a coup, and you will at least find a monument—built by the army, which did much of the killing on that day. Its two arms are meant to symbolise the army and police, cradling an orb that represents the Egyptian people, a grotesquerie that is less memorial than victory sign.Soon after the Beirut explosion, graffiti started to appear on the concrete traffic barrier outside the port. The most poignant slogan, scrawled in both English and Arabic, was simple: “My government did this”. It was photographed countless times, with the ruined silos in the background offering their own silent rebuke. Given the proper motivation, the Lebanese government is not totally supine: it painted over the graffiti. The silos are slipping into the sea. The ghosts will remain. ■

Iraq’s parliamentary plague

In normal times Iraq’s parliament can be a desolate place: many mps do not bother to show up for work. Today it is full—though far short of a quorum. On July 30th supporters of Muqtada al-Sadr, a cleric and politician, stormed parliament. They have settled in for what they promise will be an open-ended sit-in. Volunteers have been bringing meals and tea; juice vendors roam the aisles. For once, mps have a legitimate reason for staying at home.Iraq has been without a proper government for almost ten months, the longest period of paralysis since 2005; Mustafa al-Kadhimi has been hobbling along as the caretaker prime minister. Such deadlocks are nothing new. But the events of the past week have pushed the country in an ominous direction. Mr Sadr has urged more Iraqis to join the sit-in, while his opponents have started counter-protests nearby. The political crisis in the world’s sixth-largest oil producer risks boiling over into violent conflict.The Sadrists emerged from October’s elections with the largest bloc in parliament, winning 74 of 329 seats. They spent the next few months trying to form a government that would exclude their Shia Muslim rivals, chief among them Nuri al-Maliki, who served as prime minister from 2006 to 2014 and dreams of a comeback. Mr Sadr instead sought a coalition with the main Kurdish party and a Sunni Muslim grouping led by parliament’s speaker. But Mr Sadr failed to muster enough support.In June he told his mps to resign. The move made little sense on its face, as it threw away his power in parliament. One former official described it as “madness”. But it cast him as an outsider, with an implicit threat of violence: he would wait for his rivals to form a government, then unleash his supporters if he disliked the outcome.After parliament was stormed, Mr Maliki was photographed brandishing a rifle as he walked the streets of Baghdad, flanked by armed men. Talk of duelling protests raises the spectre of intracommunal bloodshed. In years past, Qassem Suleimani, a powerful Iranian general, would have flown to Baghdad to try to rein in his allies. Since America assassinated him in 2020, though, Iran has exercised less control. Still, should Mr Sadr and his rivals come to blows, the Iranians will surely side against him. The Sadrists lack serious foreign support.A series of leaked recordings, said to be of a conversation involving Mr Maliki, whose faction won the third-largest bloc in the election, has added to the tumult. He called Mr Sadr a traitor and claimed there was a British plot to install him in power. Mr Maliki insists the recordings are faked; many of the ramblings they contain are absurd. Britain is entangled finding its own new prime minister, let alone able to foist one on Iraq.Mr Maliki could also be heard trashing the Hashd al-Shaabi (Popular Mobilisation Forces), a constellation of Shia militias supported by his allies which he called cowards. That probably ended his already slim chances of becoming prime minister. On July 25th Mr Sadr’s rivals nominated Muhammad al-Sudani, a journeyman ex-minister, for the prime minister’s job. His position is weak, since his parliamentary list won just one seat in October, so he would be merely a figurehead for the powerful Shia parties behind him.Some of Mr Sadr’s backers try to cast the siege of parliament as a principled stand. For a start, they say, the cleric wants to diminish Iran’s influence in Iraq. While not quite hostile to Iran, Mr Sadr positions himself as a nationalist not beholden to foreign powers: he uses the slogan “neither east nor west” to describe his preferred government. His Shia rivals, on the other hand, are undeniably in thrall to Iran.Mr Sadr’s defenders also talk of overhauling a broken political system by changing the constitution and electoral law, perhaps shifting Iraq from a parliamentary regime to a presidential one. “The only way to make sense [of his withdrawal] is to bring down the political system,” says one senior official. Such talk may resonate with Iraqis frustrated by corruption and dismal services. But burning the system to save it rarely yields sparkling results.For all their protestations, however, Mr Sadr’s camp can hardly claim the moral high ground. Iraq’s political crisis does not stem from a thoughtful debate over the best system of governance. Rather it is fuelled by politicians who see control of the state as a zero-sum scramble for patronage and wealth.Mr Sadr draws his support from impoverished Shia communities in southern Iraq and the slums of Baghdad. His movement needs tens of millions of dollars a month to finance its patronage network. To that end his henchmen have taken key jobs in the ministries of the interior and defence, the state oil and electricity firms, and the central bank. Wide control over Iraq’s annual budget of $89bn lets the Sadrists steer spending to loyalists.Parliament has yet to pass a budget for 2022, which means it cannot spend billions of dollars in extra oil revenue accumulating at a time of high prices (see chart). In June, however, it did pass an emergency spending bill backed by Mr Sadr’s mps before they resigned. It was framed as a food-security programme at a time of soaring prices, and it did include dollops of money to pay for food and imports of fuel. But it also added tens of thousands of new public-sector workers—many of whom will probably be hired from among Mr Sadr’s constituents.The Sadrists may yet back down, realising this is a fight they cannot win. Other lawmakers will try to broker a face-saving exit. Even if that happens, though, the next government is likely to be short-lived. Far from ending Iraq’s political crisis, Mr Sadr’s antics are likely to deepen it. ■

Israel’s Russian conundrum

For the past seven years Israel and Russia have closely co-ordinated with each other on the ground and in the skies of the Middle East. The war in Ukraine may, however, be rattling these arrangements. On July 15th a Russian court ordered the Jewish Agency to close its offices in Russia. The agency is not technically part of Israel’s government but acts on its behalf, maintaining ties between the state of Israel and the Jewish diaspora around the world. Above all, it facilitates the emigration of Jews to Israel.Listen to this story. Enjoy more audio and podcasts on

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