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The world this week Politics
In the first round of Brazil’s
presidential election Jair Bol-
sonaro, the populist incum-
bent, did better than expected.
He had been trailing Luiz
Inácio Lula da Silva, a leftist
ex-president, by double digits
in the polls for months, but on
the night he was only five
points behind. The two candi-
dates now head to a run-off on
October 30th. Mr Bolsonaro, a
fan of Donald Trump, falsely
suggests that the election is
likely to be rigged, and may not
accept the result if he loses.
Russia went through the mo-
tions of illegally annexing four
provinces of Ukraine, follow-
ing sham referendums held at
gunpoint. Vladimir Putin now
claims that these provinces are
part of Russia, but his spokes-
man was unable to say exactly
where the borders might be.
Russia does not fully control
any of the four, and holds only
roughly half of two of them. Mr
Putin’s land-grab was widely
condemned.
Ukraine ignored it and contin-
ued to push back the Russian
invaders. Its forces recaptured
Lyman, a rail hub, and ad-
vanced rapidly in the south,
where tens of thousands of
Russian troops are at risk of
being trapped on the west side
of the Dnieper river. The bridg-
es they might retreat across
have been blown up. Some of
Mr Putin’s henchmen sought
to blame Russia’s defence
minister, Sergei Shoigu, for the
shambles.
The Kremlin said it had drafted
200,000 men to fight in
Ukraine. At least 300,000 have
fled Russia since the draft was
announced. Finland stopped
issuing tourist visas to Rus-
sians, many of whom have


been using Helsinki airport to
escape on planes that are not
subject to sanctions.
Germany’s €200bn ($197bn)
energy aid package fuelled fury
in Europe. Some politicians
said that by going it alone
Germany had undermined a
common approach to dealing
with the energy crunch. The
European Commission said it
was committed to “avoiding
harmful subsidy races” in the
single market.
The inaugural meeting of the
European Political Commu-
nity took place in Prague.
Leaders from the 27 member
states of the EU and 17 other
European countries, including
Britain, Switzerland, Turkey,
and by video link, Ukraine,
gathered to discuss security
and economic issues. The
forum was proposed by
Emmanuel Macron, the presi-
dent of France, as a means of
forging pan-European unity on
a number of issues.
Denmark called an early elec-
tion for November 1st. The
country faces soaring energy
bills and is nervous about
Russian aggression after two
gas pipelines were sabotaged
in nearby waters. Also, Mette
Frederiksen, the prime min-
ister, has come under pressure
for having illegally ordered a
cull of mink in 2020, believing
it would help stop the spread
of covid-19.
After ravaging Cuba, Hurri-
cane Ian swept through Flori-
da, killing 120 people. That was
the highest storm death toll in
the state since 1935.
The lady is for turning
Britain’s Conservative govern-
ment plunged in the polls after
markets punished its plan for
unfunded tax cuts. A month
after taking office, Liz Truss,
the prime minister, is more
unpopular than Boris Johnson,
her predecessor, ever was.
Kwasi Kwarteng, the chancel-
lor of the exchequer, dropped
plans to abolish the 45% top
rate of tax. The Tories bickered
over welfare cuts and other
The Economist October 8th 2022
policies. Standard & Poor’s and
Fitch put Britain’s credit rating
on a “negative” outlook.
Thailand’s constitutional
court ruled that Prayuth Chan-
ocha, the prime minister, had
not exceeded the constitu-
tion’s eight-year term limit
and could stay in power. Mr
Prayuth had been suspended
from office by the court in
August while it heard an oppo-
sition-party petition arguing
that his time was up.
Also in Thailand, dozens of
people, mostly children, were
murdered in a gun-and-knife
attack at a day-care centre in
the north-east. The suspect,
said to be a former police
officer, killed himself.
A stampede at a football stadi-
um in the Indonesian city of
Malang killed at least 131
people. It was triggered by
police firing tear-gas to
disperse fans who had run
onto the pitch.
A grid failure in Bangladesh
left 75% of the country without
electricity. Power was restored
to Dhaka, the capital, by eve-
ning, and to the rest of the
country by the following day.
Bangladesh, like many poor
countries, is suffering from
shortages of gas as Europe tops
up its supplies for winter.
North Korea fired a ballistic
missile that flew more than
4,000km, far enough to reach
Guam. It was the farthest a
North Korean missile has ever
travelled. A South Korean
missile test ended in failure
when it crashed to the ground.
Protests against Iran’s theo-
cracy continued across the
country. Some of the most
striking were in universities
and schools, where many
female students threw off
their headscarves and chant-
ed songs denouncing the
bossiness and corruption of
clerical rule.
The two main sides in the
eight-year-long civil war in
Yemen failed to renew a truce
signed in April that had been
extended several times. But
all-out war has yet to resume.
The United Nations special
envoy, Hans Grundberg,
begged the adversaries to
return to negotiations.
The zero-covid approach
Xinjiang in western China
suspended passenger train
services leaving the region to
prevent the spread of covid. A
local official said Xinjiang was
facing a “major public-health
emergency”.
Indonesia became the first
country to approve the emer-
gency use of an mRNA covid
vaccine developed in China.
The Chinese government has
yet to approve any mrna
vaccines for use among its
own population, except in
clinical trials.
Burkina Faso suffered its
second coup in less than a
year. The new regime seized
power after accusing the old
one of not doing enough to
stop jihadists who now plague
large parts of the country.
Ethiopia agreed to participate
in peace talks hosted by the
African Union with rebel
forces from Tigray that it has
been battling for two years.
The war has left thousands of
people starving in Tigray.
The commander of Uganda’s
army, Lieutenant-General
Muhoozi Kainerugaba, threat-
ened on Twitter to invade
neighbouring Kenya. It was a
joke, but Kenyans did not find
it funny. Uganda’s president,
Yoweri Museveni, stripped
the general of his job but also
promoted him. The general is
his son, and possibly his
favoured successor.
 The world this week Business
Elon Musk changed course
and offered to go ahead with
his $44bn deal to buy Twitter,
but only if a forthcoming trial
that could force him to com-
plete the takeover is stopped. A
recent preliminary hearing in
the case did not go well for his
legal team. The mercurial Mr
Musk offered to take Twitter
private in April, said the offer
was on hold in May, and aban-
doned the deal in July, prompt-
ing the legal action. He has
suggested that he will turn the
platform into “X”, an every-
thing app, similar perhaps to
the superapps that combine
messaging, shopping and
services in Asia.
A cruel summer
Stockmarkets
January 3rd 2022=100, $ terms
FTSE 100
S&P 500
Euro Stoxx 50
J F M A M J J
Source: Refinitiv Datastream
Stockmarkets rallied briefly
over the first two days of trad-
ing of the fourth quarter, after
a brutal sell-off at the end of
the third quarter. Despite some
gains in August, share indices
recorded an overall loss from
July 1st to September 30th. The
S&P 500 was down by 5% over
the quarter—September was
its worst month since March
2020, the start of the pan-
demic. The NASDAQ Composite
shed 4% and the Dow Jones
Industrial Average 7%. The
pain was worse in China. The
CSI 300, which comprises
stocks on the Shanghai and
Shenzhen exchanges, finished
the quarter 15% lower than
at the start.
Bond markets were calmer.
The yield on ten-year British
gilts eased back to around 4%
after the government ditched
its plan to scrap the top rate of
income tax (two months ago
the yield was around 2%). The
yield on the ten-year US Trea-
sury fell back to 3.6% having
risen above 4%. In Britain


banks started re-offering some
mortgage products they had
withdrawn amid the market
uncertainty. The interest rate
on an average two-year fixed-
rate mortgage rose above 6%
for the first time since 2008.
The share prices of Chinese
property companies rebound-
ed following a number of
government announcements
to shore up the housing mar-
ket. In addition, the People’s
Bank of China lowered interest
rates on certain loans for first-
time buyers.
OPEC+ said it would cut oil
production by 2m barrels a
day, around 2% of global sup-
ply. The headline figure is the
biggest reduction to output
since 2020, but some OPEC
members are already strug-
gling with production targets
110
so the overall effect will be
100
lower. Still, it was a blow for
90 the Biden administration and
80 European governments, which
70 had pressed the cartel to keep
60 cuts to a minimum so that
A SO
prices don’t rise. The White
House press secretary said that
OPEC was now clearly “aligning
with Russia”.
Annual inflation in the
Netherlands (measured by the
cPI) surged to 14.5% in Sep-
tember. Energy prices were up
by 200%, year on year. Tur-
key’s inflation rate rose above
83%; transport and food prices
increased at an even faster clip.
Australia’s central bank lifted
its main interest rate by a
quarter of a percentage point,
to 2.6%. Markets had expected
a bigger rise, but the bank
defended the smaller move
because the rate has “increased
substantially” this year.
Executives at Credit Suisse
had to battle rumours that the
bank is in trouble. A memo
sent by the chief executive,
Ulrich Körner, to staff, reassur-
ing them about the bank’s
“strong capital base and liquid-
ity position”, elicited the oppo-
site effect in the markets. Its
credit default swaps, which act
as an insurance of a default,
soared to new highs. Cooler
heads dismissed the idea that
Credit Suisse would become
the next Lehman Brothers.
Apple will have to adapt the
charger for iPhones in the EU,
after the European Parliament
approved new rules to standar-
dise charging points for
linking electronic devices to
USB-C connections. The
change applies to all products,
so some items made by
Samsung and others will also
have to adapt.
The Economist October 8th 2022 11
The World Trade Organisation
forecast that the global trade
in goods, measured by vol-
ume, will grow by 3.5% this
year, but by only 1% in 2023.
Demand for imports will soft-
en, it said, for a variety of
reasons related to the squeeze
on household spending.
Geely, a Chinese carmaker that
owns the Volvo and Lotus
brands, bought a 7.6% stake in
Aston Martin. Geely has long
wanted a piece of the British
maker of sports cars (it is seen
as a potential buyer of the
firm), and says it looks forward
to future collaborations.
Death and taxes
Dignity, the only publicly
listed funeral provider in
Britain, reported a half-year
pre-tax loss. The firm is not
immune from the more earthly
problems bedevilling other
businesses. Rising fuel costs
have caused it to consider a
surcharge on the gas burned at
its crematoriums. And
although lower death rates
from covid-19 are a blessing for
us all, it has made year-on-year
comparisons about the busi-
ness difficult. Still, Dignity
noted “positive signs” about its
market, a nod to the fact that
there will always be a demand
for its services.