By Miguel do Rosário, editor of the portal O Cafezinho

Is a world without the dollar possible?

During his recent visit to China in April 2023, President Lula delivered a bold speech in Shanghai at the inauguration of Dilma Rousseff as the new head of the BRICS bank.

Lula summarized, in his characteristically simple and profound language, one of the most central challenges of the contemporary world: why do countries need to conduct business in dollars? Why can’t they do it in their own national currencies?

Despite the traditional Brazilian press ignoring, downplaying, or manipulating the President’s speech, it had a huge impact in the Global South. Not because it was delivered by Lula or because it came from Brazil, but because this has been, in fact, one of the most complex economic issues of recent times, especially for the countries of the Global South.

The latest issue of Wenhua Zongheng, a “quarterly journal of Chinese thought,” is focused exactly on this topic: the challenges of dedollarization. The first article in this issue is by Brazilian economist Paulo Nogueira Batista Jr., who was once the vice president of the BRICS bank and a director appointed by Brazil to the IMF. The other texts are written by Chinese economists.

The magazine presents four fundamental articles to understand the issue of the dollar from a rigorously scientific perspective. Don’t be intimidated by the term “scientific,” as the texts, despite the intellectual sophistication of the authors, are written in a journalistic language that is didactic and accessible to all.

Ding Yifan’s article tackles the topic through the question in its title: “What Drives the Debate on Dedollarization in the BRICS?”

Like the other texts, Yifan is very straightforward: the dollar issue became urgent when the United States decided to “freeze” (a euphemism for steal) more than $300 billion of the Russian central bank’s reserves.

However, Yifan notes that the problem is not new. A passage from his article states:

“(…) In this era when the world is moving towards a multipolar order, the hegemony of the US dollar hinders international cooperation among many countries. Since its ‘war on terror,’ the United States has discovered that, compared to traditional trade wars, it is much more effective to use the hegemony of the dollar to impose financial sanctions on countries that violate the ‘rules-based order’ led by the US. This logic was detailed by Juan Zarate, a former US official during George W. Bush’s administration, in his 2013 book, Treasury’s War: The Unleashing of a New Era of Financial Warfare. In recent decades, the US has used the dollar as a weapon to impose financial sanctions on countries it does not favor.”

The book by Zarate cited by the writer is a masterpiece of American imperialist cynicism. I decided to study it before writing this review and was, once again, astonished by how candidly Americans admit to acting under an absolutely authoritarian philosophy towards other countries.

Zarate recounts how he worked within the Treasury Department (the equivalent of the Ministry of Finance in Brazil) and helped instill a culture of war within the institution. The US Treasury should be used, especially since the “war on terror,” as a tool to subjugate all those who stood in the way of the US’s total global domination. Even allies were not safe, as there are passages where he recounts instances in which the UK and France had to be “convinced,” through “financial pressures,” to obediently follow the White House’s policies in the Middle East.

Zarate is blunt: “The dollar serves as the global reserve currency, as well as the currency for international trade, and New York remains the financial center of international capital and the hub of all dollar transactions. With this concentration of financial and commercial power comes the ability to turn access to American markets, American banks, and American dollars into financial weapons.”

In other words, the US government sees the dollar as a weapon of war. A financial weapon, but as lethal and efficient as a battery of long-range missiles.

There is a somewhat comic point, however, in Zarate’s book, which I would very much like to bring to readers.

When discussing the precedents for using these economic weapons to subjugate other countries, he highlights some famous historical facts.

The oldest and one of the most famous, Zarate notes, is the economic siege the Athenians imposed on Megara, a Greek city allied with Sparta.

Athens was at the height of its economic and cultural prosperity until it decided to apply economic sanctions against Megara. The reasons for this aggression are varied. The Athenian humorist Aristophanes even wrote that it was Pericles’ revenge because someone in Megara kidnapped one of Aspasia’s maids, his wife.

The economic blockade banned Megarians from accessing ports and markets throughout the large Athenian Empire, effectively strangling the Megarian economy. The sanctions would have also affected Megara’s allies and may have been seen as a move by Athens to weaken its rivals and extend its influence. Megara controlled the important routes between Peloponnese and Attica, making it crucial for both Athens and Sparta.

The Spartans immediately sent diplomats to Athens to plead for the lifting of the sanctions, explaining that they were causing severe economic and social problems in Megara and many Greek cities, especially those under Spartan influence.

Athens ignored the Spartan appeals, and the Peloponnesian War began, which would be equivalent, in terms of proportional death toll, to the major world wars of the 20th century.

The result was tragic, especially for Athens, which was defeated and dominated by Sparta, marking the end of the Athenian empire and the beginning of the end of the brilliant Athenian era.

In other words, the economic sanctions against Megara were a terrible idea for Athens! Zarate seems unaware of this when he mentions them as an “example.”

He recalls other economic sanctions in history, and all are equally disastrous. At no point does Zarate acknowledge the fact that economic sanctions, in any era, tend to backfire on those who impose them.

The Treaty of Versailles, for example, also cited by Zarate, promoted a terrible economic siege against Germany. Keynes’s first book, The Economic Consequences of the Peace, provided a powerful warning against the inherent stupidity of this type of economic aggression. Despite being a public and critical success in Europe, the governments that had won the First World War ignored Keynes. In his brilliant war memoirs, Winston Churchill similarly offers a devastating critique of what he calls the “madness of the victors,” mentioning economic sanctions invented by populist politicians and insensitive bureaucrats who ignored the complexity of economic relations at the time. The sanctions against Germany did not weaken the country. On the contrary, they turned it into the greatest military power of the time, but they weakened its democracy and created the conditions for the rise of Nazism.

I repeat, all examples of economic sanctions cited by Zarate resulted in disaster for those who applied them.

The most recent example confirms the rule. The economic sanctions that the US and its European vassals applied against Russia at the start of the war in Ukraine resulted in an economic crisis in Europe itself while accelerating Russia’s development.

However, the most visible consequence of the American obsession with sanctioning half the planet is the increased determination, especially by Global South countries, the most harmed by these sanctions and the most vulnerable to this type of financial threat, to free themselves from this unbearable blackmail.

We have reached a point in the world, therefore, where the US threats to the rest of the world that they will be sanctioned if they do not obey imperial edicts, always using the hegemony of the dollar as a really dangerous and effective financial weapon, ironically result in the weakening of the dollar and the proliferation of debates, studies, and exercises on how to inaugurate a true multipolar financial order in which countries can participate in international trade and establish their reserves using a pool of currencies as a reference, rather than just a specific currency of one country.

The articles in Wenhua Zongheng denounce the increasingly acute contradiction between a burgeoning, more varied, more agile international trade and the dependence on a currency linked to a country with ever-increasing current account deficits, yet a country that is more and more aggressive and selfish in its military use of that currency.

The Chinese have already started a process of distancing themselves from the dollar. Much of China’s international trade is conducted in renminbi. Russia was forced, by American financial truculence, to make abrupt changes in its exchanges with the world, and today it trades most of its products in rubles, renminbi, or local currencies. India has also dramatically increased the use of its own currency, the rupee, in its exchanges with other countries.

However, smaller countries have much more difficulty using their own currencies, making them very vulnerable to speculative attacks, currency fluctuations in the markets, and especially to the truculence and threats from the US. A small nation wanting to trade with China or Russia will often have to consider the geopolitical consequences of that transaction.

Brazil also suffers terribly from the consequences of dollar hegemony, as our national wealth is often priced more by speculators in New York than by production costs in our territory. The price of our soybeans, meat, coffee, and oil is exposed to the financial whims of a nation with a fiscal deficit growing by $1 trillion every 100 days. It is not possible for a population of over 200 million people to remain exposed to this type of risk.

In October, there will be a BRICS meeting in Kazan, Russia, and the theme of dedollarization has already been announced as a priority. In 2025, Brazil will assume the BRICS presidency, and it will be up to Brazilian economists and economic journalists to increase their participation in this debate. As a major exporter and importer, having achieved a trade flow of nearly $600 billion in two consecutive years, 2022 and 2023, and likely to repeat this year, Brazil has become one of the main players in international trade. Therefore, the exchange rate issue has become absolutely strategic for our economic, social, and political stability. For Brazil, the dollar has also become a hindrance and a danger, exacerbated by the fact that our main trading partners today are in the Global South, precisely those most attacked by the financial wars promoted by the US through the blatant manipulation of the dollar.

The dedollarization of the world has thus become one of the main banners of geopolitical independence for the Global South and Brazil!

Important Links:

You can download the full Wenhua Zongheng and previous editions here.

By the way, I know one of the editors of this magazine, the researcher from Rio, Marco Fernandes, whom I regularly interview for Jornal da Forum, a program I anchor on the TV Forum channel on YouTube. You can watch our latest conversation here (in portuguese).

Speech by the President of the Republic Luiz Inácio Lula da Silva at the inauguration ceremony of the president of the New Development Bank.

Bibliography:

• Treasury’s War by Juan C. Zarate
• The Economic Weapon by Nicholas Mulder

Link to the Wenhua Zongheng magazine

What is the way forward for progressives in a time when it seems both centrism and authoritarianism are resurgent? What should be the character and scope of a national program that progressives in and outside the Democratic Party can and should embrace? There are many places to look for answers to these questions, and no doubt the answers will have many inspirations.

One of the most incisive articulations of an American progressive alternative is that of Roberto Mangabeira Unger, a Harvard Law professor, philosopher, and former Brazilian politician. He has written over two dozen books addressing an unusual diversity of topics, including critical legal theory—which he helped develop—economics, philosophy, and religion. Given this range, it would be unfair to reduce Unger’s work to one core idea. But perhaps the major theme of his work is summed up in his argument that “society is made and imagined, that it is a human artifact rather than the expression of an underlying natural order.”

The Nation recently spoke with Unger about his proposal for an alternative progressive track for American politics. Along the way, we discussed racial injustice in the United States, Donald Trump’s election, democratizing new technologies, the future of education, and progressive taxation. Of pressing importance is the topic of structural economic and political change, and in turn, whether Unger’s vision is impractical. This conversation has been edited for clarity and length.

DANIEL STEINMETZ-JENKINS: Right now the streets are filled with protesters demonstrating in the aftermath of George Floyd’s brutal killing by Minneapolis police. Progressives have long struggled to confront and overcome racial injustice in the United States. You have criticized their approach, the dominant approach, to racial oppression. What is your understanding? And what is your proposal?

ROBERTO MANGABEIRA UNGER: To grasp the meaning of this moment for the future of the country, it is useful to begin by distinguishing the immediate background—the failure of the established approach to racial injustice in the United States—from the larger context of which this failure forms a part: the disorientation of American progressives and the long-standing absence in American politics of any program responsive to the needs, interests, and aspirations of the working-class majority of the country, white or black.

The prevailing response to racial injustice in the United States has been the integrationist orthodoxy. It treats racial injustice as a threshold issue, to be addressed before all problems of economic equality and opportunity. Its signature expression is affirmative action. It has done little for those who most require protection, the vast number of black people who languish in prisons and dead-end jobs. This approach has offended the white working-class majority, who believe themselves to be victims of a conspiracy between sanctimonious white elites and the representatives of black workers. And it has provided a model for the identity politics that has addressed legitimate demands for respect and recognition only by diverting the country from engagement with its structural problems.

There is an alternative. The alternative is to distinguish individualized racial discrimination from the advancement of the unequipped, the excluded, and the impoverished. Individualized racial discrimination should be criminalized, as it is in many countries. Social advancement should be predicated on real disadvantage or exclusion, wherever it is found. Racial stigma should serve as only one of the standards that, together with other forms of disadvantage, trigger such advancement. Race should be combined with class rather than separated from it.

DSJ: How did the country arrive at its present situation, with the presidency in the hands of Donald Trump, after decades in which millions of working-class voters abandoned the Democratic Party?

RMU: The principal vehicle of American progressives, the Democratic Party, failed to come up with a sequel to Franklin Roosevelt’s New Deal. The sequel would have had to be very different from the original, which focused on economic security rather than economic empowerment and offers no model for how to bring more American workers into the good jobs of the most productive parts of today’s economy.

Let us look coldly at what has happened since then. Having begun under Lyndon Johnson by treating the poor as an insular minority in need of support and blacks as another insular minority in need of rights, progressives offered nothing to the working-class majority of the country other than later to dissolve them into a series of group identities and special interests. Conservatives responded with the formula by which, under Democratic as well as Republican administrations, they won and wielded power for half a century: combining material concessions to the moneyed class with moral concessions to the moneyless classes. For this whole period, the United States has had no economic growth strategy other than cheap money, delegated by the federal government to the central bank, and productivity growth has stagnated. The majority of American workers have felt—and been—abandoned.

Into the expanding vacuum that resulted from these successive abdications came the plutocratic populism of Donald Trump: a big fat hoax, given that it has done nothing for the abandoned majority other than to wage war against low-skill immigrants while continuing—it must be acknowledged—to get high employment, with relatively few good jobs, on the basis of the cheap-money policy. What an opportunity for the progressives, if they had a program. They don’t.

Read more on The Nation.

Brazil Needs a Fresh Start

Feb 5, 2020

LUCIANO HUCK

Since the restoration of democracy in 1985, Brazil has made notable gains when it comes to taming inflation, expanding welfare assistance, and even reducing poverty. But unless the country can tackle rising inequality and restore faith in its political leadership, these gains could be lost.

RIO DE JANEIRO – “I pray that my family will one day attend fewer funerals and more graduations.” These words, spoken by Douglas, a Brazilian from São Gonçalo, resounded in my ears like a gunshot. Douglas’s father died in a hail of bullets before Douglas was born; his mother was gunned down on his 11th birthday. Like so many Brazilian children his age, he was forced to drop out of school to pay the bills for his siblings.

After spending time with Douglas in São Gonçalo, one of the poorest and most violent cities in the state of Rio de Janeiro, it became obvious to me that he was a victim of the “zip code lottery.” Douglas lives in one of the most unequal cities in one of the world’s most inequitable countries. Statistically, it will take another nine generations before someone from his neighborhood ascends to the middle class.

Douglas is not alone. As an entertainer for Brazil’s largest television network, I have spent two decades sharing the stories of people living in the country’s biggest favelas and most remote Amazonian communities. And as a social entrepreneur, I am constantly looking for new ways to unlock the potential of the tens of millions of Brazilians living in poverty.

For as long as I can remember, Brazil has been ridiculed as a country eternally waiting for the future to arrive. The biggest obstacle to progress is inequality, which is tied to Brazil’s legacy of colonialism, slavery, and exclusionary institutions, and perpetuated by Brazilian elites’ cynical disregard for the poor. Although successive presidential administrations since the restoration of democracy in 1985 have tamed inflation, expanded welfare assistance, and even reduced poverty, inequality has remained stubbornly high.

Worse, recent evidence shows that inequality in Brazil has started widening again, potentially wiping out much of the progress of the previous three decades. The primary culprit is a regressive system of taxes and subsidies that disproportionately benefits wealthier people like me. Brazil has low income- and property-tax rates relative to other OECD countries, yet it imposes a bevy of indirect taxes on the poor.

If Brazil is going to have any chance of curbing inequality, it needs drastic improvements in the coverage and quality of basic public education. While wealthy citizens receive high-quality educations, poorer ones like Douglas are routinely forced to leave school prematurely, owing to violence and crippling financial pressures. This helps to explain why there are still over 11 million Brazilians aged 15 or above who can neither read nor write.

Brazil desperately needs to improve the effectiveness of its 200,000 public schools. Instead of building new facilities, we should find ways to spend more efficiently, with a focus on teacher training and career development, early childhood education, and curricula for the twenty-first century. Recent improvements in educational outcomes in Ceará, Piauí, and Espírito Santo show that rapid progress is possible.

Brazil’s fight against inequality cannot be won unless the country’s social safety net serves all citizens. There are an estimated 43 million Brazilians currently living in poverty, more than 13 million of whom live in extreme poverty, the highest level in seven years. Fortunately, artificial intelligence and big data technologies can help improve the quality and coverage of services, and at a lower cost than at any time in the past.

But to improve education and social inclusion, Brazil will need new leadership. Today, most Brazilians are frustrated and desperate. In 2013, well before the mass protests that flared up in Chile and Ecuador, Brazil experienced one of the largest demonstrations in its history. The 2018 presidential election that brought Jair Bolsonaro and his far-right government to power revealed the extent of polarization and dissatisfaction among the electorate. Exhausted by widespread corruption and economic stagnation, Brazilians voted for change. Needless to say, opinions are divided on whether Bolsonaro’s presidency will unify Brazilians and transform the country for the better.

For many in my generation, politics is seen as a dirty business that is best avoided. But, looking back, I now recognize that I share the blame for this outcome. Because politics does not come naturally to me, I was insufficiently involved in this critical domain.

But my generation can no longer accept things as they are. The time has come for Brazil to renew its social contract. The country needs a broad political coalition to curb inequality, borrowing the best ideas from both the left and the right. Ideological purity and uninformed policies will not resolve Brazil’s most pressing problems. Moreover, we need politicians and civil servants who are technically and ethically qualified for the job. But we cannot expect policymakers to succeed without outside help.

In 2017, these challenges prompted me to join Agora, a civic movement dedicated to mobilizing a new generation of young leaders who have pledged to devote at least two years of their careers to public service. Soon thereafter, I helped launch RenovaBR, a non-partisan training school for prospective political leaders. In our first call for applications, we attracted more than 4,600 submissions from people who had never been involved in politics. They were drawn by our appeal “to be the candidate whom you would want to vote for.” Of the more than 120 successful applicants, 17 were elected to federal office in 2018. In a recent call for applications ahead of Brazil’s upcoming municipal elections, we received more than 31,000 submissions.

Candidates supported by groups like Agora and RenovaBR offer an inspiring and positive vision of a more open and pluralist Brazil. They are focused on what really matters: closing the massive gap between rich and poor. Because of them, I am still bullish on Brazil. If we target inequality with the tools at our disposal, Douglas and millions of children like him will live to attend more graduations and fewer funerals.

Luciano Huck is a Brazilian TV host, philanthropist, and entrepreneur.

WHO declares the new coronavirus outbreak a Public Health Emergency of International Concern

Statement on the second meeting of the International Health Regulations (2005) Emergency Committee regarding the outbreak of novel coronavirus (2019-nCoV)

30 January 2020 Statement Geneva, Switzerland

The second meeting of the Emergency Committee convened by the WHO Director-General under the International Health Regulations (IHR) (2005) regarding the outbreak of novel coronavirus 2019-nCoV in the People’s Republic of China, with exportations to other countries, took place on Thursday, 30 January 2020, from 13:30 to 18:35 Geneva time (CEST). The Committee’s role is to give advice to the Director-General, who makes the final decision on the determination of a Public Health Emergency of International Concern (PHEIC). The Committee also provides public health advice or suggests formal Temporary Recommendations as appropriate.

Proceedings of the meeting

Members and advisors of the Emergency Committee were convened by teleconference.

The Director-General welcomed the Committee and thanked them for their support. He turned the meeting over to the Chair, Professor Didier Houssin.

Professor Houssin also welcomed the Committee and gave the floor to the Secretariat.

A representative of the department of Compliance, Risk management, and Ethics briefed the Committee members on their roles and responsibilities.

Committee members were reminded of their duty of confidentiality and their responsibility to disclose personal, financial, or professional connections that might be seen to constitute a conflict of interest. Each member who was present was surveyed and no conflicts of interest were judged to be relevant to the meeting. There were no changes since the previous meeting.

The Chair then reviewed the agenda for the meeting and introduced the presenters.

Representatives of the Ministry of Health of the People’s Republic of China reported on the current situation and the public health measures being taken. There are now 7711 confirmed and 12167 suspected cases throughout the country. Of the confirmed cases, 1370 are severe and 170 people have died. 124 people have recovered and been discharged from hospital.

The WHO Secretariat provided an overview of the situation in other countries. There are now 82 cases in 18 countries. Of these, only 7 had no history of travel in China. There has been human-to-human transmission in 3 countries outside China. One of these cases is severe and there have been no deaths.

At its first meeting, the Committee expressed divergent views on whether this event constitutes a PHEIC or not. At that time, the advice was that the event did not constitute a PHEIC, but the Committee members agreed on the urgency of the situation and suggested that the Committee should continue its meeting on the next day, when it reached the same conclusion.

This second meeting takes place in view of significant increases in numbers of cases and additional countries reporting confirmed cases.

Conclusions and advice

The Committee welcomed the leadership and political commitment of the very highest levels of Chinese government authorities, their commitment to transparency, and the efforts made to investigate and contain the current outbreak. China quickly identified the virus and shared its sequence, so that other countries could diagnose it quickly and protect themselves, which has resulted in the rapid development of diagnostic tools.

The very strong measures the country has taken include daily contact with WHO and comprehensive multi-sectoral approaches to prevent further spread. It has also taken public health measures in other cities and provinces; is conducting studies on the severity and transmissibility of the virus and sharing data and biological material. The country has also agreed to work with other countries who need their support. The measures China has taken are good not only for that country but also for the rest of the world.

The Committee acknowledged the leading role of WHO and its partners.

The Committee also acknowledged that there are still many unknowns, cases have now been reported in five WHO regions in one month, and human-to-human transmission has occurred outside Wuhan and outside China.

The Committee believes that it is still possible to interrupt virus spread, provided that countries put in place strong measures to detect disease early, isolate and treat cases, trace contacts, and promote social distancing measures commensurate with the risk. It is important to note that as the situation continues to evolve, so will the strategic goals and measures to prevent and reduce spread of the infection. The Committee agreed that the outbreak now meets the criteria for a Public Health Emergency of International Concern and proposed the following advice to be issued as Temporary Recommendations.

The Committee emphasized that the declaration of a PHEIC should be seen in the spirit of support and appreciation for China, its people, and the actions China has taken on the frontlines of this outbreak, with transparency, and, it is to be hoped, with success. In line with the need for global solidarity, the committee felt that a global coordinated effort is needed to enhance preparedness in other regions of the world that may need additional support for that.

Advice to WHO

The Committee welcomed a forthcoming WHO multidisciplinary technical mission to China, including national experts. The mission should review and support efforts to investigate the animal source of the outbreak, the clinical spectrum of the disease and its severity, the extent of human-to-human transmission in the community and in healthcare facilities, and efforts to control the outbreak. This mission will provide information to the international community to aid in understanding the situation and its impact and enable sharing of experience and successful measures.

The Committee wished to re-emphasize the importance of studying the possible source, to rule out ongoing hidden transmission.

The Committee also emphasized the need for enhanced surveillance in regions outside Hubei, including pathogen genomic sequencing, to understand whether local cycles of transmission are occurring.

The Committee would welcome strong leadership to engage in the discussion about proportionality in control measures, particularly with regard to potentially damaging travel and trade restrictions.

WHO should continue to use its networks of technical experts to assess how best this outbreak can be contained globally.

WHO should provide intensified support for preparation and response, especially in vulnerable countries and regions.

Measures to ensure rapid development and access to potential vaccines, diagnostics, antiviral medicines and other therapeutics for low- and middle-income countries should be developed.

WHO should continue to provide all necessary technical and operational support to respond to this outbreak, including with its extensive networks of partners and collaborating institutions, to implement a comprehensive risk communication strategy, and to allow for the advancement of research and scientific developments in relation to this novel coronavirus.

WHO should continue to explore the advisability of creating an intermediate level of alert between the binary possibilities of PHEIC or no PHEIC, in a way that does not require reopening negotiations on the text of the IHR (2005).

The Director-General declared that the outbreak of 2019-nCoV constitutes a PHEIC, accepted the Committee’s advice and issued this advice as Temporary Recommendations under the IHR (2005).

To the People’s Republic of China
Continue to:

Implement a comprehensive risk communication strategy to regularly inform the population on the evolution of the outbreak, the prevention and protection measures for the population, and the response measures taken for its containment.

Enhance rational public health measures for containment of the current outbreak.

Ensure the resilience of the health system and protect the health workforce.

Enhance surveillance and active case finding across China.

Collaborate with WHO and partners to conduct investigations to understand the epidemiology and the evolution of this outbreak and measures to contain it.

Share full data on all human cases.

Strengthen the efforts to identify a zoonotic source of the outbreak, and particularly the potential for ongoing circulation with WHO as soon as it becomes available.

Conduct exit screening at international airports and ports, with the aim of early detection of symptomatic travelers for further evaluation and treatment, while minimizing interference with international traffic.

To all countries

It is expected that further international exportation of cases may appear in any country. Thus, all countries should be prepared for containment, including active surveillance, early detection, isolation and case management, contact tracing and prevention of onward spread of 2019-nCoV infection, and to share full data with WHO. Technical advice is available on the WHO website.

Countries are reminded that they are legally required to share information with WHO under the IHR (2005).

Countries should place particular emphasis on reducing human infection, prevention of secondary transmission and international spread, and contributing to the international response though multi-sectoral communication and collaboration and active participation in increasing knowledge on the virus and the disease, as well as advancing research.

The Committee acknowledged that, in general, evidence has shown that restricting the movement of people and goods during public health emergencies may be ineffective and may divert resources from other interventions. Further, restrictions may interrupt needed aid and technical support, may disrupt businesses, and may have negative effects on the economies of countries affected by the emergencies.

However, in certain specific circumstances, measures that restrict the movement of people may prove temporarily useful, such as in settings with limited response capacities and capabilities, or where there is high intensity of transmission among vulnerable populations.

In such situations, countries should perform risk and cost-benefit analyses before implementing such restrictions to assess whether the benefits would outweigh the drawbacks. Countries must inform WHO about any travel measures taken, as required by the IHR. Countries are cautioned against actions that promote stigma or discrimination, in line with the principles of Article 3 of the IHR.

The Committee asked the Director-General to provide further advice on these matters and, if necessary, to make new case-by-case recommendations, in view of this rapidly evolving situation.

To the global community

As this is a new coronavirus, and it has been previously shown that similar coronaviruses required substantial efforts to enable regular information sharing and research, the global community should continue to demonstrate solidarity and cooperation, in compliance with Article 44 of the IHR (2005), in supporting each other on the identification of the source of this new virus, its full potential for human-to-human transmission, preparedness for potential importation of cases, and research for developing necessary treatment.

Provide support to low- and middle-income countries to enable their response to this event, as well as to facilitate access to diagnostics, potential vaccines and therapeutics.

Under Article 43 of the IHR, States Parties implementing additional health measures that significantly interfere with international traffic (refusal of entry or departure of international travellers, baggage, cargo, containers, conveyances, goods, and the like, or their delay, for more than 24 hours) are obliged to send to WHO the public health rationale and justification within 48 hours of their implementation. WHO will review the justification and may request countries to reconsider their measures. WHO is required to share with other States Parties the information about measures and the justification received.

The Emergency Committee will be reconvened within three months or earlier, at the discretion of the Director-General.

The Director-General thanked the Committee for its work.

Interview: Prof. Branko Milanovic, The Graduate Center, CUNY
Branko Milanovic is a visiting presidential professor at The Graduate Center, CUNY, and a senior scholar at the Stone Center on Socio-economic Inequality.

You discuss in your new outstanding book two variants of modern capitalism: “political capitalism” (China and Vietnam) and “liberal capitalism” (the West). What is the strong selling point of “political capitalism”? And how practical is it?

The strong selling point of political capitalism is efficiency. In its best form, political capitalism dispenses with a number of growth-inhibiting institutions (the need of numerous parties to agree to certain economic outcomes) and produces high economic growth.

If it could perform like that without other interfering elements, it would dominate liberal capitalism simply because richer countries are seen as models to emulate.

But one should not forget that similar view was held with respect to Soviet socialism some half-century ago: namely, that it would be able to achieve high growth rates despite local inefficiencies.

Thus, in assessing the potential of political capitalism, we have to take into account its weak points too. They are (as I argue in the book) systemic corruption which is due to the absence of the rule of law and its lack of full political consultation (lack of agency).

Both render the system less stable than liberal capitalism. Sufficient dissatisfaction can then lead to political disturbances and even to a change of regime.

China does not have a single ally. Why not? Is Beijing’s model of political capitalism (therefore) not transferable?

One has to distinguish political capitalism as a system from China as its main protagonist. China’s lack of allies is due to the suspicion that many of China’s neighbors have regarding China’s ultimate political ambitions, and to the fact that China comes to the world stage rather late, when most of the allies have already been “distributed”.

Furthermore, China has historically shown little inclination to export its model. This however may change in the years to come. Belt and Road Initiative and the creation of the Asian Infrastructure Investment Bank are the first indications that China may wish to play a more important global role.

To some extent these initiatives mirror the global initiatives that the United States implemented after the end of the Second World War. Chinese initiatives are also more serious (simply because there is more of an economic clout) than what the Soviet Union managed to do during the Cold War.

A separate issue is whether political capitalism may appeal to other countries. There, I think, the situation is clearer:

it might, as many countries in Asia (Vietnam, Laos, Burma, Singapore, even Malaysia), (Africa (Ethiopia, Rwanda, Algeria, Angola), Europe (Russia, Turkey, Belarus, Serbia, Montenegro, Hungary) and Central Asia exhibit features of political capitalism. The influence of China may not be so relevant as such; it is the system that the political elites in those countries might find appealing, not necessarily alliance with China.

Today’s globalization is accompanied by labor’s loss of bargaining power and the stagnation of wages. How do you think the third unbundling will affect the viability of the welfare state and human rights?

The third unbundling should in principle mimic a worldwide labor market. (That market is currently segmented by national borders since labor, unlike capital, cannot move freely.)

The power of labor in rich countries would be even further reduced–simply on account of an ever greater ability of less paid (and equally skilled) labor from poorer countries to compete.

The power of labor in poorer countries will augment. But dynamically, we must also take into account a steady increase in capital and a global stagnation of population.

These two developments must, over a longer time horizon, change the relative bargaining power of labor vs. capital. One can imagine that at some point in the future the relative abundance of capital might become such that the entrepreneurial function gets taken over by labor; that is, workers or single individuals organize production and simply borrow capital.

This is something that we already see in the start-up world. That does not mean that privately owned capital fails to get a return, but it could mean that it loses the role of entrepreneur that has historically been associated with ownership of capital.

Thank you very much

Branko Milanovic is visiting presidential professor and core faculty at the Stone Center on Socio-Economic Inequality at the Graduate Center, City University of New York. He was formerly lead economist in the World Bank’s research department.

His new book: “Capitalism, alone” is published by Harvard University Press in Sept 2019.

Tentative Stabilization, Sluggish Recovery?

JANUARY 20, 2020
By Gita Gopinath

In the October World Economic Outlook, we described the global economy as in a synchronized slowdown, with escalating downside risks that could further derail growth. Since then, some risks have partially receded with the announcement of a US-China Phase I trade deal and lower likelihood of a no-deal Brexit. Monetary policy has continued to support growth and buoyant financial conditions. With these developments, there are now tentative signs that global growth may be stabilizing, though at subdued levels.

In this update to the World Economic Outlook, we project global growth to increase modestly from 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent in 2021. The slight downward revision of 0.1 percent for 2019 and 2020, and 0.2 percent for 2021, is owed largely to downward revisions for India. The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels.

There are preliminary signs that the decline in manufacturing and trade may be bottoming out. This is partly from an improvement in the auto sector as disruptions from new emission standards start to fade. A US-China Phase I deal, if durable, is expected to reduce the cumulative negative impact of trade tensions on global GDP by end 2020—from 0.8 percent to 0.5 percent.

The service sector remains in expansionary territory, with resilient consumer spending supported by sustained wage growth. The almost synchronized monetary easing across major economies has supported demand and contributed an estimated 0.5 percentage point to global growth in both 2019 and 2020.

In advanced economies, growth is projected to slow slightly from 1.7 percent in 2019 to 1.6 percent in 2020 and 2021. Export dependent economies like Germany should benefit from improvements in external demand, while US growth is forecast to slow as fiscal stimulus fades.

For emerging market and developing economies, we forecast a pickup in growth from 3.7 percent in 2019 to 4.4 percent in 2020 and 4.6 percent in 2021, a downward revision of 0.2 percent for all years. The biggest contributor to the revision is India, where growth slowed sharply owing to stress in the nonbank financial sector and weak rural income growth. China’s growth has been revised upward by 0.2 percent to 6 percent for 2020, reflecting the trade deal with the United States.

The pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for underperforming emerging and developing economies such as Brazil, India, and Mexico.

Risks retreating but still prominent

Overall, the risks to the global economy remain on the downside, despite positive news on trade and diminishing concerns of a no-deal Brexit. New trade tensions could emerge between the United States and the European Union, and US-China trade tensions could return. Such events alongside rising geopolitical risks and intensifying social unrest could reverse easy financing conditions, expose financial vulnerabilities, and severely disrupt growth.

Importantly, even if downside risks appear to be somewhat less salient than in 2019, policy space to respond to them is also more limited. It is therefore essential that policymakers do no harm and further reduce policy uncertainty, both domestic and international. This will help to revive investment, which remains weak.

Policy priorities

Monetary policy should remain accommodative where inflation is still muted. With interest rates expected to stay low for long, macroprudential tools should be proactively used to prevent the build-up of financial risks.

Given historically low interest rates alongside weak productivity growth, countries with fiscal space should invest in human capital and climate-friendly infrastructure to raise potential output. Economies with unsustainable debt levels will need to consolidate, including through effective revenue mobilization. To ensure a timely fiscal response if growth were to slow sharply, countries should prepare contingent measures in advance and enhance automatic stabilizers. A coordinated fiscal response may be needed to improve the effectiveness of individual measures. Across all economies, a key imperative is to undertake structural reforms, enhance inclusiveness, and ensure that safety nets protect the vulnerable.

Countries need to cooperate on multiple fronts to lift growth and spread prosperity. They need to reverse protectionist trade barriers and resolve the impasse over the World Trade Organization’s appellate court. They must adopt strategies to limit the rise in global temperatures and the severe consequences of weather-related natural disasters. A new international taxation regime is needed to adapt to the growing digital economy and to curtail tax avoidance and evasion, while ensuring that all countries receive their fair share of tax revenues.

To conclude, while there are signs of stabilization, the global outlook remains sluggish and there are no clear signs of a turning point. There is simply no room for complacency, and the world needs stronger multilateral cooperation and national-level policies to support a sustained recovery that benefits all.

Watch the full CNN/Des Moines Register Democratic debate
By Erika Ryan, CNN

Updated 0745 GMT (1545 HKT) January 15, 2020

https://www.facebook.com/peoplepower2020/videos/457469791810491/

(CNN)Six presidential candidates took the stage in Des Moines, Iowa, for the last debate before voting begins in February. This debate’s lineup was controversial. It was the first all-white debate stage of this election season.

The start of the night was dominated by the crisis in Iran. While discussing the war in the Middle East, Sen. Bernie Sanders hit Joe Biden over his 2002 Iraq war vote.

As the second-largest consumer of energy in the world, America’s handling of the dual energy challenge will set the tone globally.
Sanders doubled down on denying telling Sen. Elizabeth Warren that a woman couldn’t win the presidency during a private 2018 meeting, which was revealed in a bombshell CNN report. Sen. Amy Klobuchar backed up Warren’s response by laying out a defense for the electability of a female President.

Health care reform has remained a hot-button issue throughout all seven debates so far. Candidates continued to spar over Medicare For All and the price tags for their proposed health care plans.

The climate crisis became a central talking point after former South Bend, Indiana, Mayor Pete Buttigieg listed the impending threats from the rapidly changing climate. Tom Steyer said he is “shocked” he is the only candidate currently in the race that calls climate change a No. 1 campaign priority.

The night came to a close as candidates reminded voters of why they were on stage and how they plan to defeat President Donald Trump.

The 2019 General Election proved to be huge disappointment for many young people, as younger cohorts were again outnumbered and outvoted in a UK election. James Sloam and Matt Henn explain how intergenerational cleavages deepened further in 2019, and how this reflects broader trends towards cosmopolitan values amongst younger citizens.

On the surface, the 2019 General Election result was a devastating defeat for younger voters. 18- to 24-year-olds again came out in strong support of Jeremy Corbyn’s Labour Party, but were heavily defeated. Over the past decade, young people in the UK have emerged as a cohesive political force – in strong support of Remain and Labour – but have suffered a string of electoral defeats. Yet these recent events must be contextualised within broader intergenerational trends both within and beyond the arena of electoral politics.

The 2017 General Election was a landmark contest in many ways, when age replaced class as the best predictor of voting intention. In our book, Youthquake 2017: The Rise of Young Cosmopolitans in Britain, we highlighted the huge surge in youth political engagement. First of all, there was a spike in youth turnout (amongst 18- to 24-year-olds), rising to the highest level for a quarter of a century. Second, we identified a dramatic rise in support for the Labour Party amongst young voters, founded on a growth in social liberal or ‘cosmopolitan values’. A historic 60% of the youngest cohort of voters supported the Labour Party.

The left-wing orientation of younger voters was rooted in the negative impact of austerity (cuts in public spending) on younger generations. The cosmopolitan turn was underpinned by relaxed attitudes towards immigration, and support for the idea of cultural diversity, and manifested itself in mass youth engagement in the 2016 EU referendum (when around three-quarters of young voters supported Remain).

Clearly, these trends are not common to all young people – they were most common amongst students, young women, and young ethnic minority citizens – but the 2016 and 2017 votes demonstrated the remarkable rise of young cosmopolitans as a political force. And, they can be observed in many other established democracies: from Prime Minister Jacinda Ardern in New Zealand, to international climate campaigner Greta Thunberg, to the youth leadership of pro-democracy protests in Hong Kong. As Norris and Inglehart brilliantly showed in Cultural Backlash, socially liberal values are increasing within younger generations (despite the recent success of authoritarian-nationalist parties and candidates).

Since the 2017 General Election, we have witnessed a further surge – a youthquake in youth participation in response to the deepening climate crisis. Politically engaged young people across the world have joined a wave of political protest against climate change, which also has electoral consequences. In the 2019 European Parliament election, the Green Party performed well in many countries – scoring 30% amongst the under 30s in Germany (as much as the next three parties put together). We see this as further evidence of the rise of young cosmopolitans. In the UK, YouGov figures during the election campaign found ‘the environment’ to be the second most important issue for adults aged 18–29 (Brexit 55%, the environment 42%) but only the sixth most important issue for over 60s.

In 2017, the gap between Labour and the Conservative Party amongst 18- to 29-year-olds was the largest on record – 60% to 27%, respectively. At the time, we believed that the scale of these intergenerational cleavages would not be equalled. Although Labour support amongst younger voters decreased significantly in 2018 and 2019, it strengthened somewhat during the course of the 2019 campaign – up from 38% in the YouGov’s 17–28 October 2019 poll, to 54% in YouGov’s final pre-election poll.

In 2019, the gap between Labour and Conservatives remained around 30 percentage points, as both lost around five percentage points (Figure 1). But youth support for progressive parties increased overall. The pro-Remain Liberal Democrats more than doubled their support and the Green Party also made significant gains amongst younger voters. On the other hand, support for the Labour Party has reached an all-time low amongst older voters – falling to under 20% amongst over 70s. So, if anything, the intergenerational divide has deepened.

It is clear that a good proportion of Labour’s youth support has been transferred along cosmopolitan cleavages to the Liberal Democrats and the Green Party. For young cosmopolitans who prioritised Brexit, Labour’s ambiguous position was trumped by the Liberal Democrat’s unequivocal support for Remain. For young cosmopolitans who prioritised the environment, voting for the Greens Party was the only real response to climate change. However, given the reality of the first-past-the-post electoral system and Labour’s commitment to a huge Green transition, the Green’s youth support was dramatically squeezed, from 15% in YouGov’s October poll to just 4% in the final poll.

As we explained in our book, the period effect of the youthquake rippled up the generations. And, we can see this when we compare the political allegiances of 18–29s with those of 30–39s. Both age groups now show majority support for Labour, Lib Dems, Greens and SNP (over 70% amongst 18–29s and over 60% amongst 30–39s), representing a politics that is progressive anti-austerity/left-ist, cosmopolitan, and at least ‘open-minded’ about retaining EU membership (Labour), if not entirely Remain-supporting LibDems, Greens and SNP.

Despite the obvious disappointment of many younger voters with the result of the 2019 General Election, they will continue to be engaged in politics by other means – from street demonstrations for Remain, to school strikes against climate change, to direct action through Extinction Rebellion. If the past decade has shown us anything, it is that youth politics is increasingly bubbling up through social movements and other digitally networked forms of citizen action.

________________

About the Authors

James Sloam is Reader in Politics at Royal Holloway University.

Matt Henn is Professor of Social Research at Nottingham Trent University.

INTERVIEW – PROF. SIMONE DEOS INTERVIEWS PROFESSOR L. RANDALL WRAY (Institute of Economics, Campinas, Unicamp, August 14th, 2018)

In this interview, Professor L. Randall Wray, one of the most prominent Post-Keynesian scholars, presents his intellectual trajectory, his main influences and makes some comments on the controversies raised by his contributions in the field of Monetary Economics. Professor Wray also talks about the problem of unemployment, and explains why a Job Guarantee policy, that is gaining momentum, would be adequate do deal with unemployment, a major problem in our societies.

Imagens: Alexandre Motta

November National Poll: Support for Impeachment Declines; Biden and Sanders Lead Democratic Primary

A new Emerson poll finds President Trump’s approval has increased in the last month with 48% approval and 47% disapproval, a bounce from 43% approval in the last Emerson National poll in October. Support for impeachment has flipped since October from 48% support with 44% opposing to now 45% opposed and 43% in support. The biggest swing is among Independents, who oppose impeachment now 49% to 34%, which is a reversal from October where they supported impeachment 48% to 39%.

The impeachment hearings are being watched or followed by 69% of voters. A plurality (26%) is getting their information from Fox News, 24% are getting their information from 1 of the 3 network stations (ABC, NBC, CBS), 16% are watching CNN, 15% MSNBC and 19% are going somewhere else for their information.

The president’s support in the Republican primary increased this month to 93% against primary challengers Bill Weld and Joe Walsh. Trump’s head to head matchups in the General Election against the top Democratic candidates have also tightened since October, now trailing Sanders by 1 point and leading his other three potential opponents.

The economy is the number one issue for Republicans (50%) and Independents (35%), while for Democrats, healthcare ranked highest at 25%. Overall, the economy continues to be the most important issue for one in three voters (34%) in deciding who they will vote for President. Healthcare is the second most important overall at 18%, followed by immigration and social issues at 10% each. The environment and impeachment were next at 7% apiece, with foreign policy being the least important issue for voters at 3%.

Senator Bernie Sanders is gaining momentum in the race for the Democratic nomination, increasing 2 points from October to at 27%. Former Vice President Joe Biden is also at 27%, holding steady from October. Senator Elizabeth Warren is in third place at 20%, down a point. Mayor Pete Buttigieg is at 7% and Andrew Yang rounds out the top 5 at 4%. All other candidates are below 4%. (MM, n= 468, +/- 4.6%)

Spencer Kimball, Director of Emerson Polling says that “Biden and Sanders continue to hold their bases, which should concern Warren, as she has waited for one of the front runners to slip these past few months – yet, their support seems to be crystalizing.”

Sanders continues to hold a strong lead with younger voters in the primary. Among voters under 50, Sanders received 37% support, followed by Warren with 22%, Biden with 15% and Yang with 7%. Among voters 50 and over, Biden continues to lead with 44% support, followed by Warren with 16%, Sanders with 13% and Buttigieg with 12%.

Voters also were asked how much respect they have for the police. 59% said they have a great deal of respect, 31% said they have some respect, and 10% have hardly any respect. This is in comparison to the Gallup poll which first asked this question in 1965 and found 71% had a great deal of respect, 22% had some, and 4% hardly any.

Biden supporters are found to have the most respect for police of the top three Democratic candidates, as 65% said a great deal, 26% said some and 10% said hardly any. Among Warren supporters, 36% said a great deal, 44% said some, and 20% said hardly any. And within Sanders supporters, 22% said a great deal, 44% said some and 34% said hardly any.

Sanders holds a lead among Hispanic or Latino voters with 36% support, followed by Biden with 23% and Warren with 22%. Sanders leads by a smaller margin with White voters with 29% support followed by Biden and Warren with 21%, and Buttigieg with 9%. Biden continues to lead with African American voters with 42% support, followed by Warren with 18%, Sanders with 17% and Buttigieg with 7%.

Looking at ideology, Sanders leads with very liberal voters with 45% support, followed by Warren with 23%, Biden with 16% and Buttigieg and Yang with 4%. Among somewhat liberal voters Warren and Sanders lead with 26%, followed by Biden with 23% and Yang with 8%. Among moderate/conservative voters, Biden leads with 39% support, followed by Sanders with 14% and Warren and Buttigieg with 12%.

Among those who supported Hillary Clinton in the 2016 primary, Biden leads with 40% support, followed by Warren with 19%, and Sanders and Buttigieg with 12%. Among those who supported Sanders in the 2016 primary, 48% still support him, followed by Warren with 23%, and Biden with 14%.

When asked if they would definitely vote for their candidate or if they could change their mind, Sanders supporters are the most committed to their preferred candidate as 71% of his supporters said they will definitely vote for him. 60% of Biden supporters, 46% of Warren supporters and 31% of Buttigieg supporters said the same.

When asked if they would support the Democratic nominee for president regardless if he or she was not their first choice in the primaries the majority of respondents said they would. 68% said they were very likely and 15% said they were somewhat likely. 93% of Buttigieg supporters reported that they were very likely to support the nominee. Followed with 80% for Warren supporters, and 77% of Biden supporters. The least likely to support the nominee of the top candidates were Sanders supporters, with only 61% reporting that they were very likely.

Two new candidates who entered the Democratic race since October have had little impact; Michael Bloomberg and Deval Patrick each take less than 1 percent of the vote. When asked if Bloomberg should enter the Democratic Primary, only 16% of Democratic primary voters think Bloomberg should. Asked the same question about 2016 nominee and former Secretary Hillary Clinton, 24% support Clinton running again.

Kimball thinks “the only angle and hope candidates like Bloomberg or Patrick have for the nomination – is a brokered convention, and while unlikely, the elimination of Super Delegates in 2020 makes it more possible though it hasn’t happened since 1952 for either party.”

Sixty-one percent (61%) of voters are watching or following the political protests in Hong Kong. A significant majority at 59% think Hong Kong should be independent from China, 7% said they should not be, and 34% were unsure. Asians as an ethnic group were the most in support of independence at 78% as compared with Hispanics, Whites and African Americans.

Caller ID

The National Emerson College poll was conducted November 17-20, 2019 under the Supervision of Assistant Professor Spencer Kimball. The sample consisted of registered voters, n=1,092, with a Credibility Interval (CI) similar to a poll’s margin of error (MOE) of +/- 2.9 percentage points. The data was weighted based on 2016 voter model of age, mode, party registration, ethnicity, and region. It is important to remember that subsets based on gender, age, party breakdown, ethnicity and region carry with them higher margins of error, as the sample size is reduced. Data was collected using both an Interactive Voice Response (IVR) system of landlines only (n=713) and an online panel provided by Amazon Turk (n=379).

Files: Full Results
Transparency Initiative

Mariana Mazzucato has demonstrated that the real driver of innovation isn’t lone geniuses but state investment. Now she’s working with the UK government, EU and UN to apply her moonshot approach to the world’s biggest challenges

By JOÃO MEDEIROS

Tuesday 8 October 2019

The idea that made Mariana Mazzucato one of the most influential economists in the world came to her in early 2011. It had been three years since the financial crisis of 2008 and, in the UK, the coalition government of Conservatives and Liberal Democrats had chosen to pursue a fiscal policy of austerity that was forcing councils to cut back public services and leading to a rise of homelessness and crime. “In my neighbourhood after-school clubs, youth centres, public libraries, policing and mental health budgets were all cut, affecting the most vulnerable people in society,” she recalls. “It was very sad.”

What particularly infuriated Mazzucato was the prevailing narrative that such cuts were necessary to boost competitiveness and innovation. In March 2011, Prime Minister David Cameron gave a speech excoriating civil servants working in government, labelling them “enemies of enterprise”. Later that year, in November, he visited the Truman Brewery in east London to announce his plans for a new technology cluster called Tech City. “They were hyping up entrepreneurs and dismissing everyone else,” Mazzucato says. “There was this belief that we didn’t have European Googles and Facebooks because we didn’t subscribe to Silicon Valley’s free market approach. It was just ideology: there was no free market in Silicon Valley.”

It was then that Mazzucato, an Italian-American economist who had spent decades researching the economics of innovation and the high tech industry, decided to look deeper into the early history of some of the world’s most innovative companies. The development of Google’s search algorithm, for instance, had been supported by a grant from the National Science Foundation, a US public grant-awarding body. Electric car company Tesla initially struggled to secure investment until it received a $465 million (£380 million) loan from the US Department of Energy. In fact, three companies founded by Elon Musk — Tesla, SolarCity and SpaceX — had jointly benefited from nearly $4.9 billion (£3.9bn) in public support of various kinds. Many other well-known US startups had been funded by the Small Business Innovation Research programme, a public venture capital fund. “It wasn’t just early research, it was also applied research, early stage finance, strategic procurement,” she says. “The more I looked, the more I realised: state investment is everywhere.”

Mazzucato included her findings in a 150-page pamphlet she submitted to UK policy think tank Demos. It was distributed to thousands of policymakers, and received coverage in daily newspapers. “It was obvious that it had touched a nerve,” she says. “The more I thought about it, the more I wanted to go straight to the core of the myths about innovation.” She decided to dissect the product that symbolised Silicon Valley’s engineering prowess: the iPhone.

Mazzucato traced the provenance of every technology that made the iPhone. The HTTP protocol, of course, had been developed by British scientist Tim Berners-Lee and implemented on the computers at CERN, in Geneva. The internet began as a network of computers called Arpanet, funded by the US Department of Defense (DoD) in the 60s to solve the problem of satellite communication. The DoD was also behind the development of GPS during the 70s, initially to determine the location of military equipment. The hard disk drive, microprocessors, memory chips and LCD display had also been funded by the DoD. Siri was the outcome of a Stanford Research Institute project to develop a virtual assistant for military staff, commissioned by the Defense Advanced Research Projects Agency (DARPA). The touchscreen was the result of graduate research at the University of Delaware, funded by the National Science Foundation and the CIA.

“Steve Jobs has rightly been called a genius for the visionary products he conceived and marketed, [but] this story creates a myth about the origin of Apple’s success,” Mazzucato writes in her 2013 book The Entrepreneurial State. “Without the massive amount of public investment behind the computer and internet revolutions, such attributes might have led only to the invention of a new toy.”

But a narrative of innovation that omitted the role of the state was exactly what corporations had been deploying as they lobbied for lax regulation and low taxation. According to a study by Mazzucato and economist Bill Lazonick, between 2003 and 2013 publicly listed companies in the S&P 500 index used more than half of their earnings to buy back their shares to boost stock prices, rather than reinvesting it back into further research and development. Pharmaceutical company Pfizer, for example, spent $139bn (£112bn) on share buybacks. Apple, which had never engaged in this type of financial engineering under Jobs, started doing so in 2012. By 2018, it had spent nearly one trillion dollars on share buybacks. “Those profits could be used to fund research and training for workers,” Mazzucato says. “Instead they are often used on share buybacks and golfing.”

That posed an urgent, more fundamental problem. If it was the state, not the private sector, which had traditionally assumed the risks of uncertain technological enterprises that led to the development of aviation, nuclear energy, computers, nanotechnology, biotechnology and the internet, how were we going to find the next wave of technologies to tackle urgent challenges such as catastrophic climate change, the epidemic of antibiotic resistance, the rise of dementia? “History tells us that innovation is an outcome of a massive collective effort – not just from a narrow group of young white men in California,” Mazzucato says. “And if we want to solve the world’s biggest problems, we better understand that.”

One of Mazzucato’s most enduring memories of her childhood is watching her father Ernesto, a nuclear fusion physicist at Princeton University, yelling at the news. She would say, “Dad, that’s just information,” to which he would reply: “That’s not information, that’s just what they’re trying to make you believe.” “A critical eye was the first thing my dad instilled in me, mainly just from watching him swear at the TV,” Mazzucato says. After the publication of The Entrepreneurial State, Mazzucato, an effervescent woman in her late forties, became a regular on current affairs programmes, often delivering devastating critiques of commonly held economic beliefs with eloquence. During a debate about the budget deficit on Newsnight in 2017, she berated Evan Davis for obsessing about it, explaining with exasperation: “Deficits matter, but what matters is what you’re spending it on.” When asked about Google’s tax avoidance by Jon Snow on Channel 4 News, she retorted: “You know what? That’s not the problem. The real problem is that people don’t know about the backroom deals that the Googles and the Apples and the Glaxos and the Pfizers have with the treasuries around the world on tax policy.”

That the message at the core of her book had resonated with a general audience didn’t necessarily surprise Mazzucato. “Silicon Valley entrepreneurs rarely acknowledged that they were standing on the shoulders of giants. It was a call to arms to innovators to sort of step up and acknowledge that,” says Saul Klein, co-founder of venture capital firm LocalGlobe. “There has been a very concerted effort, over the past 40 years, to build this intellectual construct that was sold to government and sold to society about the free market, supported by businessmen who were trying to tell a story that was advantageous to them,” says tech mogul Tim O’Reilly. “It’s now very clear that there’s something wrong with the story. We need a new theory to replace this, and Mariana is one of the economists trying to build a rival narrative.”

Mazzucato was surprised to find supporters inside the coalition government. “To be honest, given that I had mainly written academic things, there was no real risk that I sounded like a communist,” she says. That support came in the form of Business Secretary Vince Cable, who founded the Catapult centres to promote partnerships between scientists and entrepreneurs; and the “eight great technologies” investment announced by David Willetts, Minister for Universities and Science. “There’s been a gap in conservatism in offering a constructive account of the role of the state,” Willetts says. “Mariana provided an account of the role of government which was neither one of minimal government nor traditional socialism. I was able to say in government, hang on, this isn’t some experiment with left-wing socialism. This is what happens in Republican America.”

Soon, she became a regular visitor at Whitehall, advising both Cable and Willetts on policies such as the Small Business Research Initiative, which funded small and medium enterprises, and the patent box, which reduced the rate of corporate tax on income derived from patents (which she calls “the stupidest policy ever”).

Mazzucato knew that to influence politicians she would need to do more than just criticise. “The reason progressives often lose the argument is that they focus too much on wealth redistribution and not enough on wealth creation,” she says. “We need a progressive narrative that’s not only about spending, but investing in smarter ways.”

At the time, Mazzucato was increasingly interested in what she called mission-oriented organisations. The prime example was DARPA, the research agency founded by President Eisenhower in 1958 following the Soviet Union’s launch of Sputnik. The agency pumped billions of dollars into the development of prototypes that preceded commercial technology such as Microsoft Windows, videoconferencing, Google Maps, Linux and the cloud. In Israel, Yozma, a government-backed venture capital fund that ran between 1993 and 1998, supported more than 40 companies. In the UK, the Government Digital Service, launched in 2010, was behind the award-winning .gov.uk domain, saving the government £1.7bn in IT procurement. “When I use the word ‘state’ I am talking about a decentralised network of different state agencies,” she says. When such agencies are mission-oriented to solve problems and structured to take risks, they can be an engine of innovation.”

To Mazzucato, the epitome of the mission-oriented concept was the Apollo programme, the space programme designed to land Americans on the Moon and return them safely to Earth. Between 1960 and 1972, the US government spent $26bn (£21bn) to achieve precisely that. More than 300 different projects contributed, not only in aeronautics but in areas such as nutrition, textiles, electronics and medicine, resulting in 1,800 spinoff products, from freeze-dried food to cooling suits, spring tyres and digital fly-by-wire flight control systems used in commercial airplanes. The programme was also instrumental in kick-starting an industry for the integrated circuit, an unproven technology at the time, and other space projects such as the Space Shuttle and the International Space Station.

The modus operandi of these mission-oriented institutions provided Mazzucato with an alternative vocabulary that told a different story about the role of the state. “Economics is full of stories,” she says. “Words like ‘enabling’, ‘facilitating’, ‘spending’, ‘regulating’ – they create a story of the state as boring and inertial. It becomes a self-fulfilling prophecy. We need a new narrative to guide better policies.” These mission-oriented institutions were actively creating and shaping markets, rather than merely fixing them. They were ambitiously seeking high-risk directions for research and investment, rather than outsourcing and avoiding uncertainty.

Mazzucato’s collaboration with Whitehall was put on hold after the 2015 general election: Willetts stood down from his seat, and Cable lost his. By then, however, she had gone global – working with US Democrat Elizabeth Warren on public funding for health innovation, and advising Scottish First Minister Nicola Sturgeon on the development of a Scottish national investment bank. Mazzucato also launched a new type of economics department at University College London, the Institute for Innovation and Public Purpose (IIPP) – with the mission of training the next generation of civil servants in the theory of mission-oriented policies. “We want to them to think strategically and ambitiously for the public good and, in the words of Steve Jobs, to ‘stay hungry and stay foolish’,” she says.

In early 2017, Carlos Moedas, the European Commissioner for Research, Science and Innovation, offered her a position as special adviser, which she accepted. “I wanted the work to have an impact,” she says. “Otherwise it’s champagne socialism: you go in, talk every now and then, and nothing happens.” She suggested reframing the European research and innovation programme as Horizon Europe, a €100bn (£90bn) mission-oriented initiative due to start in 2020. Moedas gave her carte blanche to pursue the project.

The European Commission had traditionally framed its policies in terms of grand challenges, but Mazzucato’s concept of missions translates these into concrete projects: the Cold War was a challenge; landing on the moon was a mission. In February 2018, she published a report — titled Mission-Oriented Research & Innovation in the European Union — that defined five criteria missions should obey: they must be bold and inspire citizens; be ambitious and risky; have a clear target and deadline (you have to be able to unambiguously answer whether the mission was accomplished to deadline or not, Mazzucato says); be cross-disciplinary and cross-sectorial (eradicating cancer, for example, would require innovation in healthcare, nutrition, artificial intelligence and pharmaceuticals); and allow for experimentation and multiple attempts at a solution, rather than be micromanaged top-down by a government.

In the report, she illustrated what missions could look like with three hypothetical examples: a plastic-free ocean, 100 carbon-neutral cities by 2030, and cutting dementia by 50 per cent. The clean oceans mission could involve removing half of the plastic already polluting the oceans and reducing by 90 per cent the quantity of plastics entering them before 2025, through projects such as autonomous plastic collection stations or distributed nets. The solution would require inventing alternatives to plastic, designing novel forms of food packaging, and creating AI systems that could separate waste automatically. “These were just examples to tease out the difficulties,” Mazzucato says. “When people talk about missions, I always warn them: if this is something that makes you feel comfortable and happy and cosy, then you haven’t understood it, because it’s actually about fundamentally changing how we think about innovation.”

In March 2018, Mazzucato was contacted by two members of a progressive political movement in the US called Justice Democrats. She had no idea who Saikat Chakrabarti and Zack Exley were. “They were saying that they were trying to bring in a new wave of young politicians,” she recalls. “It was more curiosity from my side of hearing what’s going on in the US, because I had sort of lost touch.”

Chakrabarti and Exley had previously worked for Bernie Sanders’ 2016 presidential campaign. Chakrabarti then co-founded a political action committee with the aim of recruiting 400 working class candidates to run for Congress. “The idea was to create a new caucus within the Democratic Party,” Chakrabarti says. “We have people like Donald Trump in the White House, the Democratic Party leadership is acting as if it’s still 1995. The real divide is not between left and right. It’s between ambition and not ambition. We wanted an alternative vision of society that’s revolutionary. What was exciting about meeting Mariana is that there weren’t a lot of people in the US talking about those kinds of ideas.”

In London, at Mazzucato’s home in Camden, they told her that, in three months, they were hoping to have elected officials in Congress who would be willing to talk about big policy ideas, particularly around environmental change. One of their most promising candidates was a young bartender from New York. Her name was Alexandria Ocasio-Cortez.

In June 2018, Ocasio-Cortez defeated 10-term incumbent Joe Crowley in the Democratic primary, shocking the political establishment and in effect guaranteeing herself a place in Congress.

A month later, Mazzucato and Ocasio-Cortez spoke over Skype for the first time. Their conversation revolved around a new, ambitious industrial policy that the Justice Democrats were calling the Green New Deal. Mazzucato had been one of the originators, in collaboration with the economist Carlota Perez. “The most important thing is to stop thinking that we should sacrifice our way of life in order to solve our environmental problems,” Perez says. “We always thought of it as an opportunity to transform our society in a way that is also fairer and socially sustainable.”

To Mazzucato, a Green New Deal could be as bold as the 1969 moonshot. “When my book came out, Bill Gates invited me to come to Seattle,” she says. “He told me that he had followed the lead of the public sector when it came to IT. And now he was concerned that he couldn’t see the public leading in green in the same way.” A Green New Deal would involve, as she puts it, “greening the entire economy”, transforming not only the renewable energy industry but every single aspect of manufacturing. It would require tax incentives and disincentives to tackle high polluters and to encourage innovation around areas like waste and durability. It would require patient, long-term finance.

On September 11, Mazzucato and Ocasio-Cortez met face to face at the Firefly restaurant, the latter’s local hangout in Sunnyside, New York. They spoke about everything from the issue of public return for public investment to the notion of market co-creation versus market fixing. “She’s quite academic,” Mazzucato says. “It was much easier to talk to her about these things than it normally is with a politician who just wants the slogans, but doesn’t really get the details behind the message.”

Ocasio-Cortez also asked the economist for advice on how to get her message across to voters. In 2009, when Obama was proposing his healthcare reform, he had to assure people that government bureaucrats weren’t meddling. That was fine, but it didn’t capture the imagination of the public, Mazzucato said. He should have said that, actually, public-funded agencies were not just regulating – they were financing most of the innovation in the healthcare system. The pharmaceutical industry gets $32bn (£25bn) a year of innovation financing from the a state agency – the National Institutes of Health – condition free, and yet taxpayers still had to pay extortionate prices for life-saving drugs. It made no sense. “Get the language right,” Mazzucato told Ocasio-Cortez. “Otherwise, you’re just going to be a nice social democratic, boring lefty politician.”

In February 2019, Ocasio-Cortez released her first piece of legislation as a congresswoman: a 14-page resolution on the Green New Deal, which she called the “moonshot of our generation”. A few weeks later, during a congressional hearing on the drug industry, she asked Aaron Kesselheim, a professor of medicine from Harvard: “Would it be correct, Dr Kesselheim, to characterize the NIH money that is being used in development and research as an early investment? The public is acting as an early investor in the production of these drugs. Is the public receiving any sort of direct return on that investment from the highly profitable drugs that are developed from that research?”
“No,” Kesselheim replied.

One afternoon in May 2019, Mazzucato sat alongside David Willets in a packed lecture theatre at University College London. She stood up and introduced herself to the audience. Then she pointed towards a stack of 100-page yellow reports on the desk. The cover read “A Mission-Oriented UK Industrial Strategy”. “This is what we’ve been doing for the past year,” she reflected. “We’ve been working really hard and this is the outcome.”

Almost exactly a year before, then British Prime Minister Theresa May had delivered a speech at Jodrell Bank Observatory about the government’s new industrial strategy, which was centered around four grand challenges: clean growth, mobility, healthy ageing and AI. May announced one mission for each challenge: halving the energy use in new buildings by 2030; using AI to transform treatment of chronic disease; extending healthy, independent life to five extra years; being at the forefront of zero-emission vehicle manufacturing by 2040. These had already been a direct outcome of Mazzucato’s influence with the then business secretary, Greg Clark. Months before, Clark had contacted Mazzucato to learn more about mission-oriented policies. He later asked her to co-chair a commission with Willets and coordinate cross-departmental mission teams in Whitehall, inspired by DARPA.

Over a year, the commission met every month. “We found that putting into practice Mariana’s five criteria for what missions should be a lot harder than expected,” Rainer Kattel, IIPP’s deputy director, says.

For instance, the commission deemed the mission for the future of mobility as unambitious and too siloed within the Department of Transport. “That target was going to happen anyway,” Kattel says. “We went back to them and said that it was too low-hanging. The biggest surprise was that they were very open to our criticism.”

Regarding the healthy ageing mission, they struggled with the definition of “healthiness” “How do you even measure that?” Mazzucato asks. Initially, they considered the scenario of an Alzheimer’s patient who is completely independent in the home and assisted by cutting-edge technologies. But the mission leader didn’t like the idea. “Why obsess about independence?” She said. “How about nurturing co-dependency instead?”

On the future of mobility, the musician Brian Eno, one of the Institute’s advisors, questioned the assumption that getting from A to B quicker was the goal. “How about going slower and appreciating life?”

The year-long collaboration between the IIPP and Whitehall included a series of workshops around the theory of mission-oriented policies, delivered by Mazzucato and her team to civil servants in Whitehall. “These were, after all, people that had been constantly told to get out of the way and stop stifling innovation. It can get depressing,” Mazzucato says. “Going in and giving them a different narrative about ambitious missions and dreaming the big thing, their eyes would just light up. Sometimes I felt like a life coach.”

Some of those conversations, however, were challenging — particularly regarding the policy appraisals conducted by the Treasury. “As the Chancellor of the Exchequer, all across government 20 people come to you with different policy proposals that you can spend the money on. How do you decide which one will have the biggest impact or is the most worthy?” says George Dibbs, the head of industrial strategy at IIPP. The standard method of appraisal, used by governments around the world, is cost-benefit analysis, in which a simplistic quantitative estimate is made about how much a policy will cost and how much money it will generate. “It’s like the old mentality from the Vietnam war: as long as the enemy’s body count is higher, we can ignore all other variables.” Kattel says. “That’s why, for instance, some new drugs are not paid for by the NHS because not enough people can benefit from them. Bureaucrats have really lost that idea that they are somehow responsible for the people on the street.”

Cost-benefit analysis is not suitable to evaluate mission-oriented policies, which are inherently risky and uncertain, and aimed at creating new markets rather than fixing existing ones. As Mazzucato likes to point out, we would never have walked on the Moon if the Apollo Program had been evaluated via cost-benefit analysis.

At the launch of the report, Mazzucato told the audience a story to illustrate her point: in the 1500s, the Jesuits had a system that involved opening a cash box by turning two keys simultaneously — one belonged to the accountant, the second to the rector. This meant that, to open the coffer, “you had to have a vision but you also had to think about the budget,” she concluded. “I know it sounds strange, but that’s what’s missing.”

One afternoon in late June, Mazzucato sat pensively at her office in central London. A neon sign spelling “the value of everything” — a present from her husband in celebration of her second book, which has this phrase as its title — adorns one of the walls. Large posters hang on the walls depicting Mazzucato’s complex mission diagrams. Two days after the launch of the industrial strategy report, Theresa May had resigned as prime minister, potentially derailing the entire industry strategy policy and putting Mazzucato’s work with the government, once again, on hold. “Sometimes you either just want to go crawl back in bed or you fight back harder,” she says. “I tend to always do the latter.”

Mazzucato sees her work as a battle of ideas. “So much bullshit happens in the name of innovation,” she says. “As an advisor, its critical to follow up and put in the time and make the whole argument again and help people get the details right.” Sometimes, when she’s addressing an audience, she thinks to herself, ‘Oh my god, I’ve said this so many times.’ “My dad makes fun of me,” she says. “He tells me ‘Don’t people realise that you keep telling them the same thing?’ But the audience is different and the message reminds heretics in many circles.”

She laughs, because she does realise – but it’s a necessity. Recently, at the European Investment Bank, she had to tell an audience of economists: “Please never write the word ‘de-risking’ again in any of your reports, because that’s not what you’re doing. You took risks and you should able to say it openly – kind of coming out of the closet about it.”

At a talk at Nasa, where Mazzucato has been working as part of a group studying the low-Earth orbit economy, she urged them to recover the ambition befitting an agency of its calibre. “I don’t think many people realize that Novartis, one of the richest pharmaceutical companies in the world, is working for free on the International Space Station,” she says. “Who thought that up? Charge them. Or make sure the relationship is symbiotic, not parasitic.“

In May, the European Parliament voted and approved Mazzucato’s mission-oriented proposal for the Horizon Europe programme. After a lengthy consultation period, five mission areas were chosen: adaptation to climate change; cancer; healthy oceans, seas, coastal and inland waters; climate-neutral and smart cities; and soil health and food. The European Commission will now appoint a mission board of 15 experts for each area. They will be responsible for identifying the first specific missions, following Mazzucato’s criteria. “Moedas jokingly offered me the role of chief muse of missions,” she laughs. “That report was the most important thing I’ve written. It’s now a legal instrument, it can’t be undone unless another vote is had.” She pauses. “I’ve influenced politicians, but having a parliament vote on something I wrote is just fantastic,” she continues. “That’s what I want: to bring about change.”

BRUSSELS (Reuters) – Boeing is set to face a EU antitrust investigation of up to five months into its bid for a controlling stake in the commercial aircraft arm of Brazil’s Embraer, people familiar with the matter said on Monday.

The deal, marking the biggest shift in commercial aerospace in decades, would reshape a global passenger jet duopoly and reinforce Western planemakers against newcomers from China, Russia and Japan.

It would give Boeing a foothold in the lower end of the market, enabling it to better compete with the CSeries jets designed by Canada’s Bombardier Inc and backed by European rival Airbus SE.

The deal values the Embraer unit at $4.75 billion.

The European Commission, which has set an Oct. 4 deadline for its preliminary review of the deal, did not respond to a request for immediate comment.

The EU competition enforcer will launch a full-scale investigation following the end of its review, which could take up to five months and raises pressure on Boeing to offer concessions to address competition concerns.

The Commission recently quizzed suppliers and rivals on the deal, indicating concerns about the concentration in the market.

They were asked about the impact of the reduced number of players, from seven to six and from three to two in various segments, a person with direct knowledge of the deal said.

No immediate comment was available from Boeing or Embraer.

Aviation analysts say there is limited overlap in the number of seats between Boeing’s 737 family and Embraer’s smaller E2 jets.

There is slightly more overlap between Airbus’s portfolio and Bombardier’s CSeries program which the European planemaker bought last year, they add.

Reporting by Foo Yun Chee; editing by Tim Hepher

RELATED COVERAGE
Shares in Brazilian planemaker Embraer fall more than 1% on EU antitrust probe

A Group of International Jurists and Scholars Condemns the Conviction of Former Brazilian President Lula as Unfair and Politically Motivated. A Group of Brazilian Prosecutors Defend Their Conduct, and the Conviction. Read Their Dueling Open Letters Here!

Posted on September 12, 2019 by Matthew Stephenson

One of the biggest stories in the anticorruption community over the last few months—and one that we’ve featured extensively here on GAB—has been the controversy swirling around the so-called “Lava Jato” (Car Wash) anticorruption operation in Brazil, in light of private text messages among the Lava Jato prosecutors, and between prosecutors and then-Judge Sérgio Moro. These messages were stolen from hacked cell phones and provided to The Intercept, which published a series of stories based on them and also shared them with other media outlines. Critics, including the Intercept journalists, have argued that these messages show unethical conduct, political bias, and due process violations by the Lava Jato prosecutors and by Judge Moro, and that this alleged misconduct demonstrates that the convictions of many of the Lava Jato defendants—most importantly, former President Lula—ought to be thrown out. Others remain unconvinced by the most serious accusations of political bias, and find many of the allegations of misconduct questionable. (For my own, somewhat evolving take on these issues, see here and here, and for a useful debate among Brazilian legal experts, see here.)

Recently, a group of international jurists and scholars weighed in, writing an open letter in which they declared their view that, in light of the evidence revealed by the leaked text messages, Lula did not receive a fair trial and was the victim of political persecution. (An English translation of the letter is available here; the original Portuguese text can be found here.) In response, a group of 20 Brazilian Federal Prosecutors wrote a reply to the open letter’s signatories, arguing that the allegations in the open letter were based on an inaccurate, incomplete, or distorted representation of the facts. The prosecutors’ response letter has not previously been published, but the prosecutors have provided me with that letter and given me permission to post a slightly-revised version here.

I have my own views on the merits of the underlying dispute, which I may go into in a later post, but here I just want to present the two letters side by side, in the hope that this will be helpful to others who have been following this controversy and are trying to better understand the complicated questions at issue. I’ll present this in point-counterpoint format, starting with the English translation of the original open letter (with some corrections to apparent errors or ambiguities in the original translation linked above), and then presenting the prosecutors’ rebuttal:

POINT: Lula Was Not [Fairly] Tried, Was the Victim of Political Persecution

We, lawyers, jurists, former ministers of justice and former members of Supreme Courts of Justice from various countries, would like to call for consideration the judges of the [Brazilian] Supreme Court and, more broadly, the public opinion of Brazil for the serious [flaws in] the proceedings filed against Lula.

The recent revelations by journalist Glenn Greenwald and staff at The Intercept news site, in partnership with Folha de Sao Paulo and El País newspapers, Veja magazine and other media, have appalled all legal professionals. We were shocked to see how the fundamental rules of Brazilian due process were violated without any shame. In a country where justice is the same for everyone, a judge cannot be both judge and party to proceedings.

Sérgio Moro not only conducted the process partially, he led the prosecution from the outset. He manipulated the mechanisms of [cooperation agreements with prosecutors], directed the work of the prosecutor, demanded the replacement of a prosecutor he was not satisfied with, and directed the prosecution’s communication strategy.

In addition, [he wiretapped] Lula’s lawyers and decided not to comply with the decision of a judge who ordered Lula’s release, thus grossly violating the law.

Today, it is clear that Lula [did not receive] a fair trial. It should be noted that, according to Sergio Moro himself, [Lula] was convicted [based on] “undetermined facts.” A businessman whose testimony gave rise to one of the former president’s convictions even admitted that he was forced to construct a narrative that would incriminate Lula under pressure from prosecutors. In fact, Lula has not been tried [fairly], [and he] was and is the victim of political persecution.

Because of these illegal and immoral practices, Brazilian justice is currently experiencing a serious credibility crisis within the international legal community.

It is indispensable that the judges of the Federal Supreme Court fully exercise their functions and [act as] the guarantors of respect for the Constitution. At the same time, we expect the Brazilian authorities to take all necessary steps to identify those responsible for these very serious procedural deviations.

The fight against corruption is today an essential issue for all citizens of the world, as is the defense of democracy. However, in Lula’s case, not only was justice instrumentalized for political ends, but the rule of law was clearly disrespected in order to eliminate the former president from the political dispute [i.e., the 2018 presidential election].

There is no rule of law without due process of law. And there is no respect for due process when a judge is not impartial but [instead] acts as head of the prosecution. In order for the Brazilian judiciary to restore its credibility, the Federal Supreme Court has a duty to release Lula and nullify these convictions.

List of Signatories

Bruce Ackerman, Sterling Professor of Law and Political Science, Yale University
John Ackerman, Professor of Law and Political Science, National Autonomous University of Mexico
Susan Rose-Ackerman, Emeritus Professor Henry R. Luce of Jurisprudence, Yale University School of Law
Alfredo Beltrán, Former President of the Constitutional Court of Colombia
William Bourdon, lawyer registered with the Paris Bar
Pablo Cáceres, former president of the Colombian Supreme Court
Alberto Costa, Lawyer, Former Minister of Justice of Portugal
Herta Daubler-Gmelin, lawyer, former Minister of Justice of Germany
Luigi Ferrajoli, Professor Emeritus of Law, Rome Three University
Baltasar Garzón, lawyer registered with the Madrid Order
António Marinho e Pinto, lawyer, former president (president) of the Portuguese Bar Association
Christophe Marchand, lawyer registered with the Brussels Order
Jean-Pierre Mignard, lawyer registered with the Paris Bar
Eduardo Montealegre, former president of the Constitutional Court of Colombia
Philippe Texier, Former Judge, Honorary Counsel of the Court of Cassassan of France, Former President of the United Nations Economic and Social Council
Diego Valadés, Former Judge of the Supreme Court of Justice of Mexico, Former Attorney General of the Republic
Gustavo Zafra, former ad hoc judge of the Inter-American Court of Human Rights

***

COUNTERPOINT: The Prosecution of Lula Was Fair and Unbiased, and the Claims to the Contrary in the International Jurists Open Letter Are Based on an Inaccurate Representation of the Facts

As Federal Prosecutors and Federal Circuit Prosecutors of the Car Wash Task Force, together with Federal Circuit Prosecutors acting in related cases before the Federal Circuit Court for the 4th Region, we direct this letter to the jurists who issued a statement alleging that Lula was a victim of political persecution, in order to vehemently refute it. We would like to present the following facts, which we believe were either not brought to the attention of the letter’s signatories, or were presented in a distorted way. We note that the misjudgments about the assumptions and the conclusions reflected in that statement do not hinder the deep respect we hold for those who signed the letter.

1. There are eight criminal cases against former President Lula underway in three different Federal Courts, all of which are handled by independent prosecutors and judges who are selected by public competitive examinations and hold no party ties.

Former President Lula is formally accused in eight criminal cases in Brazilian courts. Only three of these cases are docketed in the Federal Court of Curitiba (where Judge Moro previously served).

The three criminal cases handled by the 13th Federal Court of Curitiba concern corruption and money laundering, and they are part of the Car Wash Operation. In these cases, the former president is accused of contributing to the massive corruption and embezzlement scheme managed by directors that he appointed to Petrobras, the state-owned oil company, with the assistance of members of his political party and the other parties in the governing coalition. In addition, in these three cases former President Lula has been accused or convicted of receiving from contractors (directly or indirectly) improper benefits worth BRL 19,749,964.70 (USD 4,937,491.18). Of these the three criminal proceedings against the former President in Curitiba, Judge Sergio Moro was the presiding judge in only one of them. In the second case, he was convicted by Judge Gabriela Hardt. The third case has not yet been resolved, but it is at an advanced stage, and will be decided by Judge Luiz Antonio Bonat.

The former president is also a defendant in four criminal cases brought before the 10th Federal Court of Brasília. The first one is part of Operation Janus, which is investigating bribery and money laundering related to the state-owned development bank BNDES’s financing of construction projects in Angola on behalf of the contractor Odebrecht. In the second case, which stems from Operation Zelotes (an investigation into crimes related to purchases of Swedish jet fighters and tax subsidies for automotive companies), the former president is accused of influence peddling, corruption, money laundering, and forming a criminal organization. In the third ongoing case against the former president in Brasilia, originally presented by the former Prosecutor General, Lula has been charged with forming a criminal organization. These charges were originally presented before the Supreme Court and then referred to the first instance court. The fourth case in Brasilia, also brought by the Office of the Prosecutor General and then referred to the lower court, alleges that former president Lula received from the contractor Odebrecht a commitment to offer USD 40 million in support of his political party.

Finally, in the Federal Court of Sao Paulo, the former president is a defendant in another investigation related to businesses of the Brazilian group ARG in Equatorial Guinea. The accusation is based on the fact that the former president received BRL 1 million in bribes and acted to launder this money.

There are, therefore, accusations of serious crimes that had their processing admitted by three different Federal Courts, under distinct Circuit Courts. These accusations were made by different prosecutors working in the lower courts in Curitiba, Sao Paulo, and Brasilia, as well as by the Prosecutor General.

Judges and prosecutors of first instance in Brazil obtain their positions through competitive examinations. Judges and prosecutors are also forbidden to engage in political partisan activity, a prohibition that also applies to the Prosecutor General. Each prosecutor and judge is fully independent. Unfounded charges can be reversed in three courts above the first instance through appeals and habeas corpus.

2. There are two criminal convictions against the former president, each delivered by a different judge. The first of these convictions has already been affirmed by seven judges of higher instances, five of whom were appointed by Lula himself or by his successor and co-partisan Dilma Rousseff.

Two of the eight cases mentioned above (both of them related to the Car Wash Operation in Curitiba) have already been tried, and in both cases Lula was convicted. In the first case, the presiding judge was former federal judge Sergio Moro; in the other, the presiding judge was Gabriela Hardt. In Brazil, judges must base their decisions on the facts, the evidence, and the law. In both of these cases, the judge’s detailed examination of the cases was demonstrated by the lengthy and detailed opinions, each of which was over a hundred pages.

The first of these cases (the one in which Judge Moro was the presiding judge) has already been affirmed on appeal by a three-judge panel of the Federal Circuit Court for the 4th Region. Different and independent Federal prosecutors (not the same ones who tried the case before the court of first instance) work before this Circuit Court, and they could have disagreed with the first instance prosecutors. The Circuit Court unanimously affirmed Lula’s conviction. Lula was allowed a second appeal, and this time the case was examined by the Superior Court of Justice (STJ), where four judges once again unanimously upheld the conviction.

In other words, in addition to the two first-instance judges (Judge Moro and Judge Hardt) convicting the former president of corruption and money laundering in separate trials, the first of those convictions has already been affirmed by seven judges on two appellate courts. (The appeals in the second case have not yet been resolved.) And again, of these seven higher-court judges, five were appointed by former President Lula himself or by his successor and co-partisan, former President Dilma Rousseff.

3. The Car Wash Task Force in Curitiba has numerous prosecutors, with no strict hierarchy and with different personal electoral preferences. All of these prosecutors concluded that the cases brought against Lula were fair and legitimate.

The Car Wash Task Force that works before the 13th Federal Court of Curitiba is composed of 15 Federal Prosecutors. (It originally consisted of six Federal Prosecutors, who joined the Task Force before there was evidence of that politicians and political parties were implicated.) Prosecutors in the Task Force have always been chosen for their competence, dedication, and ability to work in groups. None of these prosecutors has any partisan political connection, and their personal political preferences differ. Many of them in fact have voted for former president Lula and his political party in the past, and some voted for his political party in the most recent elections. Furthermore, although the Task Force has a coordinator, there is no boss and no hierarchy among the Task Force prosecutors. The most important decisions are made collectively. The decision to bring charges against former President Lula was a consensus among all members, based on the facts, the evidence, and the law. Moreover, given that each act or decision in the Car Wash Case is subject to intense public scrutiny from the beginning, there is no reason for non-partisan career prosecutors to jeopardize their careers, their investigations, and the very livelihoods of their families by manipulating investigations in order to benefit or prejudice a particular defendant for political reasons.

4. No evidence supports the thesis of a broad political conspiracy, and such a conspiracy is implausible in a bureaucratic apparatus involving more than a hundred people.

As noted above, the Car Wash Task Force includes 15 independent prosecutors with diverse political views and electoral preferences. Furthermore, when one includes the civil servants who work alongside with the prosecutors, over 60 people work in the Task Force directly. In addition, the Task Force also works with dozens of federal police officers (agents, officials, experts, registrars, etc), officers from the Brazilian Federal Revenue Office, and civil servants from other agencies. More than a hundred public servants in total are involved. With all due respect to the distinguished jurists who signed the open letter, the theory that there would be an organized political conspiracy in such a broad technical-bureaucratic apparatus–composed of over a hundred diverse people, involving so many accusations in different places, made and reviewed by independent agents, including judges appointed by President Lula or President Dilma–has no basis in reality.

5. The Car Wash Operation has led to the arrest, prosecution, and conviction of politicians from across the political spectrum.

People from different political parties have been prosecuted and convicted in the Car Wash Operation. The Petrobras scheme, on which the Curitiba investigations are focused, involved not only the “Partido dos Trabalhadores (PT)” (the party of former presidents Lula and Dilma), but also other parties that were part of the governing coalition at the relevant time, such as the “Partido do Movimento Democrático Brasileiro (PMDB)” and the “Partido Progressista (PP)”. Several powerful politicians linked to these latter parties have been accused, including Eduardo Cunha (PMDB) (one of PT’s main political antagonists who was one of the principal organizers of the impeachment of former President Dilma), Senator Romero Jucá, (PMDB), former Senator Edison Lobão (PMDB), former Rio de Janeiro Governor Sergio Cabral (PMDB), former Federal Deputy Pedro Correa (PP). Pedro Correa has been convicted and imprisoned, while Sergio Cabral and Eduardo Cunha were arrested in 2016 and are still in prison.

The Car Wash Task Force has also already initiated civil administrative misconduct cases, based on the corrupt practices, against two of these parties, the PP and the PMDB, and also against a third party, the PSB. More cases against other parties are under consideration.

The leniency agreement that the task force in Curitiba reached with the contractor Odebrecht involved 415 politicians from 26 parties. However, the Supreme Court ruled that cases that did not relate to Petrobras should be referred to other courts, which is what the Task Force then did.

6. The criminal charges brought by the Car Wash Task Force, against 450 defendants, are backed by extensive documentary evidence.

The charges brought by the Car Wash Task Force are supported by substantial evidence, including documents that reveal the operation of a cartel, bribery notices, banking transactions in Brazil and abroad, and blockages of funds. (A single former Petrobras manager had about USD 100 million in Swiss accounts.)

This documentary evidence is complemented by witness testimony, much of it from cooperating defendants. But it’s important to emphasize that the testimony of cooperating defendants is taken only as a starting point for investigations, and is never treated as conclusive. Each potential cooperator is always accompanied by a lawyer and always receives the instruction that they must speak the truth, together with the warning that lies or omissions can result in the termination of the plea bargain agreement and the withdrawal of associated benefits. More than ten companies and more than 150 individuals have agreed to cooperate with prosecutors, and these cooperating defendants have provided material evidence and testimony that has led to a great expansion of the investigations, leading to the prosecution of about 450 people and the return of more than BRL 14 billion to the public coffers.

7. The international jurists’ open letter is based on false premises.

Having made these important clarifications, it is now appropriate to present information that makes us believe that the jurists who signed the letter were misinformed with respect to certain key facts, and that their analysis of the case may have been impacted by distortions promoted by those with an interest in defending Lula and discrediting the Car Wash Operation.

7.1. The allegation that Judge Moro manipulated cooperation agreements is false.

Cooperation agreements (or plea bargains) in Brazil have always been negotiated by the Federal Prosecution Service and the defendant. Each agreement involves a series of meetings with potential cooperating defendants alongside their lawyers, often exceeding ten meetings per case. Most of the agreements are made in conjunction with the Office of the Prosecutor General because they implicate agents with so-called privileged jurisdiction [a Brazilian legal rule that provides special procedural rules for certain high-level public officials], which means that the final decision to approve a cooperation agreement usually rests with the Prosecutor General. In the Car Wash Operation, the Federal Prosecution Service negotiated and signed more than a hundred cooperation agreements, usually holding more than a dozen meetings were held for each negotiation receiving the final approval of the Prosecutor General. The claim that the presiding first-instance judge could manipulate the negotiation of these agreements therefore has no basis in reality, and is not supported by any empirical evidence. Given the process just described, such manipulation would face insurmountable obstacles.

7.2. The allegation that Judge Moro demanded the replacement of a prosecutor is also false.

At no time did Judge Moro demand or even request the replacement of a prosecutor. The text message on which this false allegation is based in fact recommended better training and preparation. The text message in question read as follows: “Dear Sir, your colleague Laura Tessler is an excellent professional, but for questioning at the hearing, she is not doing very well. I’m sorry to say this, but try to discreetly give her some advice, for her own good. A training course would do her well. Please keep this message private.” We suspect that most of the signatories to the open letter never saw the actual text message, but were instead misled by an distorted characterization of its content.

Furthermore, the prosecutor in question–who is a qualified and competent professional–was not in fact replaced. Rather, she attended, on the morning of the supposed message (March 13, 2017), a hearing in a criminal case against former Minister Antonio Palocci (case no. 5054932-88.2016.404.7000). In addition to continuing to hold the hearing in the afternoon of the same day, that prosecutor participated in all subsequent stages of this case, on the following dates: March 14, 2017, March 15, 2017, March 21, 2017, and March 22, 2017. She also remained responsible for all other cases she was handling. The case involving the former President Lula, on the other hand, was handled from the beginning by two other prosecutors, Júlio Noronha and Roberson Pozzobon, who were responsible for nearly all audiences from the beginning to the end, although other prosecutors may have occasionally contributed for some acts and hearings of the case. Therefore, no substitution of prosecutors ever occurred in these cases.

7.3. The allegation that Judge Moro authorized an illegal wiretap of a Lula’s lawyer is based on a misrepresentation.

It is true that Judge Moro authorized a wiretap of the phone of lawyer Roberto Teixeira. However, this is not because Mr. Teixeira was Lula’s lawyer, but because Mr. Teixeira was himself under investigation for actively taking part in corruption and money laundering crimes. Indeed, he was ultimately charged with these offenses (criminal proceedings number 5063130- 17.2016.404.7000 and number 5021365- 32.2017.404.7000, held before the 13th Federal Court in Curitiba). In one of these criminal proceedings, he was convicted of money laundering.

The wiretap on the phone in Mr. Teixeira’s office was therefore legal because he was himself the subject of a criminal investigation. Moreover, when the wiretap was authorized, it was not clear that his office was a law firm. According to documentary evidence in the record, the phone line in question was listed in the Federal Revenue Service’s records as the landline of a company called LILS Lectures (Lula’s company); this is the information that was provided by the company itself to the Revenue Service, and there was no indication, when the wiretap was approved, that the phone in question belonged to a law firm. Moreover, the police authority responsible for executing the wiretaps did not forward any of the telephone conversations to the Federal Prosecution Service or to the courts, as they were not considered relevant.

Thus, the allegation that Judge Moro authorized a wiretap of Lula’s lawyer, though technically correct, is seriously misleading. Moreover, the assertion that this wiretap was illegal is false, as is the insinuation that the wiretap was for purposes of interfering with Lula’s defense or his right to a fair trial. We again suspect that the jurists who signed the open letter were not made aware of the full context.

7.4. The allegation that Judge Moro refused to comply with a judicial order for Lula’s release is also misleading.

It is true that an appellate judge of the Circuit Court, responding to a habeas corpus petition, issued an order that Lula should be released, and that Judge Moro did not immediately comply with this order. Instead, Judge Moro sought further review. The order in question, which had been issued by an appellate judge on duty during a weekend, was reversed later that same same day by the appellate judge in charge of the case, and that second decision denying the release was later confirmed by the President of the Circuit Court.

Furthermore, this incident led to an investigation, requested by the Prosecutor General, of the appellate judge on duty, Rogerio Favretto, who had issued the original release order. Judge Favretto had been affiliated with Lula’s party for over 20 years and had held several official government positions in that party’s governments. And as was observed at the time, Judge Favretto, as the appellate judge on duty (over the weekend), was not legally competent to issue a release order on a habeas corpus petition, because the case had already been decided by the Circuit Court; therefore, under Brazilian law, any habeas corpus release order would have to be issued by the Superior Court of Justice. In fact, according to the Attorney General, Judge Favretto’s order to release Lula, in response to a petition filed over the weekend, was part of a “meticulously orchestrated [scheme], to the detriment of the prevailing law, to achieve the release of the defendant, which had been denied by lawful and competent procedural means.”

In other words, while it’s true that Judge Moro did not immediately order the release of Lula after Judge Favretto’s decision, Judge Moro’s decision was endorsed by two appellate judges of the Circuit Court, including the Court’s president. Given the illegality of Judge Favretto’s order, Judge Moro’s choice to seek review of that order before complying was correct. And in fact it is Judge Favretto’s conduct in this incident, not Judge Moro’s, that has been legally questioned.

7.5. The allegation that Lula’s conviction was based on the testimony of a defendant who was pressured into cooperating is false.

The international jurists’ letter asserts that “[a] businessman whose testimony gave rise to one of the former president’s convictions even admitted that he was forced to construct a narrative that would incriminate Lula under pressure from prosecutors.” This claim is a reference to the cooperating witness Carlos Paschoal and the conviction of the former president Lula by Judge Gabriela Hardt in the case involving the Atibaia country property.

First, the allegation that this individual’s testimony led to Lula’s conviction is untrue. As mentioned previously, the testimony of the cooperating defendants is always analyzed with caution, and is never by itself sufficient to support a conviction. Former President Lula was convicted of having received bribes through the renovation of a country house carried out by the company Odebrecht. In this case, the conviction was based on extensive evidence and did not depend solely on the testimony of the cooperating defendants. The evidence against Lula included, for example, documents from the department of structured operations of the company (and managed its corruption payments), internal e-mails from the contractor referring to the renovation, testimony from other witnesses (not cooperating defendants), receipts and invoices of purchases of materials in the name of “stooges,” analysis of trips taken by the former president to the country house, e-mails seized at the Lula Institute, and documents seized at the site.

Second, Mr. Paschoal subsequently clarified that he had expressed himself inappropriately when he said that he had been “pressured.” He stated that only later did he understand that in order “to be accepted as a cooperator, [I] would need to give more detailed, consistent, coherent, and comprehensive information, in addition to seeking documents that would corroborate what I had to say.” Also, as stated above, prosecutors always demand that whistleblowers tell the whole truth, and any misreprestantation, whether for the benefit or detriment of the defendant, could result in the loss of the benefits of the cooperation agreement. Thus, cooperating defendants have a strong disincentive to lie.

Finally, it should be noted that the prosecutors refused to enter into a cooperation agreement with Antonio Palocci, a member of the Worker’s Party who later entered into an agreement with the Federal Police, where he implicated the former president in criminal acts. This further shows that prosecutors are guided by public interest factors, such as the ability to expand the investigations, rather than the incrimination of specific individuals, when making decisions regarding cooperation agreements.

7.6. The allegation that Lula was convicted based on “undetermined facts” is also false.

The basis for the open letter’s claim that Judge Moro admitted that Lula was convicted based on “undetermined facts” is unclear. To refute this unsubstantiated assertion, one need only read the lengthy judicial opinions, which contain an extensive and detailed examination of the facts and evidence, as well as Brazilian law on corruption and money laundering.

7.7. The allegations that Judge Moro violated legal rules, directed the operation, or acted as a prosecutor are all incorrect.

In Brazil, the Federal Prosecution Service occupies a position in the legal system that differs from prosecution entities in other countries. The Brazilian Federal Prosecution Service is impartial and required to seek justice, rather than to act as an adversary that seeks the conviction of defendants if a case has been made. In fact, it is relatively frequent that requests for acquittal come from the prosecution itself. Judges and prosecutors seek the same objective, the public interest. Moreover, each prosecutor is entitled to functional independence, which means that prosecutors must follow the law and their conscience. There is no functional hierarchy, thereby prosecutors are not required to obey superior decisions in their work.

In the Brazilian system, it is also common for parties to talk to the judge without the other party present. In the investigation phase, where there is no audi alteram partem (“hear the other party”) principle, such contacts are quite ordinary, and in the case of the Federal Prosecution Service, such contacts may be even more intense because the prosecution service acts in all cases of a given criminal court.

Another peculiarity of the Brazilian system is the fact that the judge is authorized by law to proactively determine (ex officio) a series of probative measures, such as gathering testimony, pre-trial detention, and searches and seizures. In other words, the judge may order search and seizure or pre-trial detention without any provocation, and even when the prosecutor’s position is to the contrary. Furthermore, a judge may convict a defendant even if the Federal Prosecution Service requests for his acquittal.

Given this context, it should be clear that occasional contacts between the prosecutor and the judge, focused on the search for the truth and the values of justice, do not mean that the judge directed the work of the Federal Prosecution Service or dictated its strategy. To consider the judge as a a prosecutor, based on the messages in question, means turning a blind eye to Brazilian legal reality.

With respect to the Car Wash Operation, and Lula’s trials more specifically, essential forms have never been neglected, defendants’ fundamental rights have never been violated, and all of the Car Wash’s acts are adequately grounded in facts, evidence, and the law. In addition, claiming that the judge played a prosecution’s role in the Car Wash Operation based on the supposed text messages is inconsistent with other evidence. For example, Judge Moro acquitted more than 20% of the Car Wash defendants and dismissed many dozens of prosecution’s requests. The Federal Prosecution Service, in turn, appealed in 44 of the 45 judgments handed down by former Judge Sergio Moro. This hardly seems like a situation in which the judge is directing the prosecution.

8. Conclusion

For the foregoing reasons, the open letter’s assertion that Lula was unfairly convicted by a partisan conspiracy is simply untrue. We nonetheless respect and admire the jurists and scholars who signed onto this letter, and we believe that they were likely misled by false or incomplete characterizations of the actual facts and circumstances of this case. We therefore submit this letter to correct these misunderstandings.

List of Signatories

ADRIANO AUGUSTO SILVESTRIN GUEDES, Circuit Federal Prosecutor
ALEXANDRE JABUR, Federal Prosecutor
ANA LUISA CHIODELLI VON MENGDEN, Circuit Federal Prosecutor
ANTONIO AUGUSTO TEIXEIRA DINIZ, Federal Prosecutor
ANTONIO CARLOS WELTER, Circuit Federal Prosecutor
ATHAYDE RIBEIRO COSTA, Federal Prosecutor
CARLOS AUGUSTO DA SILVA CAZARRE, Circuit Federal Prosecutor
DELTAN MARTINAZZO DALLAGNOL, Federal Prosecutor
FELIPE D’ELIA CAMARGO, Federal Prosecutor
JANUARIO PALUDO, Circuit Federal Prosecutor
JERUSA BURMANN VIECILI, Federal Prosecutor
JULIO CARLOS MOTTA NORONHA, Federal Prosecutor
LAURA GONCALVES TESSLER, Federal Prosecutor
LUIZ FELIPE HOFFMANN SANZI, Circuit Federal Prosecutor
MARCELO RIBEIRO DE OLIVEIRA, Federal Prosecutor
MARIA EMILIA DA COSTA DICK, Circuit Federal Prosecutor
ORLANDO MARTELLO, Circuit Federal Prosecutor
PAULO ROBERTO GALVAO DE CARVALHO, Federal Prosecutor
ROBERSON HENRIQUE POZZOBON, Federal Prosecutor

Marijuana officially decriminalized in New York
By Aris Folley – 08/30/19 03:50 PM EDT

New York has officially decriminalized the use of marijuana.

The new law, which was green-lighted by Gov. Andrew Cuomo (D) last month and took effect this week, downgrades the criminal penalty for the unlawful possession of pot from a misdemeanor to a fine.

The law also removes criminal penalties for possession of less than two ounces of marijuana and creates a process where certain individuals with past marijuana convictions can have their records cleared.

According to The New York Times, nearly 160,000 people with low-level weed convictions will have them expunged from their record.

“Communities of color have been disproportionately impacted by laws governing marijuana for far too long, and today we are ending this injustice once and for all,” Cuomo said in statement last month after signing the legislation.

“By providing individuals who have suffered the consequences of an unfair marijuana conviction with a path to have their records expunged and by reducing draconian penalties, we are taking a critical step forward in addressing a broken and discriminatory criminal justice process,” he continued.

Cuomo had also worked to make the legalization of marijuana a top priority for state legislators this year. However, a bill that would have legalized the sale of marijuana for recreational use in the state failed to advance in June, putting an end to hopes that the state would be able pass such a measure later this year.

500 days of injustice – We must right the wrong and #FreeLula

Today, August 20th, marks 500 days of the wrongful imprisonment of former Brazilian President Luiz Inacio ‘Lula’ da Silva. This is a day of action and mobilisation for justice. Educators from around the world stand with their Brazilian colleagues in the call for freedom for President Lula. Join us!

One of the most beloved Presidents in Brazil’s history and its first working-class head of state, Lula is the victim of a grave miscarriage of justice. Despite a clear lack of evidence, he was jailed and prevented from standing in the Presidential elections against far-right candidate Jair Bolsonaro. With polls showing Lula as the likely winner, he was convicted under bogus charges and not allowed to participate in the elections, in spite of calls from the UN Human Rights Committee.

The policies that made Lula popular with Brazilians and helped improve the lives of millions are being rolled back under the Bolsonaro government. Free quality public education is being undermined to the detriment of the country’s students and its future. In Lula’s words, “the problems in Brazil won’t be solved with guns but with books and schools.”

With a strong background in the union movement, President Lula has been very supportive of education unions in Brazil and beyond, meeting with their representatives on several occasions. He welcomed delegates to Puerto Alegre for the 2004 Education International World Congress and spoke at the CNTE/Brasil 33rd National Congress in 2017.

Education unions in Brazil have called for the release of President Lula and have taken a hard stance against the Bolsonaro government, its methods and policies. Roberto Franklin de Leão, International Relations Secretary of CNTE/Brasil and Education International Vice-President, stated: “The 500 days in prison of former President Luís Inácio Lula da Silva is a sad milestone for the recent history of Brazilian democracy. The collusion between segments of the Brazilian judiciary, in partnership with the large commercial media in the country and the local and international economic power wrongly imprisoned the greatest living leader in Brazil, the president who enjoys the highest approval ratings among the Brazilian population: Lula has been an ardent defender of quality public education for all Brazilians. None of the charges against him are true, but the silence of the Brazilian judicial control organs makes them all accomplices of this wrongful imprisonment. We’re all Lula! Freedom for Lula now!”

David Edwards, Education International General Secretary, said: “500 days in prison without a fair trial cannot stand. This is not just about one person. This is about a country failing to deliver on its promise of true democracy, rule of law, equality and respect for human rights. This miscarriage of justice must stop now. At the Education International World Congress, representatives of 32 million educators made it clear: we stand with our Brazilian colleagues and call for the immediate release of President Lula.”

Join the action and add your voice to the call to #FreeLula! Here’s how you can contribute:

Join nearly 100,000 people and sign the petition to annul the unfair trials

Share the petition on your social media using #LulaLibreJa #FreeLula and #500InjusticeDays

Show your support online with photos, videos and messages today, particularly between 12h and 14h, Brasilia time. Use the action’s hashtags and tag the official Lula Livre campaign profiles:

Twitter: @ComiteLula @FreeLulaBrasil
Instagram: @lulalivreoficial, @free.lula
Facebook: www.facebook.com/FreeLulaBrasil/

For more information about the campaign in defence of Lula, please visit https://comitelulalivre.org/

Sergio Moro, The #Vazajato, And Reflections On Stephenson
July 22, 2019

Matthew Stephenson’s The Global Corruption Blog is the recent epicenter of discussion and debate on the behavior of Justice Minister and former judge Sergio Moro in light of The Intercept’s #vazajato revelations. Stephenson is a notable authority on corruption and anti-corruption efforts, and his successive posts (with open comments) on the #vazajato reflect the importance he gives to the question of impartiality and due process in the Lava Jato prosecutions and convictions between 2014 to 2018 and directly involving former judge Moro. I do not personally know Prof. Stephenson but I applaud his transparency, his efforts to detail his arguments, and his attention to this brewing scandal in Brazil.

In his latest post, “The Biggest Beneficiary of the Lava Jato Leaks Is Jair Bolsonaro,” Stephenson argues that The Intercept revelations based on leaked conservations among the Lava Jato prosecutorial taskforce and judge Moro may in the end benefit President Jair Bolsonaro over his opponents. Stephenson writes,

“I worry that the biggest beneficiary of VazaJato may be President Bolsonaro, and the biggest loser may be the Brazilian left. I say “worry” because I view Bolsonaro as a dangerous bigot and wanna-be authoritarian, one who is also likely to worsen Brazil’s corruption problem.”

He identifies four reasons behind his concern.

1. The Intercept revelations undermine Sergio Moro as Justice Minister and one of the most important checks on President Bolsonaro’s authoritarian reflex and “lawless, corrupt, or outrageous tendencies.”

Here Stephenson argues that while Moro may demonstrated poor judgment by joining Bolsonaro’s cabinet, the move did place the former judge in position to constrain the worst of the president’s tendencies. That is, Moro could advance the anti-corruption campaign (including new legislation) while preventing the president from intervening in ongoing corruption investigations and prosecutions. Accordingly, #vazajato undermines this check and balance effect by undermining Moro’s popularity and credibility.

Stephenson’s reasoning assumes that Moro is a just and decent person who works in good faith, whether in his capacity as judge during the Lava Jato trials or as Justice Minister. With respect to The Intercept’s revelations, he finds the evidence of judicial misconduct “less clear” than The Intercept and others suggest, and finds that claims of Moro’s “ideological bias especially flimsy.”

In this blog post, Stephenson does not treat earlier reporting and debate of Moro’s judicial misconduct, including Alex Cuadros’ fair minded piece for The Atlantic on February 2, 2018. Cuadros investigates the aftermath of Lava Jato and reports,

“In March 2016, then-President Rousseff appointed Lula to her cabinet. Moro reacted by releasing a secretly recorded conversation in which she implied that the purpose of the appointment was to shield Lula, her mentor and ally, from prosecution. For exposing a private conversation with a sitting president, Moro was reprimanded by a Supreme Court justice. But another justice blocked Lula’s appointment, and he was soon indicted. Rafael Mafei, a law professor at the University of São Paulo, was among those to suggest that Moro should be removed from the case. “Personally, I don’t have confidence in Moro’s impartiality to judge Lula,” he said. Still, it was Moro who handed down Lula’s conviction in July last year.”

Cuadros does not treat all the criticisms of the Lava Jato, but his article does pierce the cheerleading bubble and raise questions about the motives driving the zealous prosecution carried out by Lava Jato taskforce and the behavior of Moro. Geoffrey Robertson, Lula’s international roving attorney and representative at the United Nations Human Rights Committee, argued in Foreign Affairs that Brazil’s federal judicial system is chock full of authoritarian attributes that open the door to rampant judicial misconduct. In the case of Lula, Robertson finds that Moro failed to guarantee the constitutional due process rights afforded to any defendant.

It is interesting that Stephenson avoids inclusion of any early, credible and critical treatment of Moro’s judicial behavior and the Lava Jato taskforce’s practices (it may be that Stephenson has treated these in earlier posts, but without citing them). Could Stephenson’s avoidance of these earlier claims, backed up by the published #vazajato leaks, lead him to prematurely conclude that Moro worked in good faith and any mistakes were not motivated by personal or political motives?

I do not think we can draw any precise conclusions about the motives behind Moro’s conduct or conversations at this point. However, there was plenty of evidence of judicial misconduct before the #vazajato and reason enough for Moro to step aside from overseeing Lula’s first trial on corruption charges. On July 13, 2017 I wrote of the Lula X Moro confrontation,

“Judge Moro has zealously pursued the former president through Brazil’s odd system for Federal judges that allows them to act as prosecutor, jury and judge all together in a confusing whirlwind of conflicting institutional interests. Rather than tread lightly and guarantee constitutional due process, Judge Moro used every power under his authority to publicly condemn Lula before the trial began, and may have engaged in unethical or illegal acts related to the wiretapping of then President Dilma.”

Also, I was increasingly concerned over Moro’s national and international appearances, some of which were financed by organizations with a direct interest in the politics of Petrobras and the impeachment of former President Dilma Rousseff of the PT. As it stands, Moro and chief prosecutor Deltan Dallagnol pursued both personal and political ends through their questionable conduct related to the Lava Jato prosecutions and convictions. I do not understand why Prof. Stephenson would give Moro the benefit of the doubt at this point. Clearly, The Intercept revelations indicate that Moro did not act in good faith and was motivated by values quite distant from upholding constitutional due process.

If Stephenson chose not to extend the benefit of the doubt, then his reasoning regarding Moro and the #vazajato might be very different. Cautious skepticism makes it much easier to understand Moro’s transactional agreement to serve in the Bolsonaro government, and agreement to provide greater credibility to the new government in exchange for the next seat on the Supreme Court bench. Just the appearance of such a quid pro quo should be sobering to those still inclined to believe that Moro is not a politician and is a decent man.

2. Second, Prof. Stephenson argues that the implicit assertion that anti-corruption investigations like the Lava Jato are politically motivated, and that the country’s “legal and judicial institutions are themselves biased and corrupt, helps Bolsonaro more than the PT or other left-wing parties right now.”

The professor and many others logically assume that the leaks undermine the credibility of Brazil’s legal system and the federal judiciary. They may be correct, and no one can blame Brazilians for lowering their trust in these essential democratic institutions. Yet, there exists another possibility. Brazilians who share democratic values, whether they are conservative, liberal or social democrat, are increasingly aware of the intersection of politics and the judiciary, opening the way to greater civil society efforts to reform the Public Ministry and Judicial branch to put the squeeze on judges and prosecutors who illegally conspire to achieve a conviction or plea bargain. Yes, the immediate impact of the leaks on Moro’s credibility could make the struggle for accountability more difficult in the short term, but there are no alternatives for a state governed by the rule of law.

There is also a third argument than counters Stephenson’s worrisome outlook for the Brazilian left. If everyone is corrupt, then a majority of voters will elect those candidates and parties who redistribute income away from the wealthy and toward a majority of much poorer workers and their families (the rouba mas faz effect).

Stephenson may be correct, but the alternative outcomes are just as likely. We will not know until the municipal elections in 2020 and the general elections in 2022.

3. Third, Stephenson continues his line of thinking to suggest that The Intercept’s revelations frame anti-corruption efforts as the singular domain of conservatives in Brazil.

Stephenson does not offer any evidence for this assertion. It would be difficult because Stephenson admits that he does not read Portuguese. To advance his argument he would need to understand the written and voiced narratives that are whirling around Minister Moro in recent weeks. Stephenson prefers to offer his critique of the left with respect to its messaging on the Lava Jato and the recent leaks. This is the weakest link in Stephenson’s piece.

Like any Revelation, Investigation and Prosecution (RIP), the #vazajato challenges established narratives and opens up space for reinterpretation of the facts on the ground. At this point no one political force has clearly replaced the old narrative, but Brazilians are deepening their understanding of the Lava Jato, its direct consequences for economic development, the behavior of the Supreme Court with respect to both due process and corruption, and finally, Moro himself. The eye of this whirlwind is Lula, as Stephenson indicates, but the professor sweeps the Lula effect under the rug without properly placing his conviction by Moro in legal, historical or electoral perspectives. In the end Lula may not have the last word, but for now it is clear that Brazilians are searching for the real truth, and if they find that Lula was improperly prevented from registering his presidential candidacy in 2018 then there will be hell to pay.

Regardless, the search for the truth will likely lead to greater efforts to squeeze politics out of the judiciary. As Stephenson indicates, the struggle for accountability is historically the domain of the Brazilian left, not the conservative-nationalist politics that triggered the remarkable rise of the PSL in the 2018 elections. In power, Bolsonaro and his PSL have not yet demonstrated a principled commitment to fighting corruption. To the contrary, the corruption allegations against Senator Flavio Bolsonaro and Minister of Tourism Marco Alvaro Antonio (PSL) substantiate Stephenson’s concerns and may lead the opposition to innovate stronger anti-corruption legislation. There are plenty of opportunities for the Brazilian left to reassume its historical mandate to fight corruption and privilege.

4. Stephenson places the last brick of his argument at the feet of the Workers Party and its efforts to retain Lula as the center-piece of national politics. He argues that #vazajato contributes to the “Brazilian left’s unhealthy, counterproductive obsession with Lula.”

Stephenson offers this reason from a sympathetic angle and through a political analysis. He argues that

“Bolsonaro is one of the biggest beneficiaries of anything that gets the opposition to spend its time focusing on the past, and on Lula, rather than on the future.”

We can all sympathize with Stephenson’s implicit directive that the Brazilian left spend more time on envisioning Brazil’s future rather than dwell on its past. Yet, it is nearly impossible to think about the future without understanding Lula’s historic role and his consequential presidency (2003 to 2010). Moreover, we cannot clearly understand President Lula’s success without understanding how Brazil operates and the underlying conditions that permitted the first social pact that included all Brazilians without exception (Brasil para todos).

One important condition for social inclusion was the deal with the devil that we now call Lava Jato. It is inconceivable that Lula’s government could expand opportunities to all Brazilians without partially coordinating efforts to finance the very expensive electoral campaigns of the PT and its more clientelistic allies (many of which now support the Bolsonaro government). Yes, I just said it. Brazilian social democracy was dependent on crony capitalism under Lula and Dilma. No wonder the Brazilian left is thinking through Lula and his legacy since there is not a clear path for restoring social democracy in Brazil.

Stephenson and many others are correct to suggest that Bolsonaro was the biggest beneficiary of the Lava Jato. Yet, It is highly unlikely that Bolsonaro and Moro can make sense of the experience and the fallout of the #vazajato to double down on fighting corruption. Moro now seeks protection from Bolsonaro and his PSL and it appears that he intends to shield the Bolsonaro family and its allies from corruption allegations. This is the decision of a man who knows that further leaks will lead a majority of Brazilians to conclude that his judicial misconduct is as corrupt as those rightly convicted of Lava Jato related crimes.

Bolsonaro and his PSL cannot save Moro from his hypocrisy. Besides, President Bolsonaro has other issues to grapple with, including his family’s penchant for petty corruption and his government’s preference for unforced errors and high-profile incompetence. Stephenson will have to wait for the 2020 municipal elections to test his hypothesis about the aftermath of the #vazajato. It is just too early to count the Brazilian left out. Rather, mayoral candidates from the PT and its allies may win the larger cities and make in-roads into the smaller towns of pivotal states like Minas Gerais, Rio de Janeiro and Sao Paulo. If the Bolsonaro government is not seen as effective in arresting economic decline and unemployment then the Brazilian left could also make gains in the presently conservative states of Parana, Rio Grande do Sul and Santa Catarina. Democracy surprises.

I share Prof. Stephenson’s observation that the Brazilian left needs to rehabilitate to effectively fight for accountability and equality on behalf of all Brazilians. Yet, I also understand and welcome the fact that Lula will inspire this effort and may play a role in guiding it. He is the central historical figure in Brazilian social democracy and his impact on politics, even from his jail cell, should never be underestimated.

I also share Stephenson’s concern that Bolsonaro may use the #vazajato moment to exercise his authoritarian reflex. However, we should all understand that Bolsonaro was likely to go rogue with or without the #vazajato and Moro. Moro knew this, but he was clearly focused on the transaction that would eventually land him a seat on the Supreme Court.

I have thought about Stephenson’s reasoning, and his arguments lead me to a critical question moving forward.

Will the combination of the Lava Jato, the Bolsonaro government, and The Intercept revelations galvanize public opinion and a political coalition that can advance the struggle for accountability and equality or is Stephenson right to worry about the future of Brazilian democracy?

Vladimir Putin says liberalism has ‘become obsolete’

In an exclusive interview with the FT, the Russian president trumpets growth of national populism

By Lionel Barber and Henry Foy in Moscow and Alex Barker in Osaka yesterday

Vladimir Putin has trumpeted the growth of national populist movements in Europe and America, crowing that liberalism is spent as an ideological force.

In an FT interview in the Kremlin on the eve of the G20 summit in Osaka, Japan, the Russian president said “the liberal idea” had “outlived its purpose” as the public turned against immigration, open borders and multiculturalism.

Mr Putin’s evisceration of liberalism — the dominant western ideology since the end of the second world war in 1945 — chimes with anti-establishment leaders from US president Donald Trump to Hungary’s Viktor Orban, Matteo Salvini in Italy, and the Brexit insurgency in the UK.

“[Liberals] cannot simply dictate anything to anyone just like they have been attempting to do over the recent decades,” he said.

Mr Putin branded Chancellor Angela Merkel’s decision to admit more than 1m refugees to Germany, mainly from war-ravaged Syria, as a “cardinal mistake”. But he praised Donald Trump for trying to stop the flow of migrants and drugs from Mexico.

“This liberal idea presupposes that nothing needs to be done. That migrants can kill, plunder and rape with impunity because their rights as migrants have to be protected.”

He added: “Every crime must have its punishment. The liberal idea has become obsolete. It has come into conflict with the interests of the overwhelming majority of the population.”

Donald Tusk, the European Council president, said he “strongly disagreed” with Mr Putin.

“What I find really obsolete is authoritarianism, personality cults and the rule of oligarchs,” he said.

As the de facto ruler of Russia for almost two decades, Mr Putin, 66, has been regularly accused of covertly supporting populist movements through financial aid and social media, notably in the 2016 US presidential election, the Brexit referendum and the recent European Parliament elections.

Mr Putin emphatically denied this. He dismissed the conclusion by special counsel Robert Mueller that Russia had systemically interfered in the 2016 US presidential election as “mythical interference”.

Turning to the US-China trade war and geopolitical tensions in the Gulf between the US and Iran, Mr Putin said the situation had become “explosive”. The problem, he said, stemmed from American unilateralism and the lack of rules underpinning world order.

He expressed concern about the threat of a renewed nuclear arms race between the US and Russia. “The cold war was a bad thing . . . but there were at least some rules that all participants in international communication more or less adhered to or tried to follow. Now, it seems that there are no rules at all,” he said.

On a positive note, Mr Putin said there were tentative signs of a thaw in Anglo-Russian relations ahead of his meeting in Osaka with Theresa May, her farewell summit as UK prime minister.

“I think Russia and UK are both interested in fully restoring our relations, at least I hope a few preliminary steps will be made.”

Relations between London and Moscow have been frozen after the attempted assassination of former Russian double agent Sergei Skripal in Salisbury, England.

The UK government blames the Russian government for the nerve agent attack, but Mr Putin said there was no evidence to support this. Mr Skripal had served a sentence in Russia before being released in a spy swap with the UK, he noted.

Mr Putin made clear, however, that he had zero tolerance for spies who betrayed their country. “Treason is the gravest crime possible and traitors must be punished. I am not saying that the Salisbury incident is the way to do it . . . but traitors must be punished.”

Theresa May, the UK prime minister, said she will demand the suspects in the attack are extradited and “brought to justice” when she sees Mr Putin on Friday — their first face-to-face meeting since the incident.

“We would be open to a different relationship with Russia but if that is going to happen then Russia needs to stop its activity that undermines international treaties and undermines our collective security like what happened on the streets of Salisbury,” she told journalists en route to Osaka.

In recent years, Mr Putin has become emboldened, presiding over the annexation of Crimea, a pro-Russian revolt in eastern Ukraine and a military intervention in Syria which he described as a clear-cut success.

Apart from killing thousands of radical Islamists and shoring up President Bashar al-Assad’s regime, Mr Putin said the exercise had given Russia’s armed forces invaluable fighting experience.

He made no mention of the fact the seven-year-old war has resulted in more than 5m refugees and 500,000 dead. However, he did point to the waves of immigration from conflict zones in Africa and the Middle East which had fostered crime and social strains, in turn fuelling an anti-establishment backlash in Europe.

Echoing nationalist populists such as Mr Salvini and France’s Marine Le Pen, Mr Putin said liberal governments had not acted to reassure citizens. Instead they had pursued a mindless multiculturalism embracing, among other things, sexual diversity.

“I am not trying to insult anyone because we have been condemned for our alleged homophobia. But we have no problem with LGBT persons. God forbid, let them live as they wish,” he said. “But some things do appear excessive to us. They claim now that children can play five or six gender roles.”

“Let everyone be happy, we have no problem with that,” he added. “But this must not be allowed to overshadow the culture, traditions and traditional family values of millions of people making up the core population.”

***

Transcript: ‘All this fuss about spies … it is not worth serious interstate relations’

The Russian president on globalisation, China, Trump and the end of the ‘liberal idea’

Vladimir Putin, Russian president, says the ‘liberal idea’ has outlived its purpose © Press office of the President of Russia

This is the transcript of a conversation between Vladimir Putin, Russian president, Lionel Barber, Financial Times editor, and Henry Foy, the FT’s Moscow bureau chief, which took place on Wednesday 26 June in the Kremlin. Mr Putin’s quotes are translated from the Russian.

Lionel Barber: Mr President, you head for Osaka shortly as the senior statesman at the G20. Nobody has been to so many international meetings of this grouping and the G7 over the last 20 years while you have been in charge of Russia. Before we talk about the G20 agenda and what you hope to achieve, we know that there are rising tensions between America and China in trade, the risk of conflict in the Gulf. I would be very grateful if you could talk a bit about how you have seen the world change over the last 20 years while you have been in power.

Vladimir Putin: First, I have not been in power for all these 20 years. As you may know, I was prime minister for four years, and that is not the highest authority in the Russian Federation. But nevertheless, I have been around for a long time in government and in the upper echelons, so I can judge what is changing and how. In fact, you just said it yourself, asking what has changed and how. You mentioned the trade wars and the Persian Gulf developments. I would cautiously say the situation has not changed for the better, but I remain optimistic to a certain extent. But, to put it bluntly, the situation has definitely become more dramatic and explosive.

LB: Do you believe that the world now has become more fragmented?

VP: Of course, because during the Cold War, the bad thing was the Cold War. It is true. But there were at least some rules that all participants in international communication more or less adhered to or tried to follow. Now, it seems that there are no rules at all. In this sense, the world has become more fragmented and less predictable, which is the most important and regrettable thing.

LB: We will return to this theme of the world without rules, fragmentation, more transactional. But first, Mr President, tell us what you want to achieve in Osaka, in terms of your relationships with these other parties? What are your main goals for the summit?

VP: I would very much like all the participants in this event, and the G20, in my opinion, is a key international economic development forum today, so I would like all the G20 members to reaffirm their intention — at least an intention — to work out some general rules that everyone would follow, and show their commitment and dedication to strengthening international financial and trade institutions.

Everything else is details that complement the main topics one way or another. We certainly support Japan’s presidency. As for the development of modern technology, the information world, the information economy, as well as our Japanese colleagues’ attention to matters such as longevity and the environment — all this is extremely important, and we will certainly support it and will take part in all these discussions.

Even though it is hard to expect any breakthroughs or landmark decisions in the current conditions; we can hardly count on it today. But in any case, there is hope at least that during these general discussions and bilateral meetings we will be able to smooth out the existing disagreements and lay a foundation, a basis for positive movement forward.

LB: You will have a meeting with [Saudi Crown Prince] Mohammed bin Salman in Osaka. Can we expect an extension of the current agreement on oil production? Limitations?

VP: As you know, Russia is not an Opec member, even though it is among the world’s largest producers. Our daily production is estimated at 11.3m barrels, I believe. The United States has surged ahead of us, though. However, we believe that our production stabilisation agreements with Saudi Arabia and Opec in general have had a positive effect on market stabilisation and forecasting.

I believe both energy producers, in this case, oil producing countries, and consumers are interested in this, because stability is definitely in short supply at present. And our agreements with Saudi Arabia and other Opec members undoubtedly strengthen stability.

As for whether we will extend the agreement, you will find out in the next few days. I had a meeting on this issue with the top executives of our largest oil companies and government members right before this interview.

LB: They are a little bit frustrated. They would like to produce more. Is that correct?

VP: They have a smart policy. It is not about increasing production, although that is a major component in the work of large oil companies. It is about the market situation. They take a comprehensive view of the situation, as well as of their revenues and expenses. Of course, they are also thinking about boosting the industry, timely investments, ways to attract and use modern technology, as well as about making this vital industry more attractive for investors.

However, dramatic price hikes or slumps will not contribute to market stability and will not encourage investment. This is why we discussed all these issues in their totality today.

LB: Mr President, you have observed four American presidents at close quarters and maybe five, you have had direct experience. So, how is Mr Trump different?

VP: We are all different. No two people are the same, just like there are no identical sets of fingerprints. Anyone has his or her own advantages, and let the voters judge their shortcomings. On the whole, I maintained sufficiently good-natured and stable relations with all the leaders of the US. I had an opportunity to communicate more actively with some of them.

The first US president I came into contact with was Bill Clinton. Generally, I viewed this as a positive experience. We established sufficiently stable and business-like ties for a short period of time because his tenure was already coming to an end. I was only a very young president then who had just started working. I continue to recall how he established partner-like relations with me. I remain very grateful to him for this.

There have been different times, and we had to address various problems with all other colleagues. Unfortunately, this often involved debates, and our opinions did not coincide on some matters that, in my opinion, can be called key aspects for Russia, the United States and the entire world. For example, this includes the unilateral US withdrawal from the Anti-Ballistic Missile Treaty that, as we have always believed, and as I am still convinced, was the cornerstone of the entire international security system.

We debated this matter for a long time, argued and suggested various solutions. In any event, I made very energetic attempts to convince our US partners not to withdraw from the treaty. And, if the US side still wanted to withdraw from the treaty, it should have done so in such a way as to guarantee international security for a long historical period.

I suggested this, I have already discussed this in public, and I repeat that I did this because I consider this matter to be very important. I suggested working jointly on missile-defence projects that should have involved the US, Russia and Europe. They stipulated specific parameters of this co-operation, determined dangerous missile approaches and envisioned technology exchanges, the elaboration of decision-making mechanisms, etc. Those were absolutely specific proposals.

I am convinced that the world would be a different place today, had our US partners accepted this proposal. Unfortunately, this did not happen. We can see that the situation is developing in another direction; new weapons and cutting-edge military technology are coming to the fore. Well, this is not our choice. But, today, we should at least do everything so as to not aggravate the situation.

LB: Mr President, you are a student of history. You have had many hours of conversation with Henry Kissinger. You almost certainly read his book, World Order. With Mr Trump, we have seen something new, something much more transactional. He is very critical of alliances and allies in Europe. Is this something that is to Russia’s advantage?

VP: It would be better to ask what would be to America’s advantage in this case. Mr Trump is not a career politician. He has a distinct world outlook and vision of US national interests. I do not accept many of his methods when it comes to addressing problems. But do you know what I think? I think that he is a talented person. He knows very well what his voters expect from him.

Russia has been accused, and, strange as it may seem, it is still being accused, despite the Mueller report [on the investigation into allegations of Russian meddling in the 2016 presidential campaign], of mythical interference in the US election. What happened in reality? Mr Trump looked into his opponents’ attitude to him and saw changes in American society, and he took advantage of this.

You and I are talking ahead of the G20 meeting. It is an economic forum, and it will undoubtedly have discussions on globalisation, global trade and international finance.

Has anyone ever given a thought to who actually benefited and what benefits were gained from globalisation, the development of which we have been observing and participating in over the past 25 years, since the 1990s?

China has made use of globalisation, in particular, to pull millions of Chinese out of poverty.

What happened in the US, and how did it happen? In the US, the leading US companies — the companies, their managers, shareholders and partners — made use of these benefits. The middle class hardly benefited from globalisation. The take-home pay in the US (we are likely to talk later about real incomes in Russia, which need special attention from the government). The middle class in the US has not benefited from globalisation; it was left out when this pie was divided up.

The Trump team sensed this very keenly and clearly, and they used this in the election campaign. It is where you should look for reasons behind Trump’s victory, rather than in any alleged foreign interference. This is what we should be talking about here, including when it comes to the global economy.

I believe this may explain his seemingly extravagant economic decisions and even his relations with his partners and allies. He believes that the distribution of resources and benefits of globalisation in the past decade was unfair to the US.

I am not going to discuss whether it was fair or not, and I will not say if what he is doing is right or wrong. I would like to understand his motives, which is what you asked me about. Maybe this could explain his unusual behaviour.

LB: I definitely want to come back to the Russian economy. But what you said is absolutely fascinating. Here you are, the President of Russia, defending globalisation along with [China’s] President Xi [Jinping] whereas Mr Trump is attacking globalisation and talking about America First. How do you explain this paradox?

VP: I don’t think that his desire to make America first is a paradox. I want Russia to be first, and that is not perceived as a paradox; there is nothing unusual there. As for the fact that he is attacking some manifestations of globalisation, I made that point earlier. He seems to believe that the results of globalisation could have been much better for the US than they are. These globalisation results are not producing the desired effect for the US, and he is beginning this campaign against certain elements of globalisation. This concerns everyone, primarily major participants in the system of international economic collaboration, including allies.

LB: Mr President, you have had many meetings with President Xi, and Russia and China have definitely come closer. Are you putting too many eggs in the China basket? Because Russian foreign policy, including under your leadership, has always made a virtue of talking to everybody.

VP: First of all, we have enough eggs, but there are not that many baskets where these eggs can be placed. This is the first point.

Secondly, we always assess risks.

Thirdly, our relations with China are not motivated by timeserving political or any other considerations. Let me point out that the Friendship Treaty with China was signed in 2001, if memory serves, long before the current situation and long before the current economic disagreements, to put it mildly, between the US and China.

We do not have to join anything, and we do not have to direct our policy against anyone. In fact, Russia and China are not directing their policy against anyone. We are just consistently implementing our plans for expanding co-operation. We have been doing this since 2001, and we are just consistently implementing these plans.

Take a look at what is written there. We have not done anything that transcends the framework of these accords. So there is nothing unusual here, and you should not search for any implications of the Chinese-Russian rapprochement. Of course, we assess the current global developments; our positions coincide on a number of matters on the current global agenda, including our attitude towards compliance with generally accepted rules in trade, the international financial system, payments and settlements.

The G20 has played a very tangible role. Since its inception in 2008, when the financial crisis flared up, the G20 has accomplished many useful things for stabilising the global financial system, for developing global trade and ensuring its stabilisation. I am talking about the tax aspect of the global agenda, the fight against corruption, and so on. Both China and Russia adhere to this concept.

The G20 has accomplished a lot by advocating quota changes at the International Monetary Fund and the World Bank. Both Russia and China share this approach. Considering the major increase in the global economic share of emerging markets, this is fair and right, and we have been voicing this position from the very beginning. And we are glad that this continues to develop and to proceed in line with changes in global trade.

Over the past 25 years or so (25, I believe), the share of G7 countries in the global GDP has declined from 58 per cent to 40 per cent. This should also be reflected in international institutions in some way. That is the common position of Russia and China. This is fair, and there is nothing special about this.

Yes, Russia and China have many coinciding interests, this is true. This is what motivates our frequent contacts with President Xi Jinping. Of course, we have also established very warm personal relations, and this is natural.

Therefore, we are moving in line with our mainstream bilateral agenda that was formulated as far back as 2001, but we quickly respond to global developments. We never direct our bilateral relations against anyone. We are not against anyone, we are for ourselves.

LB: I am relieved that this egg supply is strong. But the serious point, Mr President, is, you are familiar with Graham Allison’s book, The Thucydides Trap. The danger of tensions or a military conflict risk between a dominant power and a rising power, America and China. Do you think that there is a risk of a military conflict in your time between you, America and China?

VP: You know, the entire history of mankind has always been full of military conflicts, but since the appearance of nuclear weapons the risk of global conflicts has decreased due to the potential global tragic consequences for the entire population of the planet in case such a conflict happens between two nuclear states. I hope it will not come to this.

However, of course, we have to admit that it is not only about China’s industrial subsidies on the one hand or the tariff policy of the US on the other. First of all, we are talking about different development platforms, so to speak, in China and in the US. They are different and you, being a historian, probably will agree with me. They have different philosophies in both foreign and domestic policies, probably.

But I would like to share some personal observations with you. They are not about allied relations with one country or a confrontation with the other; I am just observing what is going on at the moment. China is showing loyalty and flexibility to both its partners and opponents. Maybe this is related to the historical features of Chinese philosophy, their approach to building relations.

Therefore I do not think that there would be some such threats from China. I cannot imagine that, really. But it is hard to say whether the US would have enough patience not to make any rash decisions, but to respect its partners even if there are disagreements. But I hope, I would like to repeat this again, I hope that there would not be any military confrontation.

LB: Arms control. We know that the Intermediate-Range Nuclear Forces (INF) agreement is in grave jeopardy. Is there any place, from Russia’s point of view, for future arms control agreements or are we in a new phase when we are likely to see a new nuclear arms race?

VP: I believe there is such a risk.

As I said already, the US unilaterally withdrew from the Anti-Ballistic Missile treaty, and has recently quit the INF treaty as well. But this time, it did not just quit but found a reason to quit, and this reason was Russia. I do not think Russia means anything to them in this case, because this war theatre, the war theatre in Europe is unlikely to be interesting to the US, despite the expansion of Nato and Nato’s contingent near our borders. The fact remains, the US has withdrawn from the treaty. Now the agenda is focused on the Strategic Arms Reduction Treaty (New Start). I hope that I will be able to talk about it with Donald [Trump] if we happen to meet in Osaka.

We said that we are ready to hold talks and to extend this treaty between the US and Russia, but we have not seen any relevant initiative from our American partners. They keep silent, while the treaty expires in 2021. If we do not begin talks now, it would be over because there would be no time even for formalities.

Our previous conversation with Donald showed that the Americans seem to be interested in this, but still they are not making any practical steps. So if this treaty ceases to exist, then there would be no instrument in the world to curtail the arms race. And this is bad.

LB: Exactly, the gloves are off. Is there any chance of a triangular agreement between China, Russia and America on intermediate nuclear forces or is that a dream, pie in the sky? Would you support such an end?

VP: As I said at the very beginning, we will support any agreement that can advance our cause, that is, help us contain the arms race.

It should be said that so far, the level and the development scale of China’s nuclear forces are much lower than in the US and Russia. China is a huge power that has the capability to build up its nuclear potential. This will likely happen in the future, but so far our capabilities are hardly comparable. Russia and the US are the leading nuclear powers, which is why the agreement was signed between them. As for whether China will join these efforts, you can ask our Chinese friends.

LB: Russia is a Pacific power as well as a European and Asian power. It is a Pacific power. You have seen what the Chinese are doing in terms of their build-up of their navy and their maritime strength. How do you deal with those potential security problems, territorial disputes in the Pacific? Does Russia have a role to play in a new security arrangement?

VP: You mentioned the build-up of naval forces in China. China’s total defence spending is $117bn, if memory serves. The US defence spending is over $700bn. And you are trying to scare the world with the build-up of China’s military might? It does not work with this scale of military spending. No, it does not.

As for Russia, we will continue to develop our Pacific Fleet as planned. Of course, we also respond to global developments and to what happens in relations between other countries. We can see all of this, but it does not affect our defence development plans, including those in the Russian Far East.

We are self-sufficient, and we are confident. Russia is the largest continental power. But we have a nuclear submarine base in the Far East, where we are developing our defence potential in accordance with our plans, including so that we can ensure safety on the Northern Sea Route, which we are planning to develop.

We intend to attract many partners to this effort, including our Chinese partners. We may even reach an agreement with American shippers and with India, which has also indicated its interest in the Northern Sea Route.

I would say that we are also primed for co-operation in the Asia Pacific region, and I have grounds to believe that Russia can make a considerable, tangible and positive contribution to stabilising the situation.

LB: Can we just turn to North Korea? How do you assess the current situation and do you believe that in the end, any deal or agreement will have to accept the fact that North Korea has nuclear weapons and that total dismantling is just not possible? If I could just add, Mr President, I ask you this because Russia has a fairly small but still a land border with North Korea.

VP: You know, whether we recognise North Korea as a nuclear power or not, the number of nuclear charges it has will not decrease. We must proceed from modern realities, which are that nuclear weapons pose a threat to international peace and security.

Another pertinent question is where this problem stems from. The tragedies of Libya and Iraq have inspired many countries to ensure their security at all costs.

What we should be talking about is not how to make North Korea disarm, but how to ensure the unconditional security of North Korea and how to make any country, including North Korea feel safe and protected by international law that is strictly honoured by all members of the international community. This is what we should be thinking about.

We should think about guarantees, which we should use as the basis for talks with North Korea. We must be patient, respect it and, at the same time, take into account the dangers arising from this, the dangers of the nuclear status and the presence of nuclear weapons.

Of course, the current situation is fraught with unpredictable scenarios, which we must avoid.

LB: You have obviously thought of this as an experienced foreign policy and security analyst and a strategist. How do you see the North Asia security situation over the next five to 10 years, given you have Russia, you have China, you have Korea and Japan?

VP: You have said correctly that we have a common border, even if a short one, with North Korea, therefore, this problem has a direct bearing on us. The US is located across the ocean, and the UK is located far away, while we are right here, in this region, and the North Korean nuclear range is not far away from our border. This why this concerns us directly, and we never stop thinking about it.

I would like to return to my answer to your previous question. We must respect North Korea’s legitimate security concerns. We must show it respect, and we must find a way of ensuring its security that will satisfy North Korea. If we do this, the situation may take a turn nobody can imagine today.

Do you remember what turn the situation took after the Soviet Union adopted the policy of detente? Do I need to say anything else?

LB: Mr President, you have been in power or very close to power. I think in Davos I said to you when we met — you were not in power but still calling all the shots. After 20 years at the top or near the top, has your appetite for risk increased?

VP: It did not increase or decrease. Risk must always be well-justified. But this is not the case when one can use the popular Russian phrase: “He who doesn’t take risks, never drinks champagne.” This is not the case. Quite possibly, risks are inevitable when one has to make certain decisions. Depending on the scale of any decision, risks can be small or serious.

Any decision-making process is accompanied by risk. Before taking one’s chances, one has to meticulously assess everything. Therefore, risk based on an assessment of the situation and the possible consequences of the decisions is possible and even inevitable. Foolish risks overlooking the real situation and failing to clearly comprehend the consequences are unacceptable because they can jeopardise the interests of a great number of people.

LB: How big was this Syria risk in terms of your decision to intervene?

VP: It was sufficiently high. However, of course, I thought carefully about this well in advance, and I considered all the circumstances and all the pros and cons. I considered how the situation around Russia would develop and the possible consequences. I discussed this matter with my aides and ministers, including those in charge of law enforcement agencies and other senior officials. In the long run, I decided that the positive effect from our active involvement in Syrian affairs for Russia and the interests of the Russian Federation would far outweigh non-interference and passive observation of how an international terrorist organisation grows ever stronger near our borders.

LB: What has the return been like on the risk taken in Syria?

VP: I believe that it has been a good and positive return. We have accomplished even more than I had expected. First of all, many militants planning to return to Russia were eliminated. This implies several thousand people. They were planning to return to Russia or neighbouring countries with which we do not maintain any visa regime. Both aspects are equally dangerous for us. This is the first thing.

Secondly, we have managed to stabilise the situation in a nearby region, one way or another. This is also highly important. Therefore, we have directly strengthened Russia’s domestic security. This is the third thing.

Fourthly, we have established sufficiently good business-like relations with all regional countries, and our positions in the Middle East region have become more stable. Indeed, we have established very good, business-like, partner-like and largely allied relations with many regional countries, including Iran, Turkey and other countries.

Primarily, this concerns Syria, we have managed to preserve Syrian statehood, no matter what, and we have prevented Libya-style chaos there. And a worst-case scenario would spell out negative consequences for Russia.

Besides, I would like to openly speak of the mobilisation of the Russian armed forces. Our armed forces have received such practical experience that they could not have obtained during any peacetime exercises.

LB: Are you committed to [Syrian leader Bashar] al-Assad remaining in power or can we see, at some point, the transition in Syria that Russia would support, which would not be Libya?

VP: I believe that the Syrian people should be free to choose their own future. At the same time, I would like the actions of external players to be substantiated and, just as in the case of the risks you have mentioned, predictable and understandable, so that we can consider at least our next moves.

When we discussed this matter only recently with the previous US administration, we said, suppose Assad steps down today, what will happen tomorrow?

Your colleague did well to laugh, because the answer we got was very amusing. You cannot even imagine how funny it was. They said, “We don’t know.” But when you do not know what happens tomorrow, why shoot from the hip today? This may sound primitive, but this is how it is.

Therefore, we prefer to look at problems thoroughly from all possible angles and not to be in any hurry. Of course, we are perfectly aware of what is happening in Syria. There are internal reasons for the conflict, and they should be dealt with. But both sides should do their bit. I am referring to the conflicting parties.

LB: Mr President, does that same argument apply to Venezuela? In other words, you are not prepared to see a transition in Venezuela and you are absolutely committed to President [Nicolas] Maduro.

VP: Oh, and it seemed we had started so well. Please do not take offence to what I am going to say next. You won’t, will you? We were off to such a terrific start, talking seriously, and now you have moved back to the stereotype views on Russia.

We have no nothing to do with what is happening in Venezuela, if you know what I mean.

LB: What are those advisers doing then in Caracas?

VP: I will say this now, if you just let me finish. There is no problem with that.

Back under [President Hugo] Chávez we sold weapons to Venezuela, without any limits and problems. We did this absolutely legally just as it is done all around the world and as every country does, including the US, the UK, China and France. We did this too — we sold weapons to Venezuela.

We signed contracts, which say what we have to do when it comes to servicing this military equipment, that we must train local specialists, ensure that this equipment is maintained in combat readiness and so on. We provide maintenance services for this equipment. I have already said this many times, including to our American partners: there are no Russian troops there. Do you understand? Yes, there are Russian specialists and instructors there. Yes, they are working there. Only recently, I believe it was a week ago, a group of our advisers and specialists left the country. But they can return.

We have an agreement that our aircraft fly there from time to time to take part in exercises. And this is it. Are we regulating the rebels’ actions as some of our partners are doing, or the actions of President Maduro? He is the president, why should we control his actions? He is in control. Whether he is doing well or not, this is another matter altogether. We do not make any judgments.

I believe that many things could have been done differently there when it comes to the economy. But we do not meddle in things; it is none of our business. We have invested billions of dollars there, mostly in the oil sector. So what? Other countries are doing the same as well.

It looks like everything is preserved only by Russian weapons. This is not true. It has nothing in common with reality. Where are the self-proclaimed presidents and opposition leaders? Some of them have taken refuge in foreign embassies and others are in hiding. What do we have to do with this? This problem should be sorted out by the Venezuelan people themselves. This is all.

LB: I was just applying your theory and your experience of seeing what happened in Libya and Iraq to Venezuela. And therefore, logically, you would say, “We are committed to Mr Maduro because we do not want to see regime change from outside.” Is that the Russian position? Or might you be willing to say, “We will support [Venezuela’s opposition leader Juan] Guaidó because we have important oil interests in Venezuela”?

VP: We are prepared for any developments in any country, including Venezuela, if they are taking place in accordance with internal rules and the country’s legislation, its constitution, and in line with the people’s will.

I do not think that Libyan or Iraqi statehood would have been wrecked if there had been no intervention there. It would not have happened in Libya, the situation was absolutely different there. Indeed, [former Libyan leader Muammer] Gaddafi wrote his books there, set forth his theories, and so on, which did not meet specific standards, and his practical work did not meet European or American perceptions of democracy.

Incidentally, the president of France said recently that the American democratic model differs greatly from the European model. So there are no common democratic standards. And do you, well, not you, but our Western partners, want a region such as Libya to have the same democratic standards as Europe and the US? The region has only monarchies or countries with a system similar to the one that existed in Libya.

But I am sure that, as a historian, you will agree with me at heart. I do not know whether you will publicly agree with this or not, but it is impossible to impose current and viable French or Swiss democratic standards on North African residents who have never lived in conditions of French or Swiss democratic institutions. Impossible, isn’t it? And they tried to impose something like that on them. Or they tried to impose something that they had never known or even heard of. All this led to conflict and intertribal discord. In fact, a war continues in Libya.

So why should we do the same in Venezuela? Do we want to revert to gunboat diplomacy? What do we need it for? Is it necessary to humiliate Latin American nations so much in the modern world and impose forms of government or leaders from the outside?

By the way, we worked with President Chávez because he was president. We did not work with President Chávez as an individual, but we worked with Venezuela. That is why we channelled investments in the oil sector.

And where did we plan to deliver Venezuelan oil while investing in the oil sector? As you know, Venezuela has unique oil that is mostly delivered to US refineries. What is so bad about that? We wanted the Venezuelan oil and gas sector to operate steadily, predictably and confidently and to make deliveries to those US refineries. I do not understand what is so wrong with this.

First, they faced economic problems, followed by domestic political problems. Let them sort things out by themselves, and these leaders will come to power by democratic means. But when a person enters a square, raises his eyes to the sky and proclaims himself president? Let us do the same in Japan, the US or Germany. What will happen? Do you understand that this will cause chaos all over the world? It is impossible to disagree with this. There will be pure chaos. How could they act like this? But no, they started supporting that person from the very outset.

He may be a very good person. He may be just wonderful, and his plans are good. But is it enough that he entered a square and proclaimed himself president? Is the entire world supposed to support him as president? We should tell him to take part in elections and win them, and then we would work with him as the state leader.

LB: Let us talk about another democracy in Europe, my own country. You are going to have a meeting with [Theresa] May, which is going to be one of her last meetings before she steps down as prime minister. Do you think that there is a possibility of some improvement in Anglo-Russian relations and that we can move on from some of these issues that are obviously of great sensitivity, like the Skripal affair? Or do you think that we are going to stay in a deep freeze for the next three or five years?

VP: Listen, all this fuss about spies and counterspies, it is not worth serious interstate relations. This spy story, as we say, it is not worth five kopecks. Or even five pounds, for that matter. And the issues concerning interstate relations, they are measured in billions and the fate of millions of people. How can we compare one with the other?

The list of accusations and allegations against one another could go on and on. They say, “You poisoned the Skripals.” Firstly, this must be proved.

Secondly, the average person listens and says, “Who are these Skripals?” And it turns out that [Sergei] Skripal was engaged in espionage against us [Russia]. So this person asks the next question, “Why did you spy on us using Skripal? Maybe you should not have done that?” You know, these questions are infinite. We need to just leave it alone and let security agencies deal with it.

But we know that businesses in the UK (by the way, I had a meeting with our British colleagues in this same room), they want to work with us, they are working with us and intend to continue doing so. And we support this intent.

I think that Mrs May, despite her resignation, could not help but be concerned that these spy scandals made our relations reach a deadlock so we could not develop our ties normally and support business people, who are doing what? They do not only earn money, this is what is on the outside. They create jobs and added value, plus they provide revenue at all levels of the tax system of their countries. This is a serious and multi-faceted job, with the same risks you mentioned, including risks related to business operations. And if we add an unpredictable political situation, they will not be able to work at all.

I think that both Russia and the UK are interested in fully restoring our relations. At least I hope that a few preliminary steps will be made. I think it would be easier for Mrs May, maybe, because she is leaving and is free to do what she thinks is right, important and necessary and not to bother about some domestic political consequences.

LB: Some people might say that a human life is worth more than five pennies. But do you believe, Mr President that whatever happened . . .

VP: Did anybody die?

LB: Oh yes. The gentleman who had a drug problem and he died after touching the novichok in the car park. I mean somebody did that because of the perfume. It was more than one person that died, not the Skripals. I am just . . .

VP: And you think this is absolutely Russia’s fault?

LB: I did not say that. I said somebody died.

VP: You did not say that, but if it has nothing to do with Russia . . . Yes, a man died, and that is a tragedy, I agree. But what do we have to do with it?

LB: Let me just ask this and I really want to talk about the Russian economy. Do you believe that what happened in Salisbury sent an unambiguous message to anyone who is thinking of betraying the Russian state that it is fair game?

VP: As a matter of fact, treason is the gravest crime possible and traitors must be punished. I am not saying that the Salisbury incident is the way to do it. Not at all. But traitors must be punished.

This gentleman, Skripal, had already been punished. He was arrested, sentenced and then served time in prison. He received his punishment. For that matter, he was off the radar. Why would anybody be interested in him? He got punished. He was detained, arrested, sentenced and then spent five years in prison. Then he was released and that was it.

As concerns treason, of course, it must be punishable. It is the most despicable crime that one can imagine.

LB: The Russian economy. You spoke the other day about decline in the real wages in the Russian workforce and Russian growth has been less than expected. But at the same time, Mr President, you have been accumulating foreign exchange reserves and international reserves at some 460bn. What are you saving for? What is the purpose? Can’t you use some of this money to ease up on the fiscal side?

VP: Let me correct a few very small details. Real wages are not in decline in Russia. On the contrary, they are starting to pick up. It is the real household disposable income that is falling.

Wages and income are two slightly different things. Income is determined by many parameters, including loan servicing costs. People in Russia take out a lot of consumer loans and interest payments are counted towards expenses, which drags down real income indicators. Also, the shadow economy is undergoing legalisation. A substantial part of self-employed people — I believe, 100,000 or 200,000 — have already legalised their business. This, too, affects real incomes of the population, disposable incomes.

This tendency has persisted for the past four years. Last year we recorded a small increase of 0.1 per cent. It is not enough. It is still within the margin of error. But it is one of the serious problems that we need to deal with and we are dealing with it.

Real wages started to grow recently. Last year there was an 8.5-per cent increase. This year, the growth rate of real wages has significantly decreased due to a whole range of circumstances. I mean that last year we saw a recovery growth and there are some other factors involved. However, it continues. And we really expect that it will have an effect on real household disposable incomes.

Even more so because lately we have adopted a number of measures to speed up the growth of retirement pensions. Last year the inflation rate was 4.3 per cent and, based on these results, in the beginning of this year pensions were adjusted for inflation by 7.05 per cent. And we set ourselves a goal, a task — which, I am certain, will be achieved — to adjust pensions by a percentage that is above the inflation rate.

Now, real incomes were also affected because we had to increase VAT from 18 to 20 per cent, which affected people’s purchasing power because the inflation rate exceeded 5 per cent.

In other words, we expected that the negative impact of the VAT increase would be short-term, which is exactly what happened. Fortunately, it worked out and our calculations proved right. Now the inflation rate is going down, the macroeconomic situation is improving; investment is rising slightly. We can see that the economy has overcome those difficulties that were caused by internal and external shocks. The external shocks were related to restrictions and slumping prices on our traditional export products. The economy has stabilised.

The macroeconomic situation in the country is stable. It is not accidental and all rating agencies registered it. The three major agencies raised our investment rating. Economic growth last year was 2.3 per cent. We do not think it was enough but we will, of course, work on speeding up the pace. The growth rate in industrial production was 2.9 per cent and even higher, up to 13 per cent in some industries (light industry, processing and garment industries and several others). Therefore, overall, our economy is stable.

But the most important task we need to achieve is to change the structure of the economy and secure a substantial growth of labour productivity through modern technologies, Artificial Intelligence, robotics and so on. This is exactly why we increased VAT, to raise budget funds for performing a certain part of this job that is the state’s responsibility, in order to create conditions for private investment. Let us take transport and other infrastructure development. Hardly anybody besides the state is involved in it. There are other factors related to education and healthcare. A person who has health problems or has no training cannot be efficient in the modern economy. The list goes on.

We really hope that by starting this work on key development areas, we will be able to increase labour productivity and use this basis for ensuring an increase in the incomes and prosperity of our people.

As concerns the reserves, you are not exactly correct here, either. We have over 500bn in gold and foreign currency reserves, rather than 460bn. But the understanding is that we need to create a safety net that would let us feel confident and use the interest on our existing resources. If we have 7 per cent more, we can spend those 7 per cent.

This is what we plan for the next year and there is a high probability that we will succeed. Do not think that this money is just sitting on the shelf. No, it creates certain guarantees for Russia’s economic stability in the midterm.

LB: The central bank has done a very good job in helping to secure macroeconomic stability even if some of the oligarchs complain about banks being closed.

VP: You know, first of all, we do not have oligarchs any more. Oligarchs are those who use their proximity to the authorities to receive super profits. We have large companies, private ones, or with government participation. But I do not know of any large companies that get preferential treatment from being close to the authorities, these are practically non-existent.

As for the central bank, yes, it is engaged in a gradual improvement of our financial system: inefficient and small-capacity companies, as well as semi-criminal financial organisations are leaving the market, and this is large-scale and complicated work.

It is not about oligarchs or large companies; the thing is that it affects, unfortunately, the interests of the depositor, the average person. We have relevant regulatory acts that minimise people’s financial losses and create a certain safety net for them. But each case should be considered individually, of course.

In general, the work of the central bank, in my opinion, deserves support. It is related to both the improvement of the financial system and the calibrated policy regarding the key interest rate.

LB: Mr President, I would like to go back to President Xi and China. As you know, he has pursued a rigorous anti-corruption campaign in order to clean up the party, maintain the legitimacy and strengthen the party. He has also read the history of the Soviet Union, where [Mikhail] Gorbachev essentially abandoned the party and helped to destroy the country — the Soviet Union. Do you think that Mr Xi is right in his approach that the party is absolutely crucial? And what lessons do you draw for Russia? If I can just add, you said something interesting a few years ago about the break-up of the Soviet Union being the greatest geopolitical tragedy of the 20th century.

VP: These two issues are not connected. As for the tragedy related to the dissolution of the Soviet Union, this is something obvious. I meant, first of all, the humanitarian aspect of it. It appears that 25m ethnic Russians were living abroad when they learned from the television and radio that the Soviet Union had ceased to exist. Nobody asked their opinion. The decision was simply made.

You know, these are issues of democracy. Was there an opinion poll, a referendum? Most (over 70 per cent) of the citizens of the USSR spoke in favour of retaining it. Then the decision was made to dissolve the USSR, but nobody asked the people, and 25m ethnic Russians found themselves living outside the Russian Federation. Listen, is this not a tragedy? A huge one! And family relations? Jobs? Travel? It was nothing but a disaster.

I was surprised to see the later comments on what I said, in particular, in the Western media. They should try to live through seeing their father, brother or any other close relative finding themselves living in a different country, where a whole new life has started. I assure you.

As for the party and the party state building in China, this is for the Chinese people to decide; we do not interfere. Today’s Russia has its own principles and rules of life, and China with its 1.35bn people has its own. You try to rule a country with such a population. This is not Luxembourg, with all due respect to this wonderful country. Therefore, it is necessary to give the Chinese people the opportunity to decide how to organise their lives.

LB: Again a big picture question. I talked at the beginning of our conversation about fragmentation. Another phenomenon today is that there is a popular backlash against elites and against the establishment and you have seen that — Brexit in Britain. Perhaps you were speaking about Trump’s America. You have seen it with the AFD in Germany; you have seen it in Turkey; and you have seen it in the Arab world. How long do you think that Russia can remain immune to this global movement of backlash against the establishment?

VP: You should look at the realities in each particular case. Of course, there are some trends, but they are only general. In each particular case, when looking at the situation and how it unfolds, you should take into account the history of the given country, its traditions and realities.

How long will Russia remain a stable country? The longer the better. Because very many other things and its position in the world depend on stability, on internal political stability. Ultimately, the wellbeing of the people depends, possibly primarily, on stability.

One of the reasons, the internal reason for the Soviet Union’s collapse was that life was difficult for the people, whose take-home wages were very small. The shops were empty, and the people lost the intrinsic desire to preserve the state.

They thought that it could not get worse no matter what happened. It turned out that life became worse for very many people, especially at the beginning of the 1990s when the social protection and healthcare systems collapsed and industry was crumbling. It could be ineffective, but at least people had jobs. After the collapse, they lost them. Therefore, you should look at each particular case separately.

What is happening in the West? What is the reason for the Trump phenomenon, as you said, in the US? What is happening in Europe as well? The ruling elites have broken away from the people. The obvious problem is the gap between the interests of the elites and the overwhelming majority of the people.

Of course, we must always bear this in mind. One of the things we must do in Russia is never to forget that the purpose of the operation and existence of any government is to create a stable, normal, safe and predictable life for the people and to work towards a better future.

There is also the so-called liberal idea, which has outlived its purpose. Our Western partners have admitted that some elements of the liberal idea, such as multiculturalism, are no longer tenable.

When the migration problem came to a head, many people admitted that the policy of multiculturalism is not effective and that the interests of the core population should be considered. Although those who have run into difficulties because of political problems in their home countries need our assistance as well. That is great, but what about the interests of their own population when the number of migrants heading to Western Europe is not just a handful of people but thousands or hundreds of thousands?

LB: Did [German chancellor] Angela Merkel make a mistake?

VP: Cardinal mistake. One can criticise Trump for his intention to build a wall between Mexico and the US. It could be going too far. Yes, maybe so. I am not arguing about this point. But he had to do something about the huge inflow of migrants and narcotics.

Nobody is doing anything. They say this is bad and that is bad as well. Tell me, what is good then? What should be done? Nobody has proposed anything. I do not mean that a wall must be built or tariffs raised by 5 per cent annually in the economic relations with Mexico. This is not what I am saying, yet something must be done. He is at least looking for a solution.

What am I driving at? Those who are concerned about this, ordinary Americans, they look at this and say, Good for him, at least he is doing something, suggesting ideas and looking for a solution.

As for the liberal idea, its proponents are not doing anything. They say that all is well, that everything is as it should be. But is it? They are sitting in their cosy offices, while those who are facing the problem every day in Texas or Florida are not happy, they will soon have problems of their own. Does anyone think about them?

The same is happening in Europe. I discussed this with many of my colleagues, but nobody has the answer. The say they cannot pursue a hardline policy for various reasons. Why exactly? Just because. We have the law, they say. Well, then change the law!

We have quite a few problems of our own in this sphere as well. We have open borders with the former Soviet republics, but their people at least speak Russian. Do you see what I mean? And besides, we in Russia have taken steps to streamline the situation in this sphere. We are now working in the countries from which the migrants come, teaching Russian at their schools, and we are also working with them here. We have toughened the legislation to show that migrants must respect the laws, customs and culture of the country.

In other words, the situation is not simple in Russia either, but we have started working to improve it. Whereas the liberal idea presupposes that nothing needs to be done. The migrants can kill, plunder and rape with impunity because their rights as migrants must be protected. What rights are these? Every crime must have its punishment.

So, the liberal idea has become obsolete. It has come into conflict with the interests of the overwhelming majority of the population. Or take the traditional values. I am not trying to insult anyone, because we have been condemned for our alleged homophobia as it is. But we have no problems with LGBT persons. God forbid, let them live as they wish. But some things do appear excessive to us.

They claim now that children can play five or six gender roles. I cannot even say exactly what genders these are, I have no notion. Let everyone be happy, we have no problem with that. But this must not be allowed to overshadow the culture, traditions and traditional family values of millions of people making up the core population.

LB: Does that include — this is very important, like you say — the end of this liberal idea, because — what else did you say — uncontrolled immigration, open borders, definitely, as you say, diversity as an organising principle in society? What else do you think is just finished over in terms of the liberal idea? And would you say — if I could just add — that religion therefore must play an important role in terms of national culture and cohesiveness?

VP: It should play its current role. It [religion] cannot be pushed out of this cultural space. We should not abuse anything.

Russia is an Orthodox Christian nation, and there have always been problems between Orthodox Christianity and the Catholic world. This is exactly why I will now say a few words about Catholics. Are there any problems there? Yes, there are, but they cannot be over-exaggerated and used for destroying the Roman Catholic Church itself. This is what cannot be done.

Sometimes, I get the feeling that these liberal circles are beginning to use certain elements and problems of the Catholic Church as a tool for destroying the Church itself. This is what I consider to be incorrect and dangerous.

All right, have we forgotten that all of us live in a world based on biblical values? Even atheists and everyone else live in this world. We do not have to think about this every day, attend church and pray, thereby showing that we are devout Christians or Muslims or Jews. However, deep inside, there must be some fundamental human rules and moral values. In this sense, traditional values are more stable and more important for millions of people than this liberal idea, which, in my opinion, is really ceasing to exist.

LB: So religion, religion is not the opium of the masses?

VP: No, it is not. But I get the impression that you are detached from religion because it is already 12.45am Moscow time, and you continue to torture me. As we say here, there is no fear of God in you, is there? (Laughter).

LB: This is history. I have waited a long time for this. I have got one last question. And thank you for your — go on please.

VP: Please, go ahead.

Henry Foy: Mr President, would you say — I was reflecting on what you just said: some of the themes you were referring to would echo in people such as [former Trump adviser] Steve Bannon, and Mr Trump himself, and the groups in Europe who have come to power. Do you think if the end of the liberal idea is over, is now the time of the “illiberals”? And do you see more and more allies growing around the world to your way of seeing the human existence at the moment?

VP: You know, it seems to me that purely liberal or purely traditional ideas have never existed. Probably, they did once exist in the history of humankind, but everything very quickly ends in a deadlock if there is no diversity. Everything starts to become extreme one way or another.

Various ideas and various opinions should have a chance to exist and manifest themselves, but at the same time interests of the general public, those millions of people and their lives, should never be forgotten. This is something that should not be overlooked.

Then, it seems to me, we would be able to avoid major political upheavals and troubles. This applies to the liberal idea as well. It does not mean (I think, this is ceasing to be a dominating factor) that it must be immediately destroyed. This point of view, this position should also be treated with respect.

They cannot simply dictate anything to anyone just like they have been attempting to do over the recent decades. Diktat can be seen everywhere: both in the media and in real life. It is deemed unbecoming even to mention some topics. But why?

For this reason, I am not a fan of quickly shutting, tying, closing, disbanding everything, arresting everybody or dispersing everybody. Of course, not. The liberal idea cannot be destroyed either; it has the right to exist and it should even be supported in some things. But you should not think that it has the right to be the absolute dominating factor. That is the point. Please.

LB: You really are on the same page as Donald Trump. Mr President, you have been in power for almost 20 years.

VP: For 18 years.

LB: You have seen many world leaders. Who do you most admire?

VP: Peter the Great.

LB: But he is dead.

VP: He will live as long as his cause is alive just as the cause of each of us. (Laughter). We will live until our cause is alive.

If you mean any present-day leaders from different countries and states, of the persons that I could communicate with, I was most seriously impressed by former president of France [Jacques] Chirac. He is a true intellectual, a real professor, a very level-headed man as well as very interesting. When he was president, he had his own opinion on every issue, he knew how to defend it and he always respected his partners’ opinions.

In modern-day history, taking a broader view, there are many good and very interesting people.

LB: Peter the Great, the creator of the Greater Russia. Need I say any more? My last question, Mr President. Great leaders always prepare succession. Lee Kuan Yew prepared succession. So please share with us what would the process be by which your successor will be chosen.

VP: I can tell you without exaggeration that I have always been thinking about this, since 2000. The situation changes and certain demands on people change, too. In the end, and I will say this without theatrics or exaggeration, in the end the decision must be made by the people of Russia. No matter what and how the current leader does, no matter who or how he represents, it is the voter that has the final word, the citizen of the Russian Federation.

LB: So the choice will be approved by the Russian people in a vote? Or through the Duma?

VP: Why through the Duma? By means of direct secret ballot, universal direct secret ballot. Of course, it is different from what you have in Great Britain. We are a democratic country. (Laughter).

In your country, one leader has left, and the second leader, who is for all intents and purposes the top figure in the state, is not elected by a direct vote of the people, but by the ruling party.

It is different in Russia, as we are a democratic country. If our top officials leave for some reason, because they want to retire from politics like Boris Yeltsin, or because their term ends, we hold an election through universal direct secret ballot.

The same will happen in this case. Of course, the current leader always supports someone, and this support can be substantive if the person supported has the respect and trust of the people, but in the end, the choice is always made by the Russian people.

LB: I cannot resist pointing out that you did take over as president before the election.

VP: Yes, this is true. So what? I was acting president, and in order to be elected and become the head of state, I had to take part in an election, which I did.

I am grateful to the Russian people for their trust back then, and after that, in the following elections. It is a great honour to be the leader of Russia.

LB: Mr President, thank you for spending time with the Financial Times in Moscow, in the Kremlin.

VP: Thank you for your interest in the events in Russia and your interest in what Russia thinks about the current international affairs. And thank you for our interesting conversation today. I believe it was really interesting. Thank you very much.

A new Intercept report reveals that the judge who helped jail former Brazilian President Lula likely aided prosecutors in their corruption case, preventing Lula’s left-wing Workers’ Party from winning the presidency. “The consequences of this revelation have been enormous,” says Glenn Greenwald, Pulitzer Prize-winning journalist and founding editor of The Intercept.

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The users least impacted by losing Google services are on Huawei’s side here

By Chaim Gartenberg@cgartenberg May 20, 2019, 4:43pm EDT

Huawei had its Android license cut off by Google over the weekend thanks to a US government order. But Chinese users appear to be rallying around the company, with social media posts on Weibo and Douyin showing strong support for Huawei, according to What’s On Weibo.

The debate over Huawei and national security was thrust back into the spotlight over the weekend, when, as part of a US government order, Google revoked Huawei’s Android license, which cuts the company’s phones off entirely from most Google apps and services. It’s less of a problem for users in China, given nearly all Google services don’t function in China anyway, but the move is far more problematic for Huawei’s efforts to expand beyond its Chinese customer base to places like Europe and the US.

Per What’s On Weibo’s report, Chinese customers are posting in support of Huawei with declarations that they’ll continue using their Huawei phones or to purchase their next device from the company in the future. Hashtag campaigns for “Huawei Doesn’t Need to Rely on America for its Microchips” (#华为芯片可以不依赖美国供应链#) and “Huawei’s Self-Developed Operating System Hong Meng” (#华为自研操作系统鸿蒙#) were also trending on Weibo, highlighting that Huawei already develops many of its own components for its phones, as well as the in-house operating system that Huawei has been developing for just this sort of circumstance.