BLOOMBERG NEWS
Founded by Michael Bloomberg in 1990, Bloomberg News is an international news agency based in New York. Coverage is focused but not limited to business and economic news.
Economy
Cassidy Slockett

How COVID-19 Exposed The Hard Questions About The Gig Economy

Consumers are convinced. Wall Street is buoyant. Demand around the world for app-based services is booming, with entire nations stuck at home during COVID-19 lockdowns and the prospect of goods and services at their door with just a click. As the so-called "Gig Economy" spreads alongside the pandemic, society has struggled to keep up.

• Online sales in South Korea have grown by 17% this year, and 42% in food deliveries.

• The freelancer platform PeoplePerHour registered a 300% increase of users in March of this year in the UK, 329% jump in Spain, and 513% in Japan.

Upwork reported a 24% increase in signups over the summer.

Investors and founders of the likes of Doordash and AirBNB are cashing in, with the two companies IPOs hitting record highs and earning Wall Street approval for their respective market dominance. Still, the stock market is not the economy, and white-collar and blue-collar workers alike have been forced to turn to gig-work out of financial necessity — offering little in the way of social benefits or long-term prospects.

"I have to work twice as much to make half of what I was making to survive," said Tyrita Franklin-Corbett, a former retail worker turned Instacart gig-shopper, to Reuters in October.

How it works: Rather than earning a regular wage, these apps pay for each "gig" completed. While it's not uncommon that people turn to freelance work during periods of economic downturns, the health crisis presents a unique scenario in which freelance workers risk being exposed to the virus in order to get paid.

• In the UK, a recent survey by the Centre for Economic Performance (CEP) found that 78% of app workers thought their health was at risk while working.

Exploited & Exposed: The pandemic has exacerbated the vulnerabilities of millions of workers already in precarious financial situations and without a safety net. Deliverers are considered "essential," but they don't receive the same protections (both physical and economic) as other essential workers.

• With Uber Eats in France offering 10 euros to customers on three orders during lockdown, workers have accused the tech-giant of "promonavirus," that is, using them as "cannon fodder," to serve meals while everyone else stays at home, Le Monde reports.

• "We have no protection," migrant food delivery rider Diego Franco in Australia recently told the Sydney Morning Herald.

• Already this year, 15 delivery workers in South Korea have died from "kwarosa," literally "to die of overwork." The gig-world is at its tipping point.

At a rally by Uber and Lyft drivers calling for basic employment rights in Los Angeles — Photo: Ringo Chiu/ZUMA Wire

Pushing back & shutting down: In the face of this harsh reality, gig workers have responded with work shutdowns, lawsuits and union organizing.

• In the U.S., thousands of Amazon workers have gone on strike in New York City after reports emerged that several employees had tested positive and still lack safety gear.

• The Independent Workers' Union of Great Britain (IWGB) won a lawsuit which accused the UK government of failing to extend health and safety protections such as PPE to gig workers.

• The Italian food delivery industry, Assodelivery, has threatened to protest in order to give legal status to relationships with workers.

• As a result of the increase in demand during the pandemic, Scottish workers created the Workers Observatory union to discuss difficulties and track data in order to "challenge conditions in self-employed and gig work."

Fixing a fairer future: Ultimately, gig work has thrived until now on its lack of regulation. Yet the pandemic has clearly displayed the need for basic regulations, both for the workers and ultimately for the companies as well.

• La Stampa reports that Italy is attempting to strike a solution, where companies like Uber, Deliveroo, Glovo, JustEat will recognize workers as employees starting in 2021, earning a minimum wage of 10 euros per hour, along with overtime pay equal to 10%, 15% and 20% linked to following night work, holidays and bad weather.

• California recently passed Proposition 22, which seeks to provide contractors with health insurance and retirement benefits. The ballot initiative was funded by $200 million from Uber and its competitor Lyft, who presented it as a way to add some protections for its drivers while leaving them flexibility in when and how they work. Still the measure's main point was to specifically exclude gig workers from basic health and retirement benefits of a new law. Californians overwhelmingly supported the proposition, passing it 58 to 42 %.

France is offering € 1,500 to self-employed entrepreneurs who have experienced a drop in turnover of at least 70% as a result of COVID-19. But some gig workers simply cannot afford to face this drop to begin with. For them, it's even more crucial to keep working, even if it means extra hours and health risks.

The real takeaway? Critics have argued that these efforts are mainly face-saving measures that protect the platforms in the long run, and do little to address exploitation. In Europe, labor experts say that reforms that have long been driven by the rights of permanent employees must now focus on the broader status of "workers." Others are pushing for the implementation of a universal basic income (UBI) to address the entire economic system. The pandemic has offered further proof that the Gig Economy is not going away. But it has also shown that it is built on a system of inequalities that, IPOs aside, are not sustainable in the long run.

Geopolitics

The Latest: Sep. 11 Troop Withdrawal, Vaccine Doubts, Even Bigger Christ In Brazil

Welcome to Wednesday, where Joe Biden chooses a major anniversary for the final withdrawal of U.S. troops from Afghanistan, the Johnson & Johnson vaccine rollout is stopped and there's an even taller Christ statue in Brazil. We also look at how different countries are finding creative ways to commemorate the COVID-19 victims.

U.S. troops to leave Afghanistan: U.S. President Joe Biden has officially announced the withdrawal of the last U.S. troops from Afghanistan by September 11, to coincide with the 20th anniversary of the terror attacks that led to the 2001 invasion. It is a short extension of a May 1 deadline for full withdrawal made in an agreement between the Trump administration and the Taliban.

New questions about vaccines made in U.S. and China: The United States, the European Union and South Africa temporarily halt the Johnson & Johnson COVID vaccine rollout, after a few rare cases of blood clots have been reported. Meanwhile, new questions are raised about the effectiveness of China's Sinovac vaccine, which has been distributed in such countries as Brazil and Indonesia.

Violence continues in Minneapolis after police resignations: A third night of unrest was reported in Minneapolis, following the resignation of police officer Kim Potter two days after fatally shooting Daunte Wright. The police chief in the nearby town where the killing happened also resigned after calling the shooting an accident. The latest killing happened just a few miles from where George Floyd was killed last year by police officer Derek Chauvin, who is currently on trial for murder.

20 children die in Niger school fire: Investigators are probing the cause of a fire that killed 20 children died yesterday at a school in Niamey, Niger's capital city.

Coinbase listing marks crypto landmark: The largest cryptocurrency exchange, called Coinbase, lists today on the Nasdaq stock market, a milestone for the blockchain-backed currency economy.

Somalia's president extends his mandate: President Mohamed Abdullahi has signed a controversial law that extends his mandate for two more years, according to a state news agency. Adullahi's four-year term expired in February without a successor.

World's longest rabbit is missing: Darius, the 129 cm-long continental giant rabbit has been stolen from its home in Worcestershire, in the UK, according to police officials. His owner has offered a £1,000 ($1,378) reward for his return.

Watch Video Show less
Geopolitics

The Latest: Taiwan Train Crash, Gay Marriage Anniversary, Salty Mountains

Welcome to Friday, where a train crash in Taiwan leaves dozens dead, Niger has historic peaceful transfer of power and Egypt has a salty new tourist attraction. Ukrainian news website Livy Bereg also reveals why Russia is leaking secrets to the press about the international negotiations trying to resolve its conflict with Ukraine.

• Dozens dead in Taiwan train crash: A train crash killed at least 48 people and left 66 injured in eastern Taiwan. The express train, carrying about 500 passengers, derailed in a tunnel after hitting a construction vehicle that had rolled onto the tracks.

• Toll in Tigray: Nearly 2,000 victims have been identified by researchers studying the conflict since it exploded, last year. Those killed include infants and people over 90, the report says.

• Aung San Suu Kyi charged: Myanmar protesters call for "guerilla strikes' as country faces a new wireless internet shutdown and following charges filed against detained leader Aung San Suu Kyi for violating state secrets, punishable by up to 14 years of prison.

• Peaceful transition in Niger: Mohamed Bazoum gets sworn in as Niger president in the country's first peaceful transfer of power since its independence in 1960. The inauguration comes just days after the government says it thwarted a military coup attempt.

• Dutch leader Rutte survives vote of confidence: Dutch Prime Minister Mark Rutte narrowly survives a no-confidence vote over accusations he lied about coalition talks.

• G7 to double help for poorer countries to cut CO2 emissions: Deputy secretary general of the UN, Amina Mohammed calls on the world's richest group of countries to double their financial support to poorer countries to help them cut their CO2 emissions.

• Egypt's salt mountains become a tourist attraction: Images of people sliding down "snowy" mountains of Port Fouad went viral on the internet. The salt mountains quickly became a tourist hit, attracting Egyptians from all across the country to enjoy the unique landscape.

Watch Video Show less
Geopolitics

Worldcrunch Today, Jan. 4: Assange Stays, Iran's Uranium, Where's Jack?

Welcome to Monday, where the UK blocks Assange's extradition, vaccinations are moving too slowly (almost) everywhere and the Asian business world is asking: Where's Jack? We also follow Le Monde to Casablanca where Moroccans are rethinking what it means to be a man.

SPOTLIGHT: DEMOCRACY HAS MORE GRIT THAN YOU MIGHT THINK

There are more and more elected leaders these days willing to ride roughshod over the rules of democracy. But that hardly means the system's doomed writes Pedro Viveros in Colombian daily El Espectador.

In Colombia and elsewhere, there are voices declaring that democracy is doomed. They point to the proliferation of erratic leaders and budding dictators, people like Trump, Maduro, Putin, Duterte in the Philippines, or Nicaragua's Daniel Ortega, but without properly analyzing things in any of those countries.

Instead they argue that the presence of such leaders shows how weak the citizens of those nations are. And their conclusion is that the 21st century is destined to suffer another epidemic: a plague of autocrats.

The ideological references of the past century, namely fascism, Nazism and communism and their "charismatic" leaders, have led some to assume that history will repeat itself. They argue that the present crop of pestilential challenges will inevitably take us back to the foul prescriptions that produced the world wars. And here we thought things couldn't get any worse!

The deplorable events that left society fractured between three worlds — the Western and Eastern worlds, and we in the developing world — were based on extremist conceptions of nationalism that made jingoism a defensive response to anything external. Xenophobia became a rhetorical instrument amid unprecedented socio-economic crises. Voting, democracy's simple tool, was no longer enough to hold back the hordes of supporters running after the paradise promised by a Hitler, Mussolini or Lenin.

Today, too, the vote might not be enough to contain the pandemic of demagoguery. Fortunately, the many crises humanity has faced over the past century have raised the immunity of the democratic body. Its boosted defenses now include complementary mechanisms like the separation of powers, charters, multilateralism, independent bodies and human rights courts, the World Court at The Hague and the globalization of problems, but also solidarity, solutions, knowledge and education.

Voting has become the beginning and the end of a system designed to call out, criticize and control its own outrages. Donald Trump's desire to remain in the White House is, well, just that, a desire. And fortunately, the laws of the United States, forged to prevent entrenchment in power, will prevent his doing so — just as Colombia's Constitutional Court prevented former president Álvaro Uribe from seeking a third, unconstitutional term.

Likewise, multilateral coordination has guided scientific action against the coronavirus, creating a "live-and-direct" global response that has prevented the pandemic's already tragic impact from taking an even higher toll.

Democracies are behind the denunciations of corruption and of unnecessary wars. They have helped reduce poverty worldwide and forge sustainable development goals set out in the UN, itself a democratic consequence of the threats of intolerant elements mentioned above. All these efforts and tools will be crucial not only for keeping democracy alive, but also for protecting those of us who vote in this most beguiling and enduring of government systems.

— Pedro Viveros / El Espectador

Watch Video Show less
Green Or Gone
Alastair Gill

Why Washington May Detour Russia's Big Pipeline Project

Opposition to the planned Nord Stream 2 gas project had been limited to Europe. But now the Trump administration is challenging it too — with possible sanctions.

-Analysis-

The political heat over Russia's proposed Nord Stream 2 gas pipeline to Germany is now coming from far afield, after the United States announced plans to sanction companies working with Moscow's state-owned gas giant Gazprom on the controversial project.

Speaking in the Ukrainian capital Kyiv, where he was heading a delegation attending the inauguration of Ukrainian President Volodymyr Zelenskiy, U.S. Energy Secretary Rick Perry said on Tuesday that Congress was set to begin drafting a bill on sanctions, Bloomberg reported.

"I expect over the course of the not-too-distant future that the U.S. Senate as well as the U.S. House will send a bill to the president of the U.S. that will have some very, very onerous restrictions on companies that continue to do business with the Nord Stream 2 development," said Perry in Kyiv. "So stay tuned."

Initiated by Russia in 2015, the pipeline is set to travel 1,220 kilometers under the Baltic Sea from Ust-Luga in Russia's Leningrad Region to the German port of Griefswald. Running parallel to the already existing Nord Stream pipeline, which links the Russian Baltic port of Vyborg to Griefswald, Nord Stream 2 will double the amount of gas supplied to EU countries via Germany to 110 billion cubic meters per year. Germany, which is heavily dependent on Russia for energy, is a strong backer of the project, which is scheduled to be completed by the end of the year.

If completed, Nord Stream 2 will cement European reliance on Russian natural gas.

Russia says Nord Stream 2 is necessary in order to secure reliable energy supplies to Europe and give it more direct access to the EU market. But as tensions between Moscow and the West have soared over the annexation of Crimea and the Russian-backed rebellion in eastern Ukraine, doubts have emerged over whether the Kremlin's motives are purely economic, with critics in Europe arguing that the pipeline could become yet another weapon in Russia's "hybrid warfare" arsenal.

Europe currently receives 40% of its gas from a pipeline that crosses Ukraine. Kyiv not only earns up to $3 billion annually in transit fees as of 2017, but also has the power to turn off the taps if its own supply is threatened. On more than one occasion in recent years, Gazprom's European customers have fallen victim to tariff disputes between Moscow and Kyiv — always timed to coincide with winter cold — that have seen Ukraine blocking the westward flow of gas in protest.

Nord Stream 2 would bypass Ukraine, Poland and the Baltic States, thus effectively allowing Moscow to hold Kyiv — and potentially other nations — to ransom over energy, providing it with a useful weapon in its standoff with NATO in Eastern Europe.

Publicly, at least, the United States is taking the same line as the pipeline's critics in Europe: that if completed, Nord Stream 2 will cement European reliance on Russian natural gas while providing Moscow with a lever to exert political pressure on its neighbors.

But in comments made to the Kommersant FM radio station, Kremlin press secretary Dmitry Peskov made it clear that Moscow sees other motives behind Washington's efforts to frustrate the completion of the pipeline. Peskov argues that there is a clear link between U.S. opposition to Nord Stream 2 and Washington's intentions to export American gas to Europe.

Gazprom itself appears uncowed by warnings of U.S. sanctions, and says that none of its partners have withdrawn from the project as a result of American threats. The project's financial partners include Uniper SE, Engie SA, Royal Dutch Shell Plc, OMV AG and BASF SE's Wintershall.

Andrei Kochetkov, an analyst from the Moscow-based Otkrytie Broker company, told Russia's leading business daily Kommersant on Tuesday that in the event of sanctions, Gazprom would be ready to complete the project using its own resources. "The project is currently being carried out by a consortium of several (Western) companies," he noted. "But the Russian company has already stated on numerous occasions that if its European partners are unable to continue participating, then it can complete the project on its own."

In the end, the fate of Nord Stream 2 may be decided not in Washington, but in Copenhagen. The pipeline requires approval from each country whose territorial waters it passes through, and while Finland, Sweden, Germany and Russia have already given the green light for construction, Denmark has been stalling.

Copenhagen has asked the Nord Stream 2 consortium to look into alternative routes. Rather than kill the project, however, Denmark's maneuverings will probably just delay it. Whatever happens, it appears the U.S. has arrived too late to influence the outcome. That leaves Russia set to profit — perhaps at Europe's expense.

Economy
Megan Durisin, Aine Quinn and Rob Dawson

Back To Beans? A Whiff Of Britain's Post-Brexit Food Menu

A messy withdrawal from the EU could cost the U.K. its current trade routes and threaten supplies of brie and parmesan, avocados and tomatoes...and even tea!

LONDON — No more avocado toast or banana smoothies. And forget about shaving fresh parmesan on your pasta. Instead, get used to milk at every meal, bread for days, lamb chops, and peas. Lots and lots of peas.

Home-grown meals more akin to an industrial-age diet are what Britons could be eating if the U.K. leaves the European Union without a deal that sets up basic trading relations with other countries. The U.K. relies heavily on imports and has been such a hotbed of agricultural trade for centuries that it's easy to forget what the British palate would look like in a world where food trade grinds to a halt.

It's hard to predict what could happen at this stage. While it's highly unlikely that food imports would completely cease if the U.K. eventually crashes out of the bloc without a deal, grocery stores and farmers are preparing for the worst. If that were to happen, there'd at least be plenty of meat and potatoes, but forget "five-a-day" fruit and vegetables.

A caricatural figure of British PM Theresa May in Germany — Photo: Ina Fassbender/DPA/Zuma

"We'll have food, but the supply chains and logistics would need to handle a major change," said Sue Pritchard, director at the Food, Farming and Countryside Commission at the Royal Society of Arts. "Maybe we'll need to revive the British tradition of a good meat and three veg roast!"

The nation produces about 60% of its own food, so a lot of popular products would, hypothetically, be unavailable. We took a look at what supermarket shelves would look like in a world without trade.

A gallon a week

Brits would be swimming in milk. U.K. cows produce enough for about a gallon per person each week, providing plenty for breakfast cereal or dessert trifles. Egg supplies are also largely domestic.

But other familiar products could disappear, such as Irish butter or cheddar. Farmers in Northern Ireland wouldn't be able to send milk across the border for processing, and cheese fans should bid farewell to French brie and Italian Parmesan.

Bye bye bananas

There'd be fewer greens, and what remains will be more vulnerable to seasonal harvests. Fresh produce would be among the most affected, as the U.K. imports most of its fruit and about half its vegetables. We'd each get about four pounds of strawberries and half a pound of raspberries a year from British farms, with nary a banana. Avocado toast is off the menu, too.

The country produces plenty of peas (its best-selling veggie), and carrots and beets are available most months. Broccoli would be on the shelves for just half the year. Save the tomatoes for special occasions: U.K. farmers produce only a fifth of the tomatoes sold in the country throughout the year, and up to a half in the summer, according to the British Tomato Grower's Association.

More mutton

It's lamb chops aplenty in Britain, one of the largest exporters of the meat. The country also produces about 50 pounds of chicken and 30 pounds each of beef and pork annually per person, though that includes some less-appetizing cuts currently sold abroad.

If overseas trade were to stop, there could be a shortage of popular legs and loins but extra livers on sale. Livestock would also see their diets change as imported corn and soybeans disappear from feed mixes.

There should not be a shortage of fish and chips — Photo: Tristan Ferne

Bread for days

There shouldn't be much of a shortage of bread because enough wheat is grown for the bulk of U.K. flour production. The grain has been grown in the country for thousands of years and ranks as the largest arable crop by area.

It's not all good news for carb lovers though. Products with firmer dough, such as pizza crusts, use high-protein wheat varieties that typically thrive in other climates. So consumers may have to swap a slice for an extra sandwich to get their fix of gluten.

A rare catch

Lobster and chips? The cod that's battered here often comes from Norway and Iceland — 90% of it was imported in 2015 — while British fishermen sell the bulk of their fresh shellfish to the continent. That could mean an abundance of crab, lobster and prawns for U.K. consumers.

And if you want a side of chips, you're in luck. Britain's penchant for potatoes would largely be secure because the country produces about three-quarters of its own supply, though imports some processed products.

Caffeine crisis?

Pile-ups at ports of entry could also hamper supplies from non-EU nations, so you may need to find an alternative to the afternoon cuppa. Britain's tea habit has always been fed by imports, originally fueled by shipments from the East India Company that started centuries ago.

Unsurprisingly, grinds for our morning coffee aren't homegrown either, and many wine glasses would sit unused without overseas supply. The U.K. imported 480 million bottles of wine from the EU in 2017, according to the Wine and Spirit Trade Association industry group.

It's not all bad news — local pubs would still be able to serve up a stiff drink. About 20 million casks of whisky are currently maturing in Scotland, and the country could always tap its barley fields to brew beer.

— With assistance by Patricia Suzara

Future
Olivia Carville

Facebook For Felons? New Apps Are A Digital Lifeline For Inmates

Pigeonly is one of several applications that were designed by ex-cons and are transforming the way U.S. prisoners communicate with the outside world.

Laura Whitten, 35, woke up, rolled over and grabbed her phone, snapping a selfie in bed beside her dog. "Good morning, xo" she wrote in a message to her boyfriend, uploading it to an app called Pigeonly.

The picture traveled from her home in the eastern suburbs of Charlotte, North Carolina, to a fulfillment center in downtown Las Vegas. There it was printed out, stuffed into an envelope and stamped with an address: Berlin Federal Correctional Institution, New Hampshire.

A week later, the photo arrived at the prison mail room, where clerks eyeballed it for drug paraphernalia and nudity, then delivered it to Inmate 20274-058.

Cedric Benton, 43, gazed at the image for hours, sitting cross-legged in a gray tracksuit on his bunk bed. Benton has six years left on a two-decade sentence for a drug-related conspiracy felony. Looking at the photo, he thought: "There is life for me outside these walls. I have to get out and stay out."

Windows to the world

Pigeonly is one of at least three apps — all launched by ex-cons— that are revolutionizing communications between prisoners and their loved ones. Even as the outside world has embraced texting, video chats and social media, U.S. prisons have largely remained technological dead zones, where inmates typically wait in line and pay to use antiquated computers running stripped-down email services. The trio of apps are slowly but surely disrupting a prison communications industry dominated by a handful of companies with little incentive to cut prices or boost services for the 2.3 million people behind bars.

Pigeonly and its ilk have hit on a communication model — a necessarily inelegant one — that meets inmates' desire for a more tangible connection while serving the social-media habits of their loved ones. One of the apps, Flikshop, has been affectionately dubbed the "Instagram for prisons." It's an imperfect metaphor perhaps, but the app is the closest thing to the social network in prison, and Flikshop postcards are pinned up on cell walls across the country.

Beyond giving prisoners an easier, cheaper and more fulfilling way to communicate, the men who started these apps also want to make inmates less likely to re-offend because they see there's a life to be lived on the outside. Decades of research show that recidivism rates fall when prisoners are in regular contact with family. Criminal justice advocacy groups and rehabilitation non-profits have already started using the apps to make the prison population aware of their services.

Frederick Hutson, 34, started Pigeonly, Inc. in 2013, fresh from a five-year stint in federal prison for drug trafficking. "I saw first-hand how difficult and expensive it was to stay in touch," Hutson says. "I also saw how much of an impact that made on the person behind bars. I would see the guys that had the financial means to stay in touch and when they left prison I would hear that they were doing well, but those who didn't have the support network on the outside — I'd see them coming back in."

I just want to give him real life because that's what he's missing.

Pigeonly — named for the pigeon post services of wartime fame — wants to become a bridge between those who live in a digital world and those who are imprisoned in an analog one. Customers subscribe to the app for a monthly fee, ranging from $7.99 to $19.99, in order to send photos and messages and have access to cheaper online phone rates. Pigeonly has 20 full-time staff, half of whom were previously incarcerated themselves. Every day, they send up to 4,000 mail orders into county, state and federal penitentiaries across the country.

Whitten says Pigeonly has helped her remain close to Benton even as he was bounced around prisons from California to New Hampshire. She pays $7.99 a month to access cheaper state phone rates and send unlimited photos and messages. "I send him pictures all the time," she says. "I send him everything." Benton particularly likes getting photos of Charlotte to see how his hometown is changing. He enjoys seeing his nephew dressed up on Halloween and his mother on Mother's Day.

Benton has missed more than a decade's worth of Thanksgiving dinners, birthdays and Christmases, but for Whitten the grief is at its sharpest during unexpected, serendipitous moments. Like when Benton's 5-year-old nephew came into the living room fresh from a bath in his Darth Vader robe and cuddled up to her dog, who wore a matching Star Wars dressing gown.

Sending photos to an incarcerated family member – Photo: Bring in the Community

Whitten couldn't stop laughing at the pair. She wished Benton had been there to see them. So, she did what she always does when that familiar pang sets in: she snapped a photo on her phone and uploaded it to Pigeonly. Just like she does most days when she wakes up, to wish him a good morning. "I just want to give him real life because that's what he's missing," she says. "It might sound small, but that's something we weren't able to do before."

Benton says the photos are pinned up on the walls of his cell and remind him of home. "It makes me want to get there even faster," he wrote in an email from prison. "It also makes me think of my freedom and how I gots to get out and stay out."

Costly communication

A year before Pigeonly was launched, two former convicts hailing from different parts of the United States hatched similar ideas.

Scott Levine was convicted of stealing information from a data-management company — which prosecutors at the time called the largest federal computer theft indictment — and spent more than five years in the Miami Federal Correctional Institution. In federal prison, you either pay $0.21 per minute for long distance calls or the $0.06 per-minute local rate and Levine felt the pain of the complex and costly communication system when trying to keep in touch with his children. Upon release, he launched InmateAid, which lets subscribers sidestep long-distance rates by facilitating an online connection at local phone rates regardless of your geographical location, for a monthly $8.95 fee. This has cut the calling costs for some families down from $750 a month to just $50.

The startup, bankrolled and co-founded by philanthropist Shawn Friedkin, has grown into the largest online database of U.S. correctional institutions, serving some 1.2 million visitors and connecting tens of thousands of customers a month.

"When you first go in to prison, people keep in touch for a month or so and then they start to forget," Levine says. "They'll take photos and leave them sitting in the camera instead of printing them out and there's no way to turn it into something tangible without a lot of effort. We are trying to make it easier for people who are walking around all day with a smartphone in their pocket, not a typewriter or a pen and paper."

Mail call is like Christmas every day in prison.

That same year, Marcus Bullock decided to launch an app to help him stay in touch with the friends he grew up with behind bars in a maximum security federal prison in Virginia. Bullock was sentenced to eight years after being caught car-jacking at the age of 15. Every day, his mother would take photos, print them out and post them to him, keeping him involved in her day to day life. "It allowed me to be able to keep my head strong and see the world through her eyes and realize there was still life for me outside of prison," he says.

Now 37, Bullock runs Washington D.C-based Flikshop, which lets users send a postcard bearing a photo and message into prisons for $0.99. He initially bootstrapped the business with the help of family and friends, but has since received financial support from celebrity investors like former NBA All-Star Baron Davis and pop singer John Legend.

Many prisons welcome the new technology, viewing the start-ups as potential allies in the war against contraband. In September, the Lancaster County Prison in Pennsylvania decided to ban all greeting cards — which were being laced with dangerous synthetic drugs — unless they were posted via Pigeonly. These services are a "win-win for everybody," says Tammy Moyer, the facility's director of administrations.

Up until the late 20th Century, the only way to stay in touch with an inmate was to either visit in person, navigate the expensive and complex phone system or write a letter. But because prisoners can be moved to another facility with no warning, it can be hard to keep track of their location, and some families simply can't afford to visit a loved one jailed in a different state.

In 2009, email arrived at federal facilities via the Trust Fund Limited Inmate Computer System, which is operated by CorrLinks, a subsidiary of Advanced Technologies Group. It's a basic messaging service that operates outside the internet. Inmates pay $0.05 a minute for computer time and an extra $0.15 per page to print. State-run prisons have a similar email system called JPay, owned by the prison technology company Securas Technologies Inc. JPay messages cost from $0.15 to $0.47 apiece and are screened for sexual references, drug smuggling and escape schemes. In a modernizing bid, JPay now offers Snap N" Sends and VideoGrams, which let families and friends send Snapchat-style messages to inmates via email.

While these services made it easier for people on the outside to stay in touch, life on the inside got harder. Short, depersonalized email threads replaced hand-written letters that used to run pages long. The excitement of hearing your name announced at the daily mail call was replaced with long queues for the computer.

"Mail call is like Christmas every day in prison," says Teresa Hodge, who spent almost six years in the Alderson West Virginia Prison Camp for fraud. "The importance of hearing your name called, of getting something from the outside — it's a sense of validation that people care, that you still matter. I can't imagine those 70 months without remaining connected to my family. It allowed me to keep my head strong and realize there was still life for me outside."

Room for improvement

Hodge, who co-founded Mission: Launch Inc., a nonprofit that helps former prisoners reenter the workforce, recalls the difficulty she had staying in touch with her daughter from behind bars. Phone calls were over-priced and to email she had to queue up with 1,100 other inmates to use one of 15 computers, paying $0.05 a minute. That might not sound like a lot, Hodge says, but it is when you only earn $0.08 an hour and don't want your family picking up the tab.

"It's high-pressured reading and writing because you're paying for every minute," she says. "We are in the 21st Century, and prison is definitely in the 19th Century."

A family makes contact with an incarcerated loved one – Photo: Bring in the Community

In an ideal world, these apps wouldn't be necessary because communication into prisons would be free — monitored and limited, but free — says Justice Policy Institute Executive Director Marc Schindler. "This is an area that has room for lots of improvement, including exploitative practices," he says.

Devron Wadlington, 34, has spent almost half his life behind bars. He was handed a 17-year prison sentence for killing an intruder who shot him during a home invasion when he was only 18. Wadlington is in the Green River Correctional Complex in Kentucky. During a phone interview (which was disconnected four times) Wadlington says he pays $0.42 for every email he sends and $0.21 a minute for each phone call.

Everyone is making a profit off us. They capitalize off of our desire to keep in touch with people.

"It's all about the dollar bill with this whole correctional system," Wadlington says. "Everyone is making a profit off us. They capitalize off of our desire to keep in touch with people on the outside."

Wadlington lives with 200 other inmates and says there is always a line for the two computers located in his housing block. The computers lock you out after 15 minutes to ensure everyone gets a turn, but Wadlington says it's hard to digest an email and reply in such a short time span — particularly for slow typers.

Technology has changed the way his friends and family stay in contact, Wadlington says. He was incarcerated before email was introduced into prisons and he witnessed the rise and fall of the popularity of the service. He prefers it when family and friends post a letter and says he has both Pigeonly and Flikshop photos pinned up on the walls of his cell.

"I'd rather have pictures in my cell so when I first open my eyes in the morning I see someone I love and I know they love me back; this reminds me that I still have hope outside this place," Wadlington says. "It's always good to get your name called out at mail call. Whenever they hand out the mail, I'm hoping they call out my name. Us people in here, we need that."

Geopolitics
Shawn Donnan

How A U.S.-China Trade Deal Could Backfire On The Whole World

As the two superpowers get closer to an agreement, the global trade regime could suffer. History offers several precedents.

WASHINGTON — On a wintry Sunday in February 1784, the Empress of China pulled out of New York Harbor and headed for Guangzhou with a crew of 42 and a cargo of liquor, Mexican silver, and American ginseng. It was off on what's now a well-worn trade route between the world's two largest economies — the first ship under the flag of an independent United States to venture to China in search of fortune. It also raised a question that's consumed U.S. policymakers since: How do you cut a deal with China when the rest of the world wants to make one too?

As John Pomfret, author of The Beautiful Country and the Middle Kingdom, a history of U.S.-China relations that documents the voyage of the Empress of China, writes, America's preoccupation with China goes back to the Boston Tea Party. The protest was at its root against Britain's use of unfair taxes to control the price of tea from China. The Empress of China set out in part to loosen the British grip on the tea trade.

The U.S. long ago replaced Britain as global hegemon and now stands challenged by China. Much as America's Founding Fathers once did, Donald Trump seeks to redefine the relationship with Beijing. Only there is more at stake than bilateral ties. "We have a long tradition in U.S.-China relations of trying to cut a deal with the Chinese that shuts out other people," says Pomfret. The pact taking form between Trump and China's Xi Jinping may do exactly that. It seems increasingly likely to test U.S. alliances as well as the global trading system that American leaders spent decades building. The end of one trade war may well trigger others.

As negotiations continue, it's worth remembering history. Britain's trade hold on China arguably peaked in the 19th century with its victory in the Opium Wars and the painful settlement it imposed. The Chinese haven't forgotten that humiliation: It informs their prosecution of the current trade war with America.

Much as America's Founding Fathers once did, Donald Trump seeks to redefine the relationship with Beijing.

With his tariffs, Trump has sought to force what some in Beijing see as a similar capitulation on 21st century issues such as China's model of economic development, its treatment of intellectual property, and the global reach of its technology. He has also, however, forced a line-by-line discussion over increased purchases of U.S. agricultural and energy exports that reeks of 19th century mercantilism, the philosophy that a nation's wealth is derived from selling as much as it can to the world rather than enjoying the broader benefits of open trade. Trump wants Beijing to buy more to reduce a U.S. trade deficit with China that's grown largerunder his watch.

But the slip toward what purists call "managed trade" is a major departure from U.S. economic policy. It's also causing anxiety in the rest of the world, particularly among U.S. allies such as the European Union and Australia, which are likely to see their own trade with China affected. No one wants a trade war. But many fear the U.S. is putting at risk the global trading regime that has thrived since the end of World War II. "We know that a destructive global trade war between the two big economic powers would be bad for global economic growth and be negative for Australia," says Simon Birmingham, the Australian trade minister, but "the way in which the U.S. has gone about these and some other negotiations is not a way in which Australia would have or, indeed, supports."

As it is, the current trade war has caused collateral damage. The dip in demand from China, which results partly from trade tensions, has hurt the profits of U.S. companies such as Apple Inc. and Caterpillar Inc. Global trade in goods has been slowing, with exports from trade-dependent nations such as South Korea and Japan declining. Germany sits on the cusp of a recession at least in part because of a slowing China; its economy may fall over the edge if Trump imposes threatened auto tariffs. Australia's decision to bow to U.S. pressure and ban Huawei Technologies Co. equipment from its new 5G network leaves it facing retaliation. One Chinese port has forbidden imports of Australian coal, prompting fears Beijing is targeting the country's most lucrative exports.

The fallout may get worse if there's a U.S.-China agreement. In a Feb. 21 note, economists at Barclays estimated other countries could see exports to China drop as much as 20 percent. The EU would see a $55 billion hit to its exports to China, or the equivalent of a 2.2 percent drop in its exports to the world. That's why many critics see Trump's strategy as a beggar-thy-ally approach — with consequences for U.S. power. "The fact that we will have broken so much china, and have battered our allies and angered them and still reached a deal, is a reflection on the continued economic power of the United States," says Stuart Eizenstat, who was in the room when President Jimmy Carter and his Chinese counterpart, Deng Xiaoping, hashed out a deal to normalize relations in 1979 and writes about it in a recent book on Carter's White House. But, he adds, "I think in the end it will subtract from that power. It's a sort of a last fling at unilateralism."

Deng Xiaoping & Jimmy Carter— Photo: Schumacher, Karl H.

Eizenstat says the U.S. and Europe are facing the worst crisis in their relationship since World War II, and things may get more fraught. The EU and Japan are about to embark on their own trade talks with Trump while facing the threat of auto tariffs. And while they're working quietly with Washington on a common agenda to take on China inside the World Trade Organization, those efforts seem increasingly futile.

The irony is that any understanding Trump reaches with China may end up being a blow to the American-led global trading order. Until his presidency, the U.S. led the push for trade pacts that focused on building up institutions such as the WTO to arbitrate disputes and on establishing rules to govern trade — rather than rely on mercantilist, government-directed purchases. Trump and his aides have pursued the bulk of their trade war with China outside the trade organization's rules. That approach appears likely to continue. Enforcement of a deal with China, they say privately, is likely to come via U.S. tariffs rather than a reliance on the WTO to adjudicate disputes, a process that's often painfully prolonged.

Increased Chinese purchase of U.S. products, from aircraft to commodities such as beef, corn, and natural gas, may be just as corrosive. European and Japanese officials grumble about the cost they're likely to bear in loss of potential sales to China. Some of that disquiet might be offset if Trump is able to extract Chinese reforms to address the shared complaints of U.S. and European companies, such as intellectual-property theft. However, the potential agreement could well undermine the principles of nondiscrimination that underpin global trade — specifically the tenet that all trading partners treat each other as most favored nations. "By doing this you are also putting into question the trust that companies and others put into the system," says Luisa Santos, director for international relations at BusinessEurope, the leading voice for European companies.

Douglas Irwin, a Dartmouth economist and author of Clashing Over Commerce, a history of U.S. trade policy since 1776, says Trump is in many ways revisiting a debate that was largely resolved in the 1930s. In a 1934 decision that set the stage for decades of U.S. trade policy, President Franklin D. Roosevelt sided with Cordell Hull, his secretary of state, over George Peek, a White House trade adviser and the first president of the Export-Import Bank. Hull argued the U.S. and the world were best served by trade deals that established rules that allowed the free market to work. Peek argued that trade pacts ought to be purely transactional and the U.S. was best served by a government acting as a broker for U.S. goods rather than negotiating abstract rules. Peek lost the debate in part by losing the moral high ground: He negotiated what amounted to a barter agreement with Nazi Germany. He left FDR's government shortly afterward.

The administration's approach isn't monolithic.

The rules-vs.-transactions debate resurfaced in the 1980s when U.S. administrations took on Japan in a trade war that led to agreements not unlike those now in play with China. These set a series of export limits for Japan, though the issue of how to enforce them was different, given Tokyo's reliance on U.S. military protection. That debate effectively resolved itself with Japan's economic downturn in the 1990s, Irwin says. The trade conflicts with Japan, he says, helped clear the way for the creation in the 1990s of the WTO as a neutral arbiter of trade disputes.

Which brings us back to Trump and China. Irwin argues that a deal that swings the relationship to managed trade would involve a "deterioration of the system." Trump and his aides aren't sentimental about the global trading regime. They say they're unwinding decades of policy that have resulted in little more than America's industrial decay. Any purchases the Chinese may make are simply welcome commitments aimed at reducing a yawning U.S. trade deficit with China.

The administration's approach isn't monolithic. Hard-liners such as White House trade adviser Peter Navarro want a strategic decoupling of the U.S. and Chinese economies. Others, such as Treasury Secretary Steven Mnuchin, seek a less disruptive path. As Trump angles for a deal that makes the stock markets happy, the tension inside his administration is largely between demands for substantive Chinese reforms and the sort of easy deficit-reducing purchases Beijing is willing to make. "The issues on the table are too serious to be resolved with promises of additional purchases," U.S. Trade Representative Robert Lighthizer told Congress on Feb. 27.

Even with a mercantilist agreement, Irwin says, the situation needn't be cast in stone. The very nature of managed trade, he says, means "you usually have to go back to the negotiating table, and things can be repaired."

However, by pursuing bilateral negotiations and ignoring the WTO as a venue to enforce any deal, Trump is encouraging other members to do the same. His invocation of a once-taboo WTO national security loophole to impose tariffs is seen as encouraging others, such as Russia and Saudi Arabia, to do the same. Potentially worse, Trump's blocking of new WTO judges is hobbling the organization's ability to hear cases. Its seven-member appellate body may be down to one panelist by the end of the year.

If Trump uses the current tariffs on $250 billion in imports from China as the primary and long-term tool to enforce any deal, he will hand his successor a difficult legacy to unwind. The U.S. has a history of temporary tariffs that have endured. The prime example is the 25 percent "chicken tax" on imported light trucks introduced in the 1960s over a poultry dispute with Europe that's survived until now. The duties Trump has imposed on China may follow that pattern, Irwin says. For one thing, there's a growing bipartisan consensus on the need to crack down on China that will make lifting any tariffs politically awkward. "With China, there's this ratchet effect," he says. "It's not easily undoable."

While some see cognitive dissonance in Trump's push for state-directed purchases alongside economic reforms intended to reduce the long-term role of the state, others call the approach pragmatic. China for years slow-walked the delivery of promised reforms. Better to get what you can now. "You have to recognize that achieving some short-term goals requires working with China as it is rather than as you wish it to be," says Brad Setser, an expert on international economics who served in the White House and the Department of the Treasury in the Obama administration.

The Empress of China returned to America with a sizable profit in 1785. And the U.S. push to gain an advantage over European rivals on the Chinese mainland has continued ever since. In 1946 drivers on the mainland were forced to switch to the right side of the road after the U.S. lobbied Nationalist Party leader Chiang Kai-shek — who was dependent on U.S. aid — to make the change. Washington, Pomfret says, "got him to do it partially because U.S. auto companies wanted to sell more automobiles in China and wanted to shut the Brits out of the market." Now it may be the rest of the world that gets shut out of a deal between China and the U.S.

Ideas
Shashi Tharoor

V For Villain: What Western History Forgets About Churchill

His record in Britain’s former colonies more closely resembles that of a war criminal than a defender of democracy and freedom.

The recent flap over Winston Churchill — with Labour politician John McDonnell calling Britain's most revered prime minister a "villain" and prompting a rebuke from the latter's grandson — will astonish many Indians. That's not because the label itself is a misnomer, but because McDonnell was exercised by the death of one Welsh miner in 1910. In fact, Churchill has the blood of millions on his hands whom the British prefer to forget.

"History," Churchill himself said, "will judge me kindly, because I intend to write it myself." He did, penning a multi-volume history of World War Two, and won the Nobel Prize for Literature for his self-serving fictions. As the Australian Prime Minister Robert Menzies remarked of the man many Britons credit with winning the war, "His real tyrant is the glittering phrase, so attractive to his mind that awkward facts have to give way."

Awkward facts, alas, there are aplenty. As McDonnell correctly noted, Churchill as Home Secretary in 1910 sent battalions of police from London and ordered them to attack striking miners in Tonypandy in South Wales; one was killed and nearly 600 strikers and policemen were injured. It's unlikely this troubled his conscience much. He later assumed operational command of the police during a siege of armed Latvian anarchists in Stepney, where he decided to allow them to be burned to death in a house where they were trapped.

Shortly afterward, during the fight for Irish independence between 1918-23, Churchill was one of the few British officials in favor of bombing Irish protesters from the air, suggesting using "machine gun fire bombs' to scatter them. As Secretary of State for the Colonies, he followed through on that threat in Iraq. He ordered large-scale bombing of Mesopotamia in 1921, with an entire village wiped out in 45 minutes. When some British officials objected to his proposal for "the use of gas against natives," he found their objections "unreasonable." In fact he argued that poison gas was more humane than outright extermination: "The moral effect should be so good that the loss of life should be reduced to a minimum."

He declared the Pashtuns needed to recognize "the superiority of the British race"

This underscores the fundamental contrast in views of Churchill. In Britain and much of the West, he's seen as the savior of "Democracy, Freedom, and all that is good in Western Civilization," as one enthusiastic correspondent put it. In fact, his record is far more mixed even there. Throughout the 1920s and early 1930s, Churchill was an open admirer of Mussolini, declaring that the Italian Fascist movement had "rendered a service to the whole world." Traveling to Rome in 1927 to express his admiration for the Fascist Duce, Churchill announced that he "could not help being charmed, like so many other people have been, by Signor Mussolini's gentle and simple bearing and by his calm detached poise in spite of so many burdens and dangers."

churchill_stands_on_tank_WW2

Churchill inspecting a British tank during World War 2 – Photo: Horton (Capt), War Office official photographer

What Churchill was above all, though, was a committed imperialist -- one determined to preserve the British Empire not just by defeating the Nazis but much else besides. At the start of his career, as a young cavalry officer on the northwest frontier of India, he declared the Pashtuns needed to recognize "the superiority of the British race" and that those who resisted would "be killed without quarter." He wrote happily about how he and his comrades "systematically, village by village, destroyed the houses, filled up the wells, blew down the towers, cut down the great shady trees, burned the crops and broke the reservoirs in punitive devastation. Every tribesman caught was speared or cut down at once."

In Kenya, Churchill either directed or was complicit in policies involving the forced relocation of local people from the fertile highlands to make way for white colonial settlers and the incarceration of over 150,000 men, women and children in concentration camps. British authorities used rape, castration, lit cigarettes on tender spots and electric shocks to torture Kenyans under Churchill's rule.

And his principal victims were the Indians -- "a beastly people with a beastly religion," as he charmingly called us, a "foul race." Churchill was an appalling racialist, one who could not bring himself to see any people of color as entitled to the same rights as himself. (He "did not admit," for instance, "that a great wrong has been done to the Red Indians of America, or the black people of Australia … by the fact that a stronger race, a higher grade race, has come in and taken its place.") He fantasized luridly of having Mahatma Gandhi tied to the ground and trampled upon by elephants.

Churchill could not bring himself to see any people of color as entitled to the same rights as himself

Thanks to Churchill's personal decisions, more than 3 million Bengalis died of hunger in a 1943 famine. Churchill deliberately ordered the diversion of food from starving Indian civilians to well-supplied British soldiers and even to top up European stockpiles, meant for yet-to-be-liberated Greeks and Yugoslavs. "The starvation of anyway underfed Bengalis is less serious' than that of "sturdy Greeks," he argued. When reminded of the suffering of Bengalis, his response was typically Churchillian: The famine was the Indians" own fault, he said, for "breeding like rabbits." If the suffering was so dire, he wrote on the file, "Why hasn't Gandhi died yet?"

It's important to remember that these weren't enemies in a war -- Churchill also wanted to "drench the cities of the Ruhr" in poison gas and said of the Japanese, "we shall wipe them out, every one of them, men, women and children" -- but British subjects. Nor can his views be excused as being reflective of their times; his own Secretary of State for War, Leo Amery, confessed that he could see very little difference between Churchill's attitude and Hitler's.

Britons and Oscar voters may yet thrill to Churchill's stirring words about freedom. But to the descendants of the Iraqis whom Churchill gassed and the Greek protesters on the streets of Athens who were mowed down on his orders in 1944 (killing 28 and maiming 120), to sundry Pashtuns and Irish, to Afghans and Kenyans and Welsh miners as well as to Indians like myself, it will always be a mystery why a few bombastic speeches have been enough to wash the bloodstains off Churchill's hands. We shall remember him as a war criminal and an enemy of decency and humanity, a blinkered imperialist untroubled by the oppression of non-white peoples, a man who fought not to defend but to deny our freedom.

Society
Irene Caselli

Longer Lives, Dying Alone And The Things We Leave Behind

As life expectancy numbers rise, a growing number of seniors experience kodokushi (lonely death), as it's known in Japan.

TOKYO — Masazo Nonaka, 113, was the world's oldest man when he died last month on Japan's northern main island of Hokkaido in an inn that has been run by his family for four generations. With him, at the time, was his granddaughter.

Nonaka's advanced age was remarkable even by the standards of Japan, which has the world's highest life expectancy, at 84. It is noteworthy too that he didn't die alone, because in Japan — which also has one of the lowest birth rates and fastest-shrinking populations — many elderly people do. So many that there's even a term for it: kodokushi, or lonely death.

Indeed, a survey conducted by the Japenese newspaper Yomiuri Shimbun shows that local governments are facing difficulties in disposing of the belongings of those who die alone. The survey says that over 1,000 public housing units are now occupied by the belongings of single residents who died alone.

Over 1,000 public housing units are now occupied by the belongings of single residents who died alone.

Bloomberg, for its part, has reported on a growing industry of cleaning companies, where lonely deaths account for 30% of overall clients.

Since about half of residents in public housing are 65 or older, local authorities are calling on the central government to establish clear rules for disposing of such belongings. Current legislation says that heirs have to be contacted for instructions, but they are often difficult to track down. Either that or there just aren't any. In one case, north-west of Tokyo in Saitama Prefecture, belongings remained undisposed of for 18 years.

Japan's elderly face many other issues beyond loneliness. Some do not have a family to rely on and live in poverty, as Philippe Pons, the Tokyo correspondent for France's Le Monde, reported. Perhaps for that reason, there's also a surprising number of senior-age criminal offenders in Japan, according to the December 2018 "White Paper on Crime," which notes that 21.1% of those arrested in 2017 were over the age of 65.

Photo: Gideon

Older offenders are usually arrested for petty theft. Some steal food to feed themselves. Others say they prefer prison to life on the threshold of poverty (or below) and loneliness. Le Monde quoted one man as saying: "Tomorrow I will go to prison to see a friend. He is not a criminal, he is my age 78 years old and he was arrested for shoplifting in a supermarket. He wanted to be arrested. In prison, he keeps warm, he is fed and if he is sick, they take care of him... One day I may have to do the same."

Kodokushi isn't an issue just in Japan. Life expectancy is rising in many countries, and women in particular — especially those without children, statisticians note — are at high risk of spending their final days alone given that they frequently outlive their partners.

So, are there any solutions?

In South Korea, a growing number of middle-aged men live alone and hence die alone, a phenomenon that the government is trying to counteract by creating neighborhood groups to pay regular visits to those who live alone. And in the United States, villages for seniors have started popping up along with a growing number of multigenerational homes.

Author Margareta Magnusson has some ideas as well. In a 2017 book titled The Gentle Art of Swedish Death-Cleaning, the Swedish writer urges people to de-clutter in preparation for death. People may not be able to choose all the circumstances of their death, but they can at least determine what to do with their belongings.

Geopolitics

Brexit Deadlock Spooks Asian Corporate Heavyweights

The growing alarm after UK Prime Minister Theresa May's Brexit deal suffered a defeat in Parliament isn't just unsettling for British politics. Global businesses are on edge as well.

Asian companies, whose operations and investments stretch far into Britain and the European continent, have a lot at stake as they face higher tariffs and costs. Tuesday's setback will do little to cure the anxiety. Chancellor of the Exchequer Philip Hammond has sought to assure business leaders that their no-deal nightmare scenario could still be avoided, but with only 10 weeks left before the UK is due to leave the European Union, companies are bracing for a potential hard exit.

A hard Brexit would seriously impact European operations.

"Japanese companies should have been making preparations for the possibility of a hard Brexit, but now the reality of carrying out those measures is getting closer," Hiroaki Nakanishi, chairman of the country's largest business lobby Keidanren, told reporters in Tokyo Wednesday.

Here's what Asian companies are saying about Brexit:

Honda

The Japanese automaker said Wednesday that a hard Brexit would seriously impact its European operations, even though it is implementing countermeasures. New checks at the border could disrupt its logistics systems, while tariffs on goods moving between the EU and UK would hurt its competitiveness, it said. "We now look to the government to deliver a clear, legally certain path forward to avoiding no deal and to delivering the conditions that support the continued competitiveness and productivity of our sales and manufacturing operations," it said.

Honda's Tokyo HQ — Photo: Rs1421

About 4.5% of Honda Motor Co."s sales come from Europe, and it has one factory in the UK with manufacturing capacity of about 150,000 units annually.

Sony

Sony Corp., grappling with questions over its employees and distribution and sales channels, said Wednesday it is closely monitoring the Brexit news. Its European head office is located southwest of London in the town of Weybridge. The Japanese technology giant has a sales office and a factory in the UK

Panasonic

Panasonic Corp. said Wednesday that it's preparing for different scenarios to limit the impact on its operations. It shifted its Europe head office from near London to Amsterdam on Oct. 1, and transferred about 10 people from the facility as well. The move was made partly to ward off potential negative effects of Brexit and also because the electronic maker's holding company was already based in the Dutch city, it said in August. The company, which produces televisions, digital cameras and tablets in the UK, won't move its factory, a spokeswoman said in October.

CK Group

The CK Group has one of the highest exposures to the UK among Asian business empires, with operations there ranging from ports to infrastructure, telecommunications and retail. Its billionaire founder, former Chairman Li Ka-shing, has warned that Brexit would bring considerable challenges to the UK and Europe for years.

The country remains the group's biggest profit and revenue generator.

Li's son, Victor, who took over as chairman of the group last year, has echoed the cautious view. In a speech to employees in January, the younger Li cited Brexit as one the big political and economic challenges that CK will need to weather through this year.

CK, which operates the Three mobile network and Superdrug stores in the UK, has reduced its exposure to the UK since the 2016 shock referendum but the country remains the group's biggest profit and revenue generator. At the CK Hutchison Holdings Ltd. flagship, 19% of total sales and 30% of earnings before interest and taxes came from the UK in the first half of 2018, the company's most recent financial report. That's down from 21% and 39%, respectively, two years earlier.

Asahi

Asahi Group Holdings Ltd., Japan's largest brewer, owns and sells European beer brands Peroni and Grolsch in the UK — picked up from Anheuser-Busch InBev NV in a deal worth $2.9 billion in 2016. In the event of a hard Brexit, its Peroni brand would likely be impacted due to its large presence in the British market — the beer is brewed in Italy and exported to the UK Asahi's flagship Super Dry is also made in Italy and exported to the UK, but it still has only a fledgling presence in the beer market there. A company spokesman said Asahi is focused on strengthening its name as a premium beer brand in the UK market, and said it was too early to comment on any potential business impact.

Nomura

Nomura Holdings Inc., Japan's biggest securities firm, plans to ask fewer than 100 of its London-based staff to move to Europe in preparation for Brexit.

Ensuring everything will continue without disruption.

The firm said Wednesday it's "making arrangements to ensure that all current client and counter-party relationships, and access to Nomura's services, will continue without disruption after the UK leaves the EU,"" it said. It's proceeding on the assumption that UK-based financial services firms will lose so-called passporting rights to operate in the bloc. Nomura, which chose Frankfurt as an EU base after Brexit, has about 3,000 employees in the region and most work in London.

Mitsubishi UFJ

Mitsubishi UFJ Financial Group Inc., which has about 2,000 staff in London according its website, has been preparing for Brexit by setting up some operations to Amsterdam. Japan's biggest bank already does commercial banking in the Dutch city and got a securities license there in December, calling it a "major step" to continue providing services to clients in Europe after the UK leaves the union. The company is closely monitoring Brexit developments, spokeswoman Kana Nagamitsu said on Wednesday.

Watch Video Show less
Ideas
Tyler Cohen

Shift To Asia? Africa Rising? Big Questions To Track For 2019

-Analysis-

NEW YORK — As 2018 comes to a close, attention is turning to what is likely to happen in 2019. I have no idea. But if you follow these questions, you will have your finger on the pulse of the world to come:

What will happen with Chinese civil society?

Five to 10 years ago, China had a proliferating and diverse group of non-profit groups, think tanks and cooperative civil society institutions, such as charities and clubs. They never stood on a firm legal foundation, but in the last few years they have been subject to a severe crackdown, including shutdowns, discouragements from the state, and much greater surveillance. Yet this social space cannot remain empty. Either the earlier growth will resume, boosting prospects for Chinese liberalization, or Chinese society will fall back under much more state control. This is my No. 1 issue for the year to come, and so far I am pessimistic.

Will China succeed in extending its political influence to the West with One Belt, One Road?

China is attempting what is the world's most ambitious plan, namely to transform the economic and political order on its western flank, ranging as far as Africa. But China to date has not done a great job cultivating true allies (Pakistan? North Korea? Cambodia?), and already a backlash is settling in against Chinese influence. Will China succeed in helping to develop this part of the world and also bringing it into the Chinese sphere of influence? I say yes and no, respectively.

Will Ethiopia serve as a viable model for African development?

The country has been growing at about 10% for a decade, and it is spending more on infrastructure and receiving more foreign investment in its manufacturing capacity. Ethiopia now also has a charismatic prime minister, Abiy Ahmed, and under his leadership the country has deregulated its internet (formerly banned outside the capital), made peace with Eritrea, instituted market-oriented reforms, and moved to sell off parts of its government-owned companies. A lot of pieces are moving in the right direction, and maybe Ethiopia has a chance to move up to middle-income status over time, perhaps paving the way for other sub-Saharan economies.

Ethiopia's capital Addis Ababa — Photo: Daggy J Ali

I've visited twice in the last year, and I'm optimistic on this one, but the end of the story isn't written yet. A wild card is that liberalization could cause further ethnic tensions to flare up throughout the country. With more than 100 million people, Ethiopia is Africa's second most populous country, so a lot is at stake, including geopolitical stability in the Horn of Africa.

You may have noticed already that these lead issues do not much involve the U.S. or Europe. Next up is more from Africa:

Nigeria has incredible energy and talent, but it still has poor governance and rampant corruption. Can that combination drive significant economic growth?

The country has recovered from recession of last year, but still hasn't consistently stayed above 2% growth since then. So file this one under "remains to be seen." Nigeria, of course, has both the largest population and economy in Africa.

How will India's intellectual space evolve?

Many Western outsiders used to root for a particular Indian brand of Anglo liberalism to assume increasing importance in the political and intellectual life of India. While this has always been a minority viewpoint, it has had prominent representatives, including Ramachandra Guha, who just published a major biography of Gandhi. But these days, this perspective is dwindling in influence, as is old-style Bengali Marxism and other ideas from the left. It's not just Hindu nationalism on the rise, rather India seems to be evolving intellectually in a multiplicity of directions, few of them familiar to most Americans. In India, history ain't over, and further ideological fragmentation seems to be the safest prediction. Note that ideas are very often a leading indicator for where a nation ends up.

Lead issues do not much involve the U.S. or Europe.

Since India may become the world's most populous country and biggest economy by mid-century, this one is a dark horse candidate for the most important issue of the year.

How about some issues overrated in terms of immediate import? I don't think CRISPR is ready to pose major moral dilemmas just yet, driverless trucks are likely to arrive before driverless cars, and America's political checks and balances seem to be holding up.

And if you want some outright predictions for closer to (my) home, here are a few: Some version of Theresa May's Brexit plan will pass. President Donald Trump will remain in office though tarnished all the more. The Golden State Warriors will win another NBA championship. And finally: Stock prices will go up, and down, and then maybe up again. Just don't say you heard it here.