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      in World Politics

      Will Multilateralism Be Great Again?

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      A few weeks ago, six eminent world leaders — including UN Secretary-General Antonio Guterres, European Commission President Ursula von der Leyen and German Chancellor Angela Merkel — called for the revitalization of multilateral cooperation. They reminded us of the UN Millennium Declaration, which was signed by 189 countries in 2000. The declaration expressed the confidence of the international community that multilateral policies could defeat global challenges such as “hunger and extreme poverty, environmental degradation, diseases, economic shocks, and the prevention of conflicts.”

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      The declaration marked the heyday of multilateral optimism. But contrary to the millennial vision of global governance, international affairs today are dominated by entrenched mistrust between governments.

      Sadly, the above-mentioned article by the six world leaders does not explain what went wrong in the 21st century. Without such an analysis, however, appeals for changing course risk being little more than aspirational talk. To really make multilateralism great again, we have to ask: Why did things go astray?

      The Adverse Effects of Nasty Surprises

      Harold Macmillan, the British prime minister between 1957 and 1963, is frequently quoted as having said that what he feared most in politics were “Events, dear boy, events.” This catchy phrase points to the proverbial overlooked elephant that has rampaged through international affairs in the last two decades. Apparently, unexpected events, escalating into major crises and global disruptions, have driven the international community apart and contributed decisively to the demise of multilateralism.

      To their credit, the world leaders are aware of this. They accurately state that major crises remind us of how interdependent we are, referencing the global financial crisis of 2008 and the current COVID-19 pandemic. However, there have been far more important disruptions in the past two decades: the 9/11 attacks in 2001; the popular revolts in the Middle East in 2011, which escalated into civil wars in Libya, Syria and Yemen; the eurozone crisis; Russia’s annexation of Crimea in 2014; the 2016 Brexit referendum in the United Kingdom; and the presidency of Donald Trump in the United States. More could easily be added to the list.

      These disruptions shattered international cooperation. Economic crises intensified cleavages within as well as between societies. Austerity and social inequality championed populist and anti-liberal sentiments that were expressed through battle cries of “take back control” and “America First.” Following 9/11, the 2003 war in Iraq split the West, whereas the military confrontations in Libya and Syria continue to divide the international community. Russia was suspended from the G8 after its territorial aggression against Ukraine, closing an important channel of communication with the Kremlin.

      The cumulative effect of these disruptions has been a significant decline in the willingness of governments to collaborate. International organizations and multilateral agreements have become political battlegrounds. Many administrations, including those in the United States, China, Russia, India, the United Kingdom and the European Union, prioritize policies such as decoupling, self-sufficiency and strategic autonomy. Consequently, the COVID-19 pandemic is unfolding as a dual crisis of global connectivity and global governance.

      Credible Foresight Creates Trust in Multilateral Cooperation

      In their article, the world leaders shied away from the conclusion that global disruptions are not only a result of, but also an important catalyst for many governments retreating from multilateralism. That is why they are missing the low-hanging fruit for policy innovation: Avoiding nasty surprises by cultivating anticipatory governance — for instance, by investing in multilateral foresight and forecasting capabilities.

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      Hardly any of the major disruptions in international affairs have come as a surprise. Genuine “black swans” are very rare: The 9/11 Commission Report pointed out that several American agencies had been collecting evidence that al-Qaeda was planning attacks; there were plenty of reports from the Middle East and North Africa region analyzing the widespread dissatisfaction with repressive governments and bad governance; experts had frequently warned about the global financial crisis, the eurozone and the pandemic; and the referendum in the United Kingdom and the elections in the United States could only have had one of two outcomes. So, the lack of preparations for the unexpected results had more to do with wishful thinking than surprise.

      The exception to the rule is the annexation of Crimea. That the Kremlin would drastically change course instead of waiting out the developments in Kiev, which had proved a winning strategy for Moscow after 2004, came as a real surprise. But in all other cases, plenty of unheeded warnings lined the road to the tragedy of multilateralism.

      Of course, governments’ reluctance to trust forewarnings is understandable. The track record of expert predictions is not that impressive. Quite often, they turn out to be wrong. And crying wolf has consequences: Policymakers might be criticized by their opponents, the media, courts of auditors or the public when they order, for example, vaccines but a pandemic does not materialize as expected. This happened in 2009 with the swine flu scare, when policymakers in Europe and the United States learned a lesson that partly explains the inadequate preparations for COVID-19.

      But some predictions are better than others. Research has shown that the best forecasters achieve up to 30% higher prediction accuracy than analysts with access to classified material. Diversity and multi-perspectivity are important criteria for the success of forecasting teams that consistently outperform their competitors. Policymakers should harvest this knowledge. Investing in multilateral foresight and forecasting capabilities promises not only to increase timely awareness of future events. Collectively anticipating risks and opportunities could also stimulate international cooperation and joint policymaking.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      The Guardian view on China, Xinjiang and sanctions: the gloves are off | Editorial

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      China’s response to criticisms of horrifying human rights violations in Xinjiang is clear and calculated. Its aims are threefold. First, the sanctions imposed upon individuals and institutions in the EU and UK are direct retaliation for those imposed upon China over its treatment of Uighurs. That does not mean they are like-for-like: the EU and UK measures targeted officials responsible for human rights abuses, while these target non-state actors – elected politicians, thinktanks, lawyers and academics – simply for criticising those abuses.Second, they seek more broadly to deter any criticism over Xinjiang, where Beijing denies any rights violations. Third, they appear to be intended to send a message to the EU, UK and others not to fall in line with the harsher US approach towards China generally. Beijing sees human rights concerns as a pretext for defending western hegemony, pointing to historic and current abuses committed by its critics. But mostly it believes it no longer needs to tolerate challenges.Alongside the sanctions, not coincidentally, has come a social media storm and consumer boycott targeting the Swedish clothing chain H&M and other fashion firms over concerns they voiced about reports of forced labour in cotton production in Xinjiang. Nationalism is a real and potent force in China (though not universal), but this outburst does not appear spontaneous: it began when the Communist Youth League picked up on an eight-month-old statement, and is being egged on by state media.China has used its economic might to punish critics before – Norway’s salmon exports slumped after dissident Liu Xiaobo won the Nobel peace prize – and often with the desired results. But this time, it is acting far more overtly, and it is fighting on multiple fronts. Some clothing companies are already falling into line. Overall, the results are more complex. The sanctions have drastically lowered the odds of the European parliament approving the investment deal which China and the EU agreed in December, to US annoyance. Beijing may think the agreement less useful to China than it is to the EU (though many in Europe disagree). But the measures have done more to push Europe towards alignment with the US than anything Joe Biden could have offered, at a time when China is also alienating other players, notably Australia. Foreigners – who in many cases have offered more nuanced voices to counter outright China hawks – are already becoming wary of travelling there, following the detention and trial of two Canadians, essentially taken hostage following their country’s arrest (on a US extradition request) of a top Huawei executive. The sanctioning of scholars and thinktanks is likely to make them more so. Businesses, though still counting on the vast Chinese market, are very belatedly realising the risks attached to it. Those include not only the difficulty of reconciling their positions for consumers inside and outside China, but the challenges they face as the US seeks to pass legislation cracking down on goods made with forced labour, and the potential to be caught up in political skirmishes by virtue of nationality. For those beginning to have second thoughts, rethinking investments or disentangling supply chains will be the work of years or decades. But while we will continue to live in a globalised economy, there is likely to be more decoupling than people foresaw.The pandemic has solidified a growing Chinese confidence that the west is in decline, but has also shown how closely our fates are tied. There can be no solutions on the climate emergency without Beijing, and cooperation on other issues will be both possible and necessary – but extraordinarily difficult.Beijing’s delayed response to the UK sanctions suggests it did not anticipate them, perhaps unsurprising when the integrated review suggested we should somehow court trade and investment while also taking a tougher line. But the prime minister and foreign secretary have, rightly, made their support for sanctioned individuals and their concerns about gross human rights violations in Xinjiang clear. Academics and politicians, universities and other institutions, should follow their lead in backing targeted colleagues and bodies. China has made its position plain. So should democratic societies. More

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      in Elections

      A Pro-Europe, Anti-Populist Youth Party Scored Surprising Gains in the Dutch Elections

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      For years, right-wing populists have been a driving force in the Netherlands. But this week a pan-European party called Volt shook things up.Lost among the mostly humdrum national elections in the Netherlands this week was the emergence of Volt, an anti-populist, pro-Europe party made up of students and young professionals that snatched three seats in the Dutch Parliament — the first national electoral success in its five years of existence.Volt wasn’t the only outsider group to win a seat or two in the elections. One politician arrived at Parliament driving a tractor with flashing lights to claim her newly won seat for a farmer’s party. Sylvana Simons, a former TV presenter, won a seat for “Bij1,” an anticapitalist party. A new far right, anti-immigrant party won four seats.Over the last two decades, however, it was populists and far right parties that played the insurgent role in Dutch politics, promoting anti-immigrant, anti-establishment and anti-European policies. While never a serious threat to seize power, in 2016 representatives of these parties initiated and won a referendum in the Netherlands on an E.U. trade treaty with Ukraine, temporarily halting the deal.This makes this week’s victory of newcomer Volt all the more remarkable. The party is staunchly pro-Europe, something that most traditional parties had thought was a complete turnoff for voters.“Most people of my generation grew up paying in euros and never having to think about crossing borders,” said Laurens Dassen, 35, the party’s Dutch leader. “For us, Europe is a fact of life.”Prime Minister Mark Rutte, whose center-right Party for Freedom and Democracy comfortably won the greatest number of seats for the fourth time since 2010, has had a tense relationship with Europe. Last year, for example, he upset Southern European countries when he refused to discuss financial support during the pandemic, and brought a biography of Chopin to the meetings because he wasn’t planning on talking anyway.The success of Volt in the Netherlands is all the more remarkable in that it isn’t even a Dutch party but an offshoot of a European movement, with 9,000 members scattered across Europe, and a few more in Switzerland and Albania. The main party was established in 2016 by Andrea Venzon, 29, an Italian living in London, and has a presence in every one of the 27 member states of the European Union.Caroline van der Plas, the leader of the BoerBurgerBeweging party, speaking with journalists from the booth of her tractor.Remko De Waal/Agence France-Presse, via Getty ImagesMr. Dassen, who was raised in Knegsel, a village near Eindhoven, played in the local youth orchestra and, after studying business management, went to work at ABN Amro bank checking processes for transactions in money laundering.But he was worried about the rise of populism and far-right parties, he said, and “in 2018 I read an article about Volt, decided to join and gave up my job some months later to really try to get the party started.”In the Dutch elections Volt piled up heavy vote totals in several Dutch student cities like Delft and Leiden, powered in part by a social media campaign and a broad network of volunteers.Another pro-European party, the D66, won an extra four seats this week, making it the second largest party in the parliament. Its leader, Sigrid Kaag, is a former United Nations special envoy for Syria and the outgoing foreign minister of trade and development.Because no party in the Dutch Parliament commands a majority, analysts said the idiosyncrasies of coalition building could bring Volt into the governing bloc along with Mr. Rutte and Ms. Kaag. Whatever the outcome of that horse trading, analysts think Volt’s future is bright in the Netherlands.“They could be big here and double their seats if they manage to go even stronger on the climate,” said Felix Rotterberg, a campaign strategist long affiliated with the social-democratic party PvdA. “Volt has the youth, and there will only be more of those in the future.”The party is on a winning streak in other parts of Europe, though nothing else is as high-profile as its victories in the Netherlands. Volt now has over 30 elected representatives across Europe, mainly in municipalities in Germany and Italy. But it has also won its first seat in the European Parliament, in the person of Damian Boeselager, 33.In coming months, Volt will be running candidates in national elections in Bulgaria and Germany, in a regional vote in Spain and in local elections in Italy. Following Brexit this year, its British members are starting a rejoin Europe campaign. Its leaders emphasize Volt’s pan-European character, which they say differentiates it from any other party in Europe.“Every one of our members, has direct voting rights at the European level, they are able to choose our board and influence our policies directly,” said Valerie Sternberg, 30, the party’s Germany-based co-president. “No matter where you live in Europe, even in Britain.” The party doesn’t have a youth organization. “Most of us are young ourselves,” she said.Ms. Sternberg said she cried “tears of joy,” when she learned about the success of Volt’s Dutch chapter, and said the party is now setting its sights on Germany, which is having national elections in the fall.“Our weak point is in rural areas across Europe, we need to get our message there, now populists are winning there,” she said. “We hope that Covid is showing people that isolation makes us weak and cooperation makes us stronger.” More

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      in US Politics

      The Guardian view on defence and foreign policy: an old-fashioned look at the future | Editorial

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      The integrated review offers a nostalgic – at times, even anachronistic – response to the challenges of the 21st century. Its intent is laudable: acknowledging that attempting to defend the status quo is not enough, and seeking to carve out a path ahead. It recognises the multiple threats that the UK faces – from future pandemics to cyber-attacks – and the need for serious investment in science and technology. But overall, “global Britain” offers a hazy vision of a country that is looking east of Suez once more, wedded to the symbolic power of aircraft carriers, and contemplating a nuclear response to cyberthreats.The policy paper is in essence a response to three big shifts: the rise of China, the related but broader decline of the existing global order, and Brexit. Two of these confront democracies around the world. But the last is a self-inflicted wound, which the government appears determined to deepen. And the need to deal with the first two is not in itself a solution to the third, as this policy paper sometimes seems to imagine.The plan essentially recognises the move that is already taking place towards a warier, more critical approach to China, away from the woefully misjudged “golden era” spearheaded by George Osborne, and the fact that parameters will be set for us by the tougher approach of the US, in particular. It accepts that we must engage on issues such as climate change, and that we are not in a new cold war – we live in a globalised economy – albeit that there is likely to be more decoupling than many anticipated.But it does not try to explain how the UK can square the circle of courting investment while shielding itself from undue Chinese influence and expanding regional alliances. Australia is currently finding out what happens when Beijing is angered by a strategic shift.The tilt to the Indo-Pacific may – like Barack Obama’s “pivot to Asia” – fail to live up to its advertising. But it is true that Britain has paid insufficient attention to Asia, and is wise to pursue stronger ties with Five Eyes nations and other democracies in the region. These relationships will sometimes be problematic; India is the world’s largest democracy, but under Narendra Modi is looking ever less democratic. The pursuit of new partnerships could have been “in addition to” rather than “instead of”. Yet Britain is snubbing old, reliable, largely like-minded friends with clear common interests. The review is written almost as if the EU did not exist, preferring to mention individual member states. That seems especially childish when it also identifies Russia as an “active threat”. Nor is it likely – even if the UK joins the Trans-Pacific free-trade pact – that countries thousands of miles away can fully compensate for the collapse in trade with the EU that saw Britain record a £5.6bn slump in exports to the bloc in January. Geography matters.Behind the rhetoric of the review is a country that has failed to match its words and ambitions to its actions. Britain boasts of its soft power and talks of upholding the rule of law internationally – yet has declared itself happy to break international law when it considers it convenient. Though the paper promises to restore the commitment to spending 0.7% of GDP on aid “when the fiscal situation allows”, slashing the budget is not only undermining the UK’s standing, but global security and stability too.Most strikingly, after 30 years of gradual disarmament since the end of the Soviet Union, and despite its obligations under the non-proliferation treaty, Britain is raising the cap on its nuclear warheads – a decision met with dismay by the UN Elders and others, and bafflement by analysts. Mr Johnson has not deigned to explain why.The review has rightly asked difficult questions. While Joe Biden has brought the US back to multilateralism, his predecessor has shown that the longer-term parameters of US policy may not be as predictable as Britain once believed. Old certainties have gone. But the new challenges cannot be met by turning back to nukes and aircraft carriers. The government should have looked closer to home and been bolder in addressing the future. More

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      in World Politics

      The Italian Job: Can Mario Draghi Master It?

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      A political crisis was the last thing Italy needed during the COVID-19 pandemic. Yet a personal conflict between the leader of Italia Viva, Matteo Renzi, and the previous prime minister, Giuseppe Conte, led to the collapse of the coalition in mid-January. President Sergio Mattarella then commissioned 73-year-old Mario Draghi, the former head of the European Central Bank (ECB), to form a technocratic government, which he will preside over as prime minister.

      According to Mattarella, it would have been risky to organize early elections during the pandemic. Indeed, new elections would have delayed the fight against the pandemic. In addition, the prospect of a right-wing populist government would also probably have had a negative impact on the financial markets — a risk that had to be avoided in an already challenging situation.

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      Draghi is inheriting a difficult situation. In Italy, the health, economic and social crises triggered by the pandemic have exacerbated the country’s enormous structural problems. Italy’s “seven deadly sins” — as Italian economist Carlo Cottarelli called them — are tax evasion, corruption, excessive bureaucracy, an inefficient judicial system, demographic problems, the north-south divide and difficulty in functioning within the eurozone. As a result of the pandemic, gross domestic product (GDP) fell by almost 9% in 2020, public debt rose to around 160% of GDP and more than 400,000 jobs were lost. The inability of the traditional parties to find solutions for the economic problems keeps support for the right-wing populist coalition (Lega, Fratelli d’Italia, Forza Italia) at almost 50%.

      Even though almost all major political forces have declared their intent to cooperate with the Draghi government, the framework of a technocratic government offers the right-wing populists a target. It is quite conceivable that they will accuse Draghi of lacking democratic legitimacy. It will also be a challenge for the new head of government to govern without his own parliamentary majority.

      Managing the Health Crisis Without Austerity

      The top priority of the new leadership will be to manage the health crisis. This includes speeding up vaccinations and supporting schools and the labor market. This means applying for — and successfully using — funds from the financial assistance plan of the European Union to mitigate the economic and social consequences of the COVID-19 pandemic. The expected €200 billion ($243 billion) or so from this fund could benefit the economic recovery as well as the planned structural reforms in public administration, taxation and the judiciary, which will give the new government more room for maneuver in economic policy.

      Unlike the last technocratic government under Mario Monti between 2011 and 2013, the fact that Draghi will not have to enact politically-costly fiscal consolidation with possible negative effects on GDP growth can also be seen as an opportunity. This is mainly due to broad market confidence in Draghi and the fact that his government is operating from the outset under the protective umbrella of the ECB, which will not allow the cost for servicing public debt to rise excessively. The eurozone’s fiscal rules have also been temporarily suspended; this makes it possible to support the economy through fiscal policy measures.

      Finally, it should not be forgotten that, despite the structural problems, the Italian economy has many strengths: Italy is one of the most industrialized countries in Europe and the second-largest exporter after Germany. If some obstacles to growth are removed and, for example, credit is released by the Italian banking sector, the pace of recovery could pick up significantly. Draghi’s experience from the finance ministry and in central banking could help him set a decisive course.

      Who Will Succeed Mario Draghi?

      Nevertheless, given the major challenges facing Draghi’s technocratic government, one should be cautious about expectations. The next general election is less than two and a half years away, and it cannot be ruled out that it will be brought forward. That is very little time to address structural problems that have existed for decades.

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      To avert a victory for the right-wing populists, the new head of government will do everything he can to prevent early parliamentary elections until the current moderate majority in parliament has elected President Mattarella’s successor. The latter’s term ends in February 2022, and it cannot be ruled out that Draghi himself will succeed Mattarella. He could use his authority and power as president to stabilize politics, as is the traditional role of the Italian president.

      In 2012, Draghi saved the eurozone as head of Europe’s most important financial institution. In the current crisis, even if supported by figures from across a broad political spectrum, he will act as head of one of Europe’s most politically-fragile governments — an incomparably less favorable starting position.

      Draghi will make the best possible use of his time as head of government. That much is certain. However, given the massive level of support for the populists, the most important question is: After Draghi, will someone take the helm who will continue his reforms or reverse them? Not only Italy’s future but also that of the entire eurozone depends on it.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions relating to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in Elections

      Mario Draghi Is Asked to Form Government in Italy

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      #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyMario Draghi Gets Nod to Form New Government and Guide Italy Out of CrisisThe sudden ascent of the man credited with helping save the euro was a pipe dream for Italians frustrated with a coalition paralyzed by ideological schisms and incompetence.Mario Draghi, the former head of the European Central Bank, knows well the machinery of government at both the European and Italian level. Credit…Andrew Medichini/Associated PressFeb. 3, 2021Updated 8:43 a.m. ETROME — Mario Draghi, the former head of the European Central Bank who is largely credited with helping to save the euro, accepted a mandate from Italy’s president on Wednesday to try and form a new unity government that would guide the country out of the pandemic and through economic recovery.“To overcome the pandemic, to complete the vaccine campaign, to offer answers to the daily problems of the citizens, to relaunch the country are the challenges we face,” Mr. Draghi said after meeting with President Sergio Mattarella for more than an hour at the Quirinal Palace. Italy, he said, faced a “difficult moment.” And he said he had accepted Mr. Mattarella’s appeal because the emergency “requires an answer equal to the seriousness of the situation.”Until as recently as Tuesday, the idea of Mr. Draghi replacing Giuseppe Conte as prime minister remained a pipe dream for the many Italians frustrated with a governing coalition that seemed paralyzed by ideological schisms and incompetence, especially as the coronavirus pandemic raged and economic devastation set in.But on Tuesday evening, Mr. Mattarella summoned Mr. Draghi and appealed to “all the political forces in the Parliament” to support a “high profile government” to meet the historic moment.He made it clear Mr. Conte’s tenure was over and the new players, potentially political leaders proposed by the parties supporting Mr. Draghi or an all-star cast of politically unaffiliated economists, judges and scientists, was ready to take the stage.Italy’s stock market rallied on Wednesday in response to the news that Mr. Draghi had been lined up to lead the Italian government. He immediately began consultations with party leaders that will continue in the coming days in an effort to form a new Italian government.“I am confident that from the exchange with the parties and the groups in the Parliament and from the dialogue with the social forces,” Mr. Draghi said on Wednesday, “there will emerge unity and the capacity to give a responsible answer to the president’s appeal.”Mr. Draghi is himself no political novice. He has served in past Italian governments, was a director of Italy’s treasury and knows well the machinery of government at both the European and Italian level.His name has been mentioned for years as a potential candidate to replace Mr. Mattarella as Italy’s head of state in 2022. But now Mr. Mattarella himself has called on Mr. Draghi, whom he has publicly praised in the past, and brought him directly into the fray.“Now everyone of good will must heed the call of President Mattarella and support the government of Mario Draghi,” Matteo Renzi, the wily former prime minister who engineered the collapse of Mr. Conte’s government by pulling his small party’s support in Parliament. “Now is the time for sobriety.”A former prime minister, Matteo Renzi, triggered the previous government’s collapse.Credit…Pool photo by Alessandro SerranoParty leaders on the right and left quickly expressed support for Mr. Draghi after it became clear that Mr. Mattarella would ask him to form a government.Among them were leaders who had made great shows of their loyalty to Mr. Conte. Nicola Zingaretti, the leader of the Democratic Party that Mr. Renzi once led, released a statement that on the one hand referred to the government crisis as a “disaster provoked by the irresponsible choice” of Mr. Renzi, but he then welcomed Mr. Mattarella’s decision. “We will stand ready to discuss the common good for the country.”The Coronavirus Outbreak More

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      Netflix still several steps ahead in strategy for wooing subscribers

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      Only Frank Underwood could amass as much power in such a short space of time. Nearly eight years after Netflix used House of Cards as the launch of its global empire, the streaming service announced last week that it now had more than 200 million subscribers. The pandemic has hastened the company’s transformation from a debt-laden digital upstart into an essential part of the TV landscape in homes across the world.In 2013, when Netflix’s first original series made its debut, the company had 30 million (mostly US) subscribers. This was six years after it moved from being a DVD-by-post business to a streaming pioneer. Since then it has added 170 million subscribers in more than 190 countries and its pandemic-fuelled results last week sent Netflix’s market value to an all-time high of $259bn.Last year proved to be the best in the company’s history, even as a new wave of deep-pocketed rivals attempt to deprive it of its streaming crown. Accustomed to operating in battle mode, Netflix added a record 37 million new subscribers as lockdown prompted viewers to alleviate housebound cabin fever with fare including The Crown, Bridgerton and The Queen’s Gambit.Last week it reported that in 2020 the amount it earned from subscribers exceeded what it spent – to the tune of $1.9bnBut Netflix’s pioneering low-price, binge-watching approach to driving growth has come at a cost. Year after year the need to spend billions on ever-increasing numbers of films and TV shows in order to keep and attract subscribers has weighed on its balance sheet, if not its share price. With a Netflix subscription a fraction of the cost of a traditional pay-TV service, average revenue per user is low. This is great for growth but means the company has to keep on topping up its content budget to fulfil its binge-watching promise to fans. A few billion here and there has spiralled to $16bn in long-term debt and a further $19bn in “obligations” – essentially payments for content spread out over a number of years.Analysts have been split over Netflix’s grow-now-pay-for-it-later strategy, but the company finally appears to have proved the naysayers wrong. There was a symbolic announcement in its results last week: it reported that in 2020, free cashflow was positive – which means that the amount it earns from subscribers exceeds what it spends on content, marketing and other costs – to the tune of $1.9bn.Part of the reason for this was that Netflix’s content spend fell – from $14bn to $12bn – as a result of production stoppages caused by lockdowns, but it was a turning point nevertheless. It has taken 23 years since its humble beginnings as a DVD rental company in California for the Netflix machine to reach the point of sustainability.The firm’s decision in 2013 to invest heavily in original productions has proved critical – and prescient. It sensed, correctly, that its success would prompt the suppliers that it was licensing shows from to eventually keep them for their own services. In the past 18 months, HBO Max, Sky-owner Comcast’s Peacock and AppleTV+ have joined longer-term rival Amazon Prime Video in vying for subscribers.Reed Hastings, Netflix’s co-chief executive, acknowledges this second wave in the streaming wars, particularly noting the “super-impressive” performance of Disney+, which has become the third global force in streaming behind Amazon. In just 14 months since its launch, the service, powered by franchises including Star Wars TV spin-off The Mandalorian, Marvel films and Frozen 2, has amassed 87 million subscribers four years sooner than forecast. Last month, Walt Disney+ announced a doubling of its content budget and tripled its forecast of subscriber numbers by 2024.However, new rivals have yet to dent the dominance of Netflix, which reported adding 8.5 million subscribers in the fourth quarter, and revealed that 500 TV titles were in the works and a record 71 films would premiere this year. Some doubters had raised concerns that Netflix’s debt-fuelled growth was a financial house of cards. But its foundations look solid now.Nissan’s ‘edge’ over rivals is no vote for BrexitLeaving the EU without a deal would have been an act of economic self-sabotage nearly unrivalled by a developed economy. Carmakers’ relief that a deal was reached on Christmas Eve was palpable. Nissan’s glee became clear last week, with chief operating officer Ashwani Gupta repeatedly declaring that the Brexit deal had given the Japanese carmaker a “competitive advantage”.Nissan had looked through the complex new rules of origin governing trade between the UK and the EU. Parts and finished cars that cross the Channel will not attract tariffs if a certain proportion of their components are from either the UK or the EU. Nissan’s cars already comply with the rules.Crucially, this applies to high-value batteries, which a partner company builds in Sunderland, in a factory next door to Nissan’s. Other companies are not so well-placed and must rely instead on imports from east Asia. For them the Brexit deal has started a scramble to secure batteries from Europe – if they want to sell into the UK – or hope that untested UK companies can build gigafactories to supply them.However, the Japanese carmaker’s statement should not be mistaken for a “vote of confidence”, as Boris Johnson managed to do. Gupta acknowledged that the UK’s departure from the EU had brought new costs, though these were “peanuts” for a company of Nissan’s scale. They may not be so negligible for exporting entrepreneurs, a breed that will probably become rarer as non-tariff barriers increase for would-be traders with the EU.Furthermore, “competitive advantage” is a double-edged compliment. Nissan will gain on UK and EU rivals which do not source batteries locally. Even if it is less of a burden than those carried by competitors, a handicap – in this case increased trade friction with the UK’s biggest market – is still a handicap.A new president is not a panaceaIt would be a mistake to allow the relief that has accompanied Joe Biden’s victory in the US presidential election to become something close to euphoria and, consequently, freight the new US president with expectations that are unachievable.The next decade is looking troubled and fractious even now that Donald Trump’s hand is no longer on the tiller of the world’s largest and most powerful economy. From a global perspective, there is the assessment of climate economist Lord Stern that the next 10 years will be crucial if we are to reach net zero carbon emissions by 2050.China, for 30 years a convenient supplier of low-cost goods to the global economy, is becoming more authoritarian and looking to use its spheres of influence in Asia and Africa to quell complaints by international bodies about the way it treats Uighur Muslims and Hong Kong protesters. To make matters worse, populations in the west and in China are ageing and struggling to provide a decent standard of living for younger members of society.In the UK, Brexit reintroduces a welter of red tape into the trading arrangements this country has with its biggest commercial partner, the EU, and will depress average household incomes over a long period. So despite the relief in many corners of the globe that greeted Biden’s inauguration, there is reason to worry.But there are grounds for hope too. The pressure to address the climate emergency is growing rapidly and politicians all over the world are at last taking notice. The 26th UN climate change conference in Glasgow, scheduled for November, could mark a seismic shift in action. And Biden showed how inclusive he plans to be with his roster of inauguration acts, from the stalwart Republican country singer Garth Brooks to 22-year-old African American poet Amanda Gorman.It was telling that Biden said he wanted to build bridges. It will be difficult, but on the issue of climate change, if on nothing else, that must include China. More

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      Joe Biden is now president, but Trump has changed the US for a generation | Martin Kettle

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      Donald Trump departed today from the American presidency as he arrived four years ago: vain, cruel and telling lies, without any vestige of grace or magnanimity.There was no acknowledgment of, still less apology for, his deranged delinquency in the face of Covid, or of his election defeat – failures that made the nervy, locked-down inauguration of Joe Biden inevitable. But Trump leaves having changed America.Biden did his best today. He had been absolutely the right candidate to defeat Trump at the polls. He calmly outsmarted the incumbent through the campaign; his appointments have been good; and there is no one in American politics better placed to begin the healing of wounds that ran through everything he said at the inauguration.The address by Biden on Capitol Hill did not mention Trump by name, but it was saturated in his blowhard predecessor’s divisive legacy. The riot of 6 January hung over the occasion, the speech and even the images. The speech struck necessary and reassuring notes of realism, humility, hope and consistency. It was wholly unTrumpian. But Biden cannot remake America by trying to lead it back to a better yesterday. That would fail.To describe it as a presidential inauguration without parallel is to risk a lack of historical awareness on the one hand or journalistic hyperbole on the other. America, its institutions and values have survived civil war before, as well as assassination. America will probably survive the horrors of Trump’s corrupt tenure, which Biden called “this uncivil war”. But survival may no longer be enough in an America that has been led too close to the brink of a deeper conflict by a wanton leader, abetted by a weak-willed party, an elite of morally supine tech companies and the lie machines of Rupert and Lachlan Murdoch.Yet it is also true that Trump is not a one-off. Consider this: “American politics has often been an arena for angry minds. In recent years we have seen angry minds at work mainly among extreme rightwingers … But behind this I believe there is a style of mind that is far from new and that is not necessarily right wing. I call it the paranoid style simply because no other word adequately evokes the sense of heated exaggeration, suspiciousness, and conspiratorial fantasy that I have in mind.”Each one of those words could have been written this week. In fact, the historian Richard Hofstadter wrote them six decades ago, after the failed 1964 presidential bid of the rightwing Republican Barry Goldwater. Hofstadter drew the argument not only from the delusions of the 1960s, but from a line of conspiracy theories that stretched right back to the French Revolution in the 1790s and forward to McCarthyism in the 1950s – and beyond.This tells us two things that need to be remembered in the light of the Biden inauguration. The first is that the battle to extend and bolster democratic values needs to be as sleepless as the tradition of those who oppose them. Biden’s words, that “disagreement must not lead to disunion”, indicate the scale of what is at stake. Disunion can wreck a nation.The rioters of 6 January adhere to what the columnist David Brooks calls a “violent Know-Nothingism that has always coursed through American history”. They sometimes see themselves as refighting America’s 18th-century war of independence. It is more accurate to see them as refighting the 19th-century civil war from the side of the Confederacy, whose racial legacy still scars the United States 150 years later. They have to be punished and defeated.Biden said nothing about that. Yet, as the Economist said last week, you do not overcome division by pretending that nothing is wrong but by facing it. The US senate has to finish the job by convicting Trump too.The second lesson is that, while America sometimes echoes and influences the politics of other nations, including Britain’s, it is also extremely different. In most respects, and far more than many politicians elsewhere understand, the United States follows its own distinct path. It is a foreign country, and the better you get to know it the more aware of that you become. Trump has turbocharged that. This is the America that Biden now leads.Foreigners, especially English-speaking foreigners, need to control their delusions about America. Until 2017, every inaugural was watched from Europe as a statement of the terms on which our own politics here would be set for the coming years. Trump changed all that. American carnage broke the dials, which sadly the former British prime minister Theresa May failed to see. Biden’s warm words now will not reset the dials. There was surprisingly little in his address about foreign policy. The future of America’s place in the world is not definitively settled by the change of administration.Trump lost the election, but he has changed things for a generation. Biden’s address was an implicit acknowledgment of that. The European nations, Britain included, need to grasp the same thing. Just as the era of American domestic bipartisanship remains for the foreseeable future a thing of the past, so the era of American global leadership is not for rebuilding quickly or perhaps at all.Under Donald Trump, the arrogance of global greatness came perilously close to breaking America. If Biden and his successors fail, that may still happen. But Brexit has shown that Britain suffers from an arrogance of greatness all of its own. Britain is a vessel sailing the oceans in the dark without charts or lights. Biden’s America will not come to the rescue any time soon. It has its own problems to solve. More