A Vote For What?

Your Friday author has always been cynical about cynicism, the tool that lazy people use to appear sophisticated. But it’s hard not to smirk at the world’s five big votes scheduled for the spring. See for yourself.


Italy — On March 4, Italians head to the polls for parliamentary elections unlikely to produce a result that pleases most of those who vote. No party will win a majority, beginning a prolonged process of coalition bargaining in a country where many MPs switch parties after the votes are cast.

Maybe Silvio Berlusconi’s center-right Forza Italia will join the far-right Northern League and some smaller conservative parties to form a government. Berlusconi can’t serve as prime minister because he’s been convicted of tax fraud and of dyeing his hair with black shoe polish. Maybe the center-left Democratic Party will lead another unstable coalition, the fourth in seven years, with Forza Italia. Maybe, though not likely, the populist Five Star Movement (5SM) can form a government with the far right. Or maybe talks will collapse and Italy will need another round of elections. True connoisseurs of political cynicism will be closely watching the performance of the new “Free Flights to Italy” party.

Whatever the outcome, Italy’s large public debt and its frustration with other EU members who aren’t helping ease a still-large refugee burden will continue. The best that can be said: Economic growth continues to improve, and even the 5SM has stopped talking up a referendum on exiting the Eurozone.

Germany — Speaking of unhappy coalitions, we’ll learn the outcome on March 4 of the vote-by-mail balloting of 460,000-plus members of Germany’s SPD, who must choose whether their center-left party should join another government led by Chancellor Angela Merkel and the center-right CDU-CSU. Six months after elections in which both major parties took big losses from previous totals, it all comes down to an in-or-out vote for the SPD. This one, unlike similar votes in the past, is no sure thing, particularly with the party’s youth wing actively campaigning for “no.” If SPD voters reject the deal their leaders have cut with Merkel, Germany will have new elections, or Merkel will try to lead a minority government.

The choice is simple, if cynical: Join a Merkel-led government that many SPD leaders have pledged to oppose in exchange for leadership of the foreign and finance ministries or face new elections after the party’s worst drubbing since World War II. Merkel’s party won just 33% of the vote last September, but the SPD won a mere 20.5% — and its popularity has since fallen to 16%, now behind even the far-right Alternative for Deutschland. As in France, traditional parties of the center-right and center-left are struggling to cope with rising public demand for change.

True fans of hard-core electoral cynicism will ignore Italy and Germany to focus on upcoming votes in Venezuela, Egypt, and Russia.

Russia — Vladimir Putin isn’t much worried that he’ll lose his March 18 bid for re-election to Ksenia Sobchak. He’s more worried that he’ll miss his 70/70 target — 70% of the vote with 70% turnout — and that the kids won’t turn out to certify that their president remains cool.

That’s probably why the Russian government hatched a plan to get young voters to compete to win iPads and iPhones by sending in selfies taken at polling stations. (h/t to our friends at Bear Market Brief.) If there’s anything the youngsters like more than iStuff, it’s the selfies.

Other prizes we’d like to see offered:

  • A chance to hold President Superman’s cape while he wrestles a slightly drugged bear.
  • Two tickets to join the Kremlin watch party for the November US midterm elections. (Bring a date!)
  • A chance to fire Prime Minister Dmitri Medvedev on live TV.

Too cynical? I’m not even warmed up yet.

Egypt — On March 26, Egyptians will choose between voting to re-elect President Abdel Fattah al-Sisi, voting for an opponent who isn’t really running to win, and staying home to watch TV. The January arrest of former army chief of staff and credible opponent Sami Anan made clear Egypt’s strongman will leave little to chance. Like Putin, Sisi is worried about low turnout, particularly since Egypt’s opposition will boycott the vote. No worries: Sisi’s government is unlikely to publish credible turnout information anyway.

Anan is far from the only rival pushed out of the race — a former prime minister, a human rights lawyer, and former president Anwar Sadat’s nephew have all been harassed off the ballot. But Anan’s uniform reminds us that Sisi worries less about civilian opposition than about losing his support base within the military. That may eventually happen, if Egypt’s economy and security situation don’t improve. But not in time for next month’s vote. In the meantime, 14 international and Egyptian rights groups accuse the US and EU of “largely unquestioning support for a government presiding over the country’s worst human rights crisis in decades.”

Venezuela — The salsa king of Venezuela, aka President Nicolas Maduro, has decided to stand for re-election on April 22. There are many reasons he’s going to win. His government has made no deal with the opposition, allowing Maduro to change election rules as he goes. There will be no objective international observers to certify Maduro didn’t cheat. And Maduro will cheat — by using the country’s courts to disqualify any legitimately popular opponent, by stuffing the ballot box, or both.

It’s no wonder then that the country’s four largest opposition parties announced this week they’ll boycott the whole show. Henri Falcon, a former Chavista turned controversial opposition figure, says he’s in the race. But though he enjoys a two-to-one lead over Maduro in current polls, there’s no way Maduro will let him win.

In the meantime, conditions inside Venezuela will get even worse. Declining oil production will undermine the value of the country’s only valuable export. Runaway inflation and shortages of basic goods will continue, even for those who have supported Maduro. Sanctions may hasten a default, particularly if the Chinese and Russians decide to stop throwing good money after bad.

That’s why the greatest threat to Maduro in coming months comes not from the still-fragmented opposition but from within the Chavista movement, those with real power to dance him offstage.

Facebook unveiled plans for a new cryptocurrency and payment system on Tuesday. It's called the Libra, and it's not-so-modest goal is to "reinvent money," and "transform the global economy" so that "people everywhere can live better lives." Ambitious much, Zuck?

This is a huge political gamble, but the rewards could be enormous. Here's a quick look at the tradeoffs:

The risks: Facebook is asking its 2.5 billion users — and government regulators — to entrust it with something that's vitally important to people everywhere and a power that governments jealously protect: access to money. And it's doing so at a time when trust in Facebook and other big Silicon Valley companies is at a low ebb.

Whether it's a concern that Big Tech has become too powerful or that it's not doing enough to protect privacy or put a stop to fake news, it's a heck of a time to launch a new techno-utopian project that could give Silicon Valley much more power — including the ability to track not just what people say they like but how they spend their money.

Mark Zuckerberg understands this — the Facebook founder is setting up Libra as a Swiss-based non-profit that will be governed by an "association" of 28 tech and financial companies and non-profits of which Facebook is just one member. He's also promising that Facebook will not mix personal data with payment information, and to cooperate with regulators.

But this will always be Zuckerberg's baby, and by launching Libra, he's painting a big new political bullseye on his own back.

The payoff: If Libra can survive the inevitable political and regulatory storm (and convince its billions of users that they can trust the underlying technology and financial stability of the new cryptocurrency) the upside could be enormous.

How enormous? The Libra website claims that more than 30 percent of the world's population — about 1.7 billion people — currently lack access to traditional bank accounts. Many more pay steep fees to transfer money using traditional payment services. Libra, by contrast, promises access to anyone in the world with a simple smartphone — and to make payments as inexpensive as sending a text message.

Plug those capabilities into a social network whose user base is roughly double the population of the biggest country in the world, and the results could be revolutionary — not just for billions of people who would gain new access to financial resources, but for Facebook's business model, and for central banks and governments that have traditionally sought to control the flow of money through their economies.

That would be a techno-utopian dream come true, but it's a power that governments won't willingly surrender.

If Willis's story on Tuesday about Argentina being plunged into darkness after a nationwide power failure didn't get you packing a flashlight and checking that your car has a full tank of gas, this one should. Over the weekend, the New York Times said anonymous US officials had revealed a US campaign to plant "potentially crippling malware" inside Russia's power grid "at a depth and with an aggressiveness that had never been tried before."

Quick thoughts:

This is a big provocation. It's the cyber equivalent of mining a harbor — an aggressive move that falls short of actual conflict but sends an unmistakable message: mess with us, and we'll mess you up.

The leak was probably intentional. The campaign fits with the new US strategy, launched under the Trump administration, of trying to deter cyber adversaries like Russia, China, and Iran from hacking its critical infrastructure. By disclosing the US campaign, US officials are effectively telling Russia (and by extension China and Iran), that they've got a loaded gun cocked and pointed at their economies.

That's dangerous. People — and governments — may not always behave rationally when a gun is pointed at their heads. Russia might be even more inclined to lash out. And unlike more conventional forms of conflict, cyber isn't a domain where the US can be sure it has an overwhelming advantage if push comes to shove.

It gets worse. The Times said US cyber officials described a "broad hesitation" to go into details of cyber operations against Russia with President Donald Trump because they feared he might cancel it or tell other governments about it. Among other things that are disturbing about this story, a lack of communication between the President and US cyber warriors could send mixed signals that further embolden US adversaries.

It's no secret that cyberattacks are becoming more commonplace. But where do most of them originate and what countries do they target most? The graphic above shows the most significant offenders and victims since 2006. Hackers in China, Russia, Iran, and North Korea account for three-quarters of all major attacks. Nearly a fifth of attacks, meanwhile, have targeted institutions or companies in the United States.

(At least that we know of: this chart highlights known attacks on government agencies, tech companies, and other operations that caused more than $1 million in economic damage. But many cyberattacks are never disclosed, and some countries are more transparent than others, so consider this a cross-section of a much bigger — and more disturbing — picture.)

China's outrage against Swiss bankers – Paul Donovan, an economist at UBS and a former colleague of your Wednesday Signal author, ended up in hot water last week after he wrote that an outbreak of swine fever that had pushed up pork prices in China, "matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world." The Swiss bank put Donovan on leave after a nationalist tabloid picked up the story, unleashing a torrent of invective from angry Chinese citizens, industry groups, and clients. Although we're a bit puzzled at the intensity of the outrage, we're following this story closely. The anger of 1.4 billion people is a powerful thing, and if the US-China standoff over tech and trade continues to escalate, US firms could soon find themselves on the receiving end.

What we are ignoring: Trump on ICE

Trump's Deportation Threats – As Donald Trump revved up his official reelection campaign in Florida on Tuesday, he took to Twitter to vow mass deportations of "millions of illegal aliens" starting next week. We are ignoring this for two reasons: First, it looks more like a campaign trail stunt than a well-thought-out plan — the scale of deportations Trump envisions would require massive logistical coordination, and it's not clear that Immigration and Customs Enforcement (ICE) can deliver it — even if the federal force got help from local police, who may be reluctant to participate in mass arrests in their communities. Second, while this type of rhetoric may play directly to Trump's base, images of crying children torn from their parents will galvanize the president's opponents — and, in particular, the suburban women crucial to his 2016 victory. We're not ignoring the pain and trauma that mass deportations would inflict on immigrant communities if Trump delivers on this threat. We're ignoring a boast that's likely to prove a political bust.