April 2024, Volume 30, Number 2

Africans continue to cross the Sahara Desert bound for Libya and Europe. Agadez in Niger is halfway between Lagos and the Libyan coast, and a place where a variety of trucks await migrants who hope to cross the Mediterranean to Italy; a pick-up truck can transport 30 migrants across the Sahara.

The EU paid the Niger government about $100 million a year to restrict migrant movements from Agadez, but the elected government was deposed by the military in summer 2023 and the gate northward reopened. Niger's new military government may be allowing more migration to retaliate against the EU for reduced funding.

Ukrainians are another looming issue for EU leaders. The EU Temporary Protection Directive issued in March 2022 granted four million Ukrainians access to housing, employment and education in all EU countries, and some countries provided additional benefits.

EU economies are growing slowly, reflecting factors that range from aging and slow population growth to national and EU-wide regulations that slow innovation and productivity growth. Some critics say that America innovates, China replicates, and Europe regulates, calling attention to EU goals such as protecting workers, consumer privacy and avoiding monopolies.

There are tradeoffs. Europe has more mobile phone operators and lower consumer costs than the US, but they make less investment in 5G. The EU's proposed regulations to safeguard consumers from AI that may push AI firms elsewhere.

Britain. The UK provided $176 million to Rwanda to integrate asylum seekers who arrive illegally by boat across the English Channel from Europe, but had not sent any boat people to Rwanda by spring 2024. The UK received some 75,000 asylum applications in 2023; the peak was 84,000 asylum applications in 2002.

Farmers. French and German farmers protested plans to reduce subsidies on diesel fuel in January 2024, highlighting farmer discontent in many European countries that contributed to the ascension of the anti-migrant Party for Freedom in the Netherlands in 2023. Right-wing and anti-migrant parties in France and Germany that support farmer protests are gaining support in opinion polls.

European farmers are grappling with rising costs, reduced subsidies, and EU and national regulations that aim to reduce carbon emissions. Governing parties often provide some relief from costs and regulations after farmers block streets in capital cities.

Rightist parties echo farmer complaints that far-off bureaucrats who do not understand agriculture are imposing their will on the farmers who feed Europeans. Farm protests may lead to victories for populists who say they represent ordinary people opposed to the globalist elites who govern countries and the EU.

The French government promised more aid and looser regulations in February 2024 to persuade farmers to eliminate tractor roadblocks, offering $165 million in aid to livestock farmers and to embed "food sovereignty" in French law. France received the most CAP subsidies, $10 billion in 2022, and runs a farm trade surplus, but CAP subsidies are increasingly conditioned on adhering to environmental regulations.

Some of the farmers' ire is aimed at the EU, which in February 2024 abandoned efforts to force farmers to reduce their use of chemicals and scaled back recommendations to reduce farming-related carbon and methane emissions. Farmers want the EU to impose tariffs on food imports from countries that do not follow EU environmental regulations.

Germany. The Alternative for Germany party is polling at 25 percent among voters, just behind the Christian Democratic Union and the Christian Social Union. AfD leaders have publicly called for deporting "millions of foreigners back to their home countries."

Over a million Germans protested in January 2024 after learning that AfD leaders met with far-right groups in Potsdam, site of the 1942 Wannsee Conference that developed the "final solution." AfD leaders explored ways to "reverse the settlement of foreigners."

The German economy shrank in 2023, leaving it about the same size as in 2017 in real terms. Integrating immigrants while dealing with labor shortage complaints and maintaining a path toward renewable energy are proving to be very difficult challenges for the coalition government. Germany's auto industry, which employs 800,000 workers and exports three-fourths of the vehicles produced, as well as the mechanical engineering sector that employs a million, complain of high electricity and energy costs.

German industries pioneered the mass production of solar panels, but Chinese competitors can produce solar panels cheaper, leaving only German firms that produce niche solar products. Almost all of the solar panels installed in Europe in 2023 were imported, usually from China, prompting German solar panel manufacturers to demand a resilience bonus, higher prices for electricity from panels produced in Europe. Germany wants to increase its solar power production from 10 to 80 gigawatts a year, and some argue that, instead of protection from imports, German firms must build complete heating and battery systems rather than only panels.

Germany's previous economic crisis in the early 2000s led to labor market reforms known as the Hartz laws that required the unemployed to more quickly find new jobs.

The German train drivers union (GDL) called a six-day strike in January 2024, the fourth in two months, in support of demands for an 18 percent wage increase and a 35-hour work week. While Deutsche Bahn offered 13 percent wage increase for the current 38-hour work week.

There have been other strikes that increase dis-satisfaction with the so-called traffic light SPD-Green-FDP coalition government. Germany's economic growth slowed due to higher energy prices, and inflation was higher in 2023 than any time in the previous half century. There are few prospects for relief from labor force growth due to an aging and shrinking population.

Netherlands. The anti-migrant and anti-Muslim Party for Freedom led by Geert Wilders won 37 of the 150 seats in the Dutch Parliament in November 2023 elections, making the Netherlands the third country after Italy and Sweden with rightist and anti-migrant parties with political clout. The Party for Freedom may form a coalition government with mainstream rightist parties.

Israel-Hamas. The Hamas attack in Israel in October 2023 included killing and taking hostage some of the 30,000 Thai guest workers in Israel. A third of the Thai guest workers left to avoid the conflict, prompting Israel in January 2024 to announce that up to 20,000 (Hindu) Indian migrants would be admitted to fill jobs paying about $1,500 a month that were previously filled by daily commuter Palestinians no longer admitted from Gaza and the West Bank as well as migrants from other countries.

Before the war, almost 200,000 Palestinians worked in Israel, compromising 20 percent of the West Bank's workforce.

Russia-Ukraine. Russia invaded Ukraine in February 2022. Two years later, the two sides remain in a stalemate, with Russia occupying about 20 percent of Ukraine's territory.

The war had major repercussions in both Russia and Ukraine, including reducing the power of Ukrainian oligarchs, many of whom got rich by buying state-owned factories and farms cheaply in the 1990s. There were 10 Ukrainian billionaires before the Russian invasion, and two in 2024. Unlike Russia, where most oligarchs support President Putin, oligarchs in Ukraine supported different media outlets and politicians.

Russia doubled spending on its military from 14 to 29 percent of federal spending over the past several years, explaining its ability to replace drones and ammunition used against Ukraine. Western sanctions have not cut Russia off from supplies of semiconductors that are used in drones and bombs.

Will the Russia-Ukraine war encourage European NATO countries to increase military spending? Denmark, Germany, Italy, and the Netherlands spend about one percent of GDP on defense, half of the two percent NATO target. Since the end of the cold war in the early 1990s, European nations enjoyed a peace dividend of about $2 trillion.

A March 2024 attack on a Moscow concert hall by four Tajik migrants left over 130 people dead. Migrants from the Central Asian "stans" do much of the low-skilled work in Russia, and Russian Muslims are a disproportionately high share of the Russian army fighting in Ukraine. Tajikistan has a population of 10 million, and a million Tajiks are employed in Russia.

China. China's population of 1.4 billion dropped by 2.1 million in 2023, as births fell to nine million and the fertility rate fell to one, well below the average 2.1 births per woman needed to keep the population stable. China had 30 million births in 1963 and 18 million births in 1980 when the one-child policy was adopted. India has 1.4 billion people and a growing population.

Some 20 percent of Chinese are 60 and older, the normal time of retirement for urban residents. By 2040, a third of Chinese will be 60 or older.

The one-child policy was ended in 2015, but its effects persisted. Recently, Chinese federal, provincial, and local governments have reversed course and are now encouraging couples to have two or three children. Instead of fines for having two or three children, couples can receive government payments.

The federal government provided $2 trillion to jump start US production of EVs, semiconductors, and solar panels. However, Chinese producers can produce these goods cheaper than European or US producers, raising questions about whether China is abiding by WTO rules against state subsidies that give its firms unfair advantages.

China is a manufacturing powerhouse, accounting for a third of global manufactured goods and a sixth of global goods exports due to low interest loans, free land from local governments and low energy prices. China produces 80 percent of the world's solar panels, 60 percent of all electric vehicles, and 80 percent of electric vehicle batteries. The EU and US are considering new tariffs on Chinese imports.

Producing and exporting manufactured goods is substituting for building and furnishing condos and apartments.

China is uniquely positioned to help its high-tech industries expand because of its huge home market. Almost seven million EVs were sold in China in 2023, compared with about a million in the US. Some US analysts say that China provides so many subsidies that Chinese firms overproduce, making them willing to export products at low cost. In shipping, solar cells and steel, China expanded enough to drive most foreign competitors out of business.

Hong Kong created the Top Talent Pass Scheme in 2022, offering two-year renewable visas to foreigners with degrees from the world's top 185 universities or an annual income of at least 320,000. Since then, over 95 percent of those approved have been mainland Chinese. Hong Kong has about 7.5 million residents, and Top Talent is expected to bring more mainland Chinese to the SAR, with some likening Hong Kong as the lifeboat to the big ship that is mainland China.

India. Will India become the China of the 2020s and 2030s, providing goods and services to the world? India has the world's largest population, half under 25, and could surpass Germany and Japan to become the world's third largest economy, after the US and China, by 2035.

With almost 20 percent of the world's 15- to 64-year olds, India should be well positioned to attract electronics assemblers such as Foxconn. However, only a third of Indian women are in the labor force, compared with three-fourths of Chinese women. The Indian government's agricultural subsidies plus cultural norms slow the movement of rural women to urban factories, a sharp contrast to the dorms that house millions of rural migrants around Chinese factories.

Some 260 million Indians are employed in agriculture, about 45 percent of the 570 million-strong Indian labor force. However, agriculture contributes only 18 percent to GDP, meaning low farm incomes.

The Indian government wants to reduce farm subsidies and encourage rural youth to move to cities and work in factories. However, farmers want the government to guarantee minimum prices for major commodities to support farm incomes, and have protested government plans to allow markets to set commodity prices because many fear they will not be able to find jobs in cities.

Farms act as safety valves for rural-urban migrants. Between 2019 and 2024, the number of Indians in farming increased by 60 million as factories closed to prevent the spread of covid. The rural safety net improved with many families able to receive five kilos of free rice or wheat each month and keeping some people in rural areas.

India is second only to Brazil in sugar production, and the leading consumer of sugar. There are 500 mills in Uttar Pradesh, Maharashtra and Karnataka, and 50 million people are involved in producing, harvesting and processing cane. Many of the workers who harvest cane take wage advances from crew leaders who report to the mills that keep them in debt bondage, working to repay debts that grow with interest and fees.

NGOs in Beed, Maharashtra report widespread labor abuses of farm workers. Instead of farmers hiring cane cutters, the mills rely on independent contractors with vehicles to recruit, transport and supervise cutters, and a million cane cutters are employed by these contractors in Maharashtra for the October to March harvest. Cutters receive about $900 or $5 a day in advance for cutting cane, and then work to pay off their debt, with the debt accumulating if cutters are unable to work sufficient days. Many cutters migrate as families, ensuring that some older children also cut cane.

The Indian government has high public debts, equivalent to 85 percent of GDP and second only to Brazil among fast-growing developing countries. The Indian government wants to increase manufacturing's share of GDP from the current 15 percent to 25 percent, which requires FDI. Some foreigners are reluctant to invest in India due to import tariffs that raise the cost of needed inputs, bureaucracy that can slow the building of plants, and rigid labor laws.

Narendra Modi became Prime Minister and is expected to lead the Hindu Bharatiya Janata Party (BJP) to victory in one of the world's the most expensive elections in April 2024. Election spending of $15 billion is about the same as expected spending on the 2024 US elections.

The Indian government in 2017 allowed businesses to buy electoral bonds or to make unlimited and undisclosed campaign contributions, and many firms that were under investigation made contributions. Electoral bonds were supposed to make political contributions more transparent, but backfired until the Indian Supreme Court ordered contributors to be revealed in January 2024.

India has become more unequal over the past decade. Over 90 percent of Indians live in households with annual incomes of less than $3,500 a year, although the social safety net has expanded to provide the poorest Indians with benefits that range from free food to cheap housing materials. As a result, many Indians are optimistic that their economic situation will improve.

Japan. Japan's stock market reached a new high in 2024, with the Nikkei 225 topping 39,000; the previous high was almost 39,000 in 1989. The Japanese economy slipped to fourth-largest behind Germany in 2023, and the Japanese population is aging, with 20 percent of residents 75 and older.

Japan has been governed by the Liberal Democratic Party for almost the entire post WWII period, and there are few prospects for change as many Japanese say Shouganai, or it can't be helped.

Korea. Korea has about 300,000 legal low-skilled migrant workers and another 430,000 migrants who overstayed their visas and are working illegally. A record 165,000 new three-year migrant visas will be issued under the Employment Permit System in 2024.

Korean wages of $1,500 to $2,500 a month are 10 times what workers could earn in 16 countries of origin that range from Bangladesh and Nepal to Vietnam, but working conditions can be harsh. The EPS was created in 2004 to solve the problem of migrants paying for foreign jobs, but does not deal with conditions for migrants in Korea. The Korean government wants to improve migrant worker housing with public dorms and increase labor law enforcement.

South Africa. Rival mining unions are taking workers hostage to win more members before 2024 elections. The Association of Mineworkers and Construction Union represents most platinum miners and is trying to increase its membership among gold miners by calling wildcat strikes, while the ANC-affiliated National Union of Mineworkers struggles to keep members that the AMCU seeks to poach.

Underground mine workers typically earn R10,500 or $550 a month for 48-hour weeks. The 29 major South Africa mining firms have decreased profits due to rising costs and rolling electricity blackouts.

Australia and New Zealand. The Costa Group was acquired by Paine Schwartz Partners for AUD $1.5 billion or $1 billion in February 2024. Driscoll's has had a joint venture with Costa since 2010 to develop berries suited for Australia and New Zealand. Paine Schwartz has invested about $6 billion in farm companies in the 21st century.