The republic strikes back

Emmanuel Macron unveils a controversial bill to fight Islamism

It will go to parliament next year

Nearly two months after the beheading of Samuel Paty, a schoolteacher who had shown pupils caricatures of the Prophet Muhammad, the French government has unveiled a bill to clamp down on radical Islamism. 

This, at least, is the implicit aim of a draft law presented on December 9th. 

President Emmanuel Macron had promised a bill to combat “Islamist separatism”. But, to pre-empt charges of stigmatising Islam, the final version has been reframed as a text “to reinforce the principles of the republic”.

The bill, declared Jean Castex, the prime minister, is “not a text against religion, nor against the Muslim religion”. Rather, he said, it is “a law of emancipation against religious fundamentalism”, designed to reinforce such principles as laïcité (secularism) and gender equality. 

It was presented on the 115th anniversary of the adoption of a law that separated religion and the state, and first enshrined laïcité. This strict French version of secularism protects the right both to believe and not to believe, as well as requiring religious neutrality in public life.

The new provisions, which will go through parliament in early 2021, include tight curbs on home-schooling (though not a ban, as originally promised). Parents will need to apply for permission if they wish to teach their children at home, and to justify it. 

The aim is to limit the use of home-schooling as a way to escape state oversight of radical Koranic teaching. Officials say they have uncovered such classes in some neighbourhoods.

The bill will also make it easier for the government to inspect and shut places of worship or associations that get public subsidies, if they do not respect “republican principles”, such as women’s equality. 

A ban on state employees displaying “conspicuous” religious symbols, such as the hijab or crucifix, will be extended from the state administration to any form of sub-contracted public service, such as job centres (although, with the existing exception of schools, there is no such ban on those using public services, including universities). 

Those who threaten officials with violence to secure concessions on religious grounds will face criminal penalties.

Finally, doctors will be forbidden to issue “virginity certificates” in order to protect women from pre-nuptial pressure. It will also be illegal to divulge or publish information that locates or identifies individuals in a way that puts them in danger, with stiffer penalties for identifying those in positions of public authority. This measure is a direct response to the murder of Paty, whose assassin identified him on social media before travelling to the school where he taught.

The government argues that it needs stronger powers in order to break up “counter-societies”. Associations under radical Islamist influence, it says, have increasingly created parallel societies, running services from crèches to sports activities, and are waging a war for the minds of the young. 

Since 2017 intelligence services, magistrates and the state have worked in 15 such neighbourhoods to “destabilise” networks, closing 15 places of worship and four schools. Such “enclaves”, argues Gilles Kepel, author of a forthcoming book on the Middle East and jihadism, became a way for global jihadists to recruit fighters, provoke Islamophobia and divide Western societies. 

Between 2012 and 2018 over 2,000 French citizens left to take part in jihad in Syria, and more than 250 people were killed in terrorist attacks in France.

Since his election Mr Macron has come to believe that tougher rules are needed to defend French society from such influences. Indeed, Eric Dupond-Moretti, the justice minister, described the bill as a “great law of liberty”. 

In 2004, when France banned “conspicuous” religious symbols from state schools, recalls Patrick Weil, a French historian, the commission of inquiry that preceded the law concluded that it was necessary to protect girls from fundamentalist pressure to wear the hijab.

Not everybody, however, sees it this way. Critics say that the bill hands too much power to the state to overrule local authorities, and that it infringes the right to religious practice that laïcité is supposed to guarantee. 

Some also accuse the government of mistaking conservative religiosity for sinister intent, and of ignoring the structural racism behind the development of French ghettos. 

Mr Macron has indeed so far put less emphasis on his promise to fight racial discrimination than on the war against Islamism. In parts of the Muslim world, he is accused of being not just anti-Islamism, but against the religion itself.

In France, though, there is broad support for Mr Macron’s measures, both on the mainstream left (most of which is firmly laïc) and the right—although the far right’s Marine Le Pen considers them too tame. 

Some Muslim leaders have also backed them. Mohammed Moussaoui, head of the French Council of the Muslim Faith, said that the overall aim “reassures French Muslims”, since extremists are such a “marginal minority”. 

A recent poll showed that 79% of the French agree that “Islamism is at war with France”; 72% of Socialist voters agreed, and 90% on the centre-right. 

With less than 18 months before the next presidential election, Mr Macron’s tough line on Islamism may be criticised abroad, but is likely to prove popular at home.

 China Wants to Be the World’s Banker

The U.S. is in danger of losing its dominant leadership position in global financial services.

By Henry M. Paulson Jr.


The U.S. remains the dominant force in the financial-services industry, leading in nearly every area of finance, from venture capital and private equity to banking and asset management. 

The liquidity and scale of U.S. capital markets support the primacy of the dollar, which allows Americans to pay less for foreign goods and helps finance U.S. government spending. 

America’s financial leadership, however, is increasingly being challenged by fierce competition from abroad and by shortsighted and counterproductive policies at home. Maintaining U.S. financial pre-eminence should be a priority for the Biden administration.

Traditionally, challenges to American leadership have come from well-established financial centers like London, Hong Kong and Tokyo. But mainland China will be an increasingly formidable challenger in financial services in the next few years.

The last-minute cancellation last month of Ant Group’s planned initial public offering—which would have been the largest in history, raising some $34 billion—reminded many investors about the risks of the Chinese market. But the deal’s size also showed China’s ability to attract massive amounts of capital. Despite the stumble, China’s domestic exchanges are well-positioned for the future.

China lags behind the advanced financial centers, but it has belatedly begun to open up and attract best-in-class foreign financial institutions. Its markets have governance and accounting issues to overcome, but Beijing is working to enhance its regulatory structure to meet global standards and provide greater transparency and better enforcement. 

China’s relatively quick recovery from the Covid-19 pandemic without a major fiscal stimulus has also allowed it to maintain higher interest rates and a stronger currency. 

This is attracting large investment inflows to Chinese stocks and other securities. 

Shanghai ranked first among global exchanges for number of IPOs and capital raised through the first nine months of 2020. These IPOs show that major fundraising can take place outside the U.S. financial ecosystem.

At the same time China is working to attract global capital, the U.S. is moving in the opposite direction. Ultimately, the strength of America’s capital markets rests on trust in the country’s stable macroeconomic and fiscal policies, and in the resilience of its open political system.

The U.S. government has undermined this trust through shortsighted actions and long-term fiscal negligence. Efforts to delist legitimate Chinese companies from U.S. exchanges make for good politics, but bring serious and underappreciated risks. 

These efforts come at exactly the wrong time, driving away Chinese demand for dollars at a moment when the U.S. is taking on large amounts of debt. Let’s hope that China doesn’t rethink the wisdom of its Treasury holdings.

While investors from around the world are benefiting from investing in equity securities from China, Washington is making it more difficult for U.S. investors to do so. These risks are worth avoiding. But unless something changes dramatically, China will remain the world’s fastest-growing major economy, surpassing the U.S. in size in the foreseeable future. 

More Fortune Global 500 companies are already based in China than the U.S. Other financial centers like Hong Kong, London, Tokyo and even Shanghai will be competing for the Chinese listings that the U.S. is now discouraging.

A more fundamental threat is the lack of political will to deal with America’s long-term structural deficit, which undermines confidence in the U.S. economy and the dollar. Interest rates are at historic lows, and the federal debt is larger as a share of the economy than at any time since the end of World War II. 

This debt will continue to grow as Washington finances necessary pandemic-related stimulus and recovery measures. But as the debt level grows, the attractiveness of U.S. debt will gradually decline. 

A world-class financial system can’t exist in a country that fails to maintain the quality of its credit. When the pandemic passes, it is critically important to bend down the steep trajectory of the rising national debt. 

Otherwise, the dollar will eventually be debased. Washington won’t be able to pay its bills.

America’s leadership in financial services is a core strength of the U.S. economy. But this mantle of leadership isn’t preordained. If it is to endure, America needs to play to the strengths that have made its capital markets the envy of the world. 

At the same time it must craft a smarter approach to dealing with China, one that avoids unnecessary conflict and takes advantage of the opportunities that exist to attract more capital.

Mr. Paulson served as Treasury secretary, 2006-09, and is chairman of the Paulson Institute.

The foreseeable, yet largely unforeseen, risks of a tech crash

The next crisis could spring from damage to the digital services we now depend on

John Thornhill 

    © James Ferguson

Technology has been an indispensable tool in our response to the Covid-19 pandemic and the consequent economic slump.

Doctors have adopted telemedicine. School children have been taught in digital classrooms. 

Billions of us have communicated, shopped, worked and been entertained mostly online.

But unless we are careful, our increased reliance on technology may magnify, rather than minimise, the next global crisis. Just like the Covid-19 pandemic, that risk falls into the category of entirely foreseeable, yet largely unforeseen. 

We know how this story could play out even if we have not yet read the script.

Our ubiquitous use of technology has already outstripped our ability to manage it safely. Unless we upgrade our security, governance and regulatory regimes, we will remain worryingly vulnerable to the crippling of critical infrastructure, either by malicious design or by default. Call it a tech crash.

The events this week at FireEye signal the inherent risks. The US cyber security company’s job is to protect its clients from hackers, but it was itself hacked. 

FireEye pointed the finger of suspicion at a state-sponsored attacker “who primarily sought information related to certain government customers”.

Alarmingly, the hackers stole the tools used by FireEye’s “red team” which hacks into its clients’ systems to highlight their own vulnerabilities. The company is now scrambling to deploy countermeasures. 

Cyber weapons have already become an accepted part of many states’ armouries given their cheapness, effectiveness and deniability. Their use has been examined in a chilling, new HBO documentary, The Perfect Weapon, based on a book by David Sanger.

The film highlights how the US and Israel were the first to realise the power of cyber weapons, unleashing the Stuxnet malware against Iran to degrade its nuclear weapons programme in 2007. 

“Stuxnet was the first time a major state used a powerful cyber weapon in an aggressive way,” Amy Zegart, the co-director of the Centre for International Security and Co-operation at Stanford University, says in the film. 

But that successful attack opened a Pandora’s box of troubles that may now be impossible to slam shut. The Iranians, North Koreans, Russians and Chinese rapidly concluded that cyber war was an asymmetrical game against a country as big, open and digitally exposed as the US. 

In 2014 there was a damaging Iranian cyber attack on the casino empire of Sheldon Adelson, the American tycoon who had openly called for a nuclear bomb to be dropped on Iran. 

North Korean hackers then inflicted serious damage on Sony Pictures in anger at the release of a film mocking the dictator Kim Jong Un. They later released the WannaCry ransomware, exploiting flaws in Microsoft software to hit more than 155 countries.

Russians have launched cyber attacks against Ukraine, incapacitating electricity grids, subway systems and airports. 

They also hacked the Democratic National Committee during the 2016 US presidential election campaign and released stolen emails to WikiLeaks.

Chinese hackers have cracked open the US Office of Personnel Management accessing nearly 22m files. According to experts quoted in the film, they have also been attempting to hack into Covid-19 vaccine programmes and have been deliberately feeding an “infodemic” of disinformation about the pandemic in the US.

Given all this, it is little wonder that US defence officials have for years been warning about the dangers of a “cyber Pearl Harbor” that could take down critical infrastructure, even as they contemplate unleashing devastating cyber attacks of their own.

But it is not just state-on-state cyber conflict that is alarming. We should also worry about the internet’s systemic instability, given its governance is unnervingly flimsy. 

Ingenious, short-term patches have stayed in place a remarkably long time while long-term fixes have never materialised.

Satya Nadella, Microsoft’s chief executive, argues that societal trust in technology has been degrading because of growing concerns about cyber security, privacy, internet safety and the ethical use of artificial intelligence. 

“Given the inevitability of tech playing a much more central role, we need to build more trust,” he said this week.

Corporate engineering teams should take more responsibility for developing systems to ensure security and reinforce trust, Mr Nadella said. But we also need new regulations and institutions.

Our governance structures remain stuck in the analogue age. We either need to reimagine their scope or invent new ones. We could start with a World Data Organisation to agree protections for personal data and secure international data flows. 

The digital equivalent of a US Food and Drug Administration might be charged with preapproving algorithms used in sensitive areas, such as healthcare and the judicial system. And a Digital Geneva Convention could establish the limits of cyber war. 

William Gibson, the science-fiction writer who coined the term cyber space, told me earlier this year that we may be the last generation to draw any distinction between our offline and online worlds. 

He is doubtless right. It is time we governed our physical and virtual worlds as one.

Housing Insecurity in America

The U.S. economic recovery is in jeopardy, with tens of millions of Americans facing eviction.

By: Geopolitical Futures


Since late April, the U.S. Census Bureau has been doing a so-called Household Pulse Survey, which regularly collects data from U.S. households to get a sense of the social and economic impact of the pandemic. 

The survey asks about opinions and experiences with respect to a range of issues: education, employment, food security, housing security, medical access, mental health, transportation and other spending behaviors. 

Housing security is especially important right now, given that the federal eviction moratorium is due to expire at the end of the year.

A central issue of 2021 will be the economic recovery. 

Western governments are beginning to roll out COVID-19 vaccines, but distribution will take several months even under the best conditions. Governments still face the challenge of propping up businesses and households in the meantime. 

The U.S. government is studying plans for more than $900 billion in new relief, with approximately $25 billion set aside for emergency rental assistance. 

(Estimates of overdue rent range from $13 billion to $24 billion.) 

The eviction moratorium also could be extended for another three months. 

The map above shows what’s at stake. 

An agreement on relief is likely, because failing to pass a relief bill and avoid evictions on such a scale nationwide would severely hamper the U.S. economy’s ability to recover in the medium term.