Who Are You Calling a Communist?

When the red hammer and sickle banner was pulled from the Kremlin ramparts a final time 30 years ago, obituaries for socialism were written by the hundreds. Three decades later, it’s clear those prophecies couldn’t have been more wrong.

Depending on where you’re reading this, the word “socialism” has very different connotations. In Europe, it’s associated with being a social-democratic safety net. Across the Atlantic, many view it as little more than Red Scare socialism and on Sunday, leftist and far-right protesters clashed yet again in Portland, Oregon. What’s clear is that whether you’re in the U.S. or China, Latin America or Africa, the left is reemerging as a potent force.

Today’s Daily Dose introduces you to the next leaders of the global left, looks at the unlikely nations where labor movements are growing and examines how tech is aiding the crimson rise. And no, we won’t predict what the left will look like 30 years hence — the world’s learned not to.


Tatiana Fernández Martí

With cropped, rainbow-colored hair and a confident smile, this petite 20-year-old has emerged as the bold young face of Argentina’s student movement. She joined the socialist Partido Obrero — Workers’ Party — at the age of 13, and in recent months has led calls for authorities to ensure that university campuses have the necessary infrastructure for students, teachers and other staff to attend college safely. University education is free in Argentina. Now Martí’s preparing for a bigger stage, contesting in upcoming primaries for the Buenos Aires state legislature.

Sara Nelson

This labor movement up-and-comer is the most powerful flight attendant in America. After getting hired by United Airlines in 1996, Nelson immediately became a union member. Now serving as international president of the Association of Flight Attendants union, she helped launch a revolutionary, plane-grounding strike in 2019 and helped secure $54 billion in COVID-19 relief that kept the industry afloat and protected aviation workers’ paychecks and benefits. Still, despite the work done by leaders such as Nelson, the U.S. labor movement continues to face obstacles. The biggest of these is to “regain membership in the private sector, where unions have become ghettoized with too small membership to impact workers as a whole,” Richard Freeman, Harvard economist and professor, tells OZY. “All other problems become resolvable if private sector union density starts rising.”

Rita Bosaho

Spain’s first Black female legislator emigrated from Equatorial Guinea as a child and became a national lawmaker in 2015. Since then, her success has inspired a small but growing number of African immigrant candidates to seek public office in Spain. Now her left-wing Podemos Party is in power in Spain, and she’s holding her government accountable to its promises, as director general for equality of treatment and ethnic-racial diversity at the country’s Ministry of Equality.

Pritam Singh

For 56 years, the island state of Singapore has been ruled by a single party. Now the 45-year-old Singh is plotting the ultimate socialist insurrection in a land that in many ways is a capitalist archetype, with low taxes and a business environment that companies rate as among the friendliest in the world. Last year, his Workers’ Party emerged from the margins of Singaporean politics to offer an unprecedented challenge to the ruling People’s Action Party (PAP). Young voters have been drawn to the charismatic Singh, with his calm, crisp voice and the promise of a fairer society. Alas, the PAP prevailed, but with its smallest-ever majority. The Workers’ Party recorded its best performance, making Singh the country’s first leader of opposition. Read more on OZY.

Carlos Alvarado Quesada

A former rock singer and novelist, the 41-year-old was clearly in tune with Costa Rican voters when he comfortably won the Central American nation’s presidential election in 2018. But instead of partaking in the divisive politics dominating our times, he invited members of the opposition to join his government. It’s moves such as this that have made the country’s youngest president a poster child for the moderate, socially liberal left. Quesada has legalized same-sex marriage, taken on leftist autocrats like Venezuela’s Nicholás Maduro and driven an ambitious green agenda, including a plan to reduce to zero all carbon emissions — and not just net pollution — by 2050.

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Taking on Bourgeois Beijing

For four decades, the city of Shenzhen stood as a symbol of the type of reforms that unleashed China’s economic miracle. But in 2018, the city where China set up its first special economic zone was in the news for a different reason. A workers group backed by Marxist students went on strike at a factory seeking better conditions and pay, exposing the hypocrisy of a so-called socialist state that in truth is wedded to private profit. Authorities swiftly cracked down on the protesters, yet they couldn’t fully stamp out the embers of anger. Amid an economic slowdown in recent years, labor protests have exploded across China. The years since the Shenzhen strike have seen 3,368 labor protests — including more than 1,300 since the start of the pandemic. The signs are clear: The Chinese Communist Party’s biggest threat isn’t America — it’s the country’s own working class.

Protests Popular

Union membership in America has steadily dropped over the past few decades. But the financial instability prompted by the pandemic, combined with better messaging by politicians in pursuit of a younger generation of voters, growing wealth inequality and a more pro-union presidential administration, may be turning the tide. Public approval of unions rose to 65% in 2020, up from 48% a decade prior. “[Unions’] popularity is going up because economic developments show that in a largely union-free environment, power and much money flows to capital,” Freeman says. Still, despite the growing popularity, efforts to unionize face roadblocks. “Most firms will go to war to keep unions out,” he adds.

The Forgotten 80%

They’ve been ignored for generations. Now, the women who constitute 80% of Pakistan’s at-home workforce, running cottage businesses that hold up much of the country’s economy, have had enough. They’re organizing like never before, forming trade unions and winning battles for better working conditions. So much so that the country’s mainstream, male-dominated labor unions, which have been on the decline for years, are now turning to these female labor activists for inspiration.

Courting Controversy

But the rise of the left globally hasn’t been without controversy or divisiveness. In South Africa, the Economic Freedom Fighters, a radical left party that advocates for the forced expropriation of land from mostly white farmers without compensation, has grown in popularity in recent years at the expense of the ruling African National Congress. In the country’s 2019 national elections, the EFF, led by the firebrand Julius Malema, saw its vote share increase sharply while the ANC and the Democratic Alliance, the principal opposition party, lost votes. Critics argue that the EFF’s central focus on race prevents it from challenging the ills of capitalism.



Daniel Ortega was jailed and tortured, took on a U.S.-backed dictator, stared down U.S. presidents and led Nicaragua from 1979 to 1990 — making him a folk hero for leftist movements in the region and beyond. But in his second stint in power since 2007, he has increasingly adopted the same authoritarian policies he once stood against. His wife is his vice president. His government cracked down brutally on student protesters in 2018. And now, ahead of national elections, his administration is arresting opposition leaders in a brazen attempt to ensure a comfortable majority for Ortega. The irony? Both the U.S., which has criticized Ortega, and Nicaragua’s despot, have blood on their hands.

Russian Communist Party

It’s been the main opposition party in Russia since the collapse of the USSR, absorbing socialists, voters nostalgic for the Soviet Union and many who are unhappy with the current regime. Yet it has repeatedly refused to seriously challenge the administration of President Vladimir Putin and has effectively served to legitimize the Kremlin’s sham democracy. But now, things are coming to a head. Putin, whose security forces have focused for the most part on more vocal opponents like Alexei Navalny, has in recent weeks cracked down on the communist party by barring some of its candidates from contesting elections. Is the fixed match between Putin and the Russian Communist Party over? And can the latter win back its credibility?

Europe’s Center-Left

For decades, the center-left social democratic parties of Western Europe were almost always in power — or the main opposition. Yet, since the Great Recession of 2008-09, the German Social Democrats (SPD), the French Socialist Party, the Dutch Labour Party and Greece’s Pasok have all seen their vote shares shrink dramatically, as far-left and ultra-right parties have eaten into their support bases. There are exceptions — like Podemos in Spain and the socialists in Portugal, who are in power — but the current pandemic-fueled economic crisis could threaten their rule too.

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The name may sound contradictory, but a growing number of left-wingers see blockchain as a way to stick it to the man while furthering their socialist political agendas. How? By using the technology to wire money in the form of a cryptocurrency to persecuted activists or by using it to fund protests — and avoiding capitalist banks and companies in the process. Some even believe that blockchain could help build a marketless socialist economy, using it and cryptocurrencies to distribute housing to citizens. Are these crypto comrades on the right track, or are their ideas too radical?

Gig Economy Movements

Not surprisingly, Big Tech doesn’t love unions. But among the companies’ employees, more are standing up for workers’ rights, though frequently with little success. Workers rallied to unionize at an Amazon warehouse in Alabama earlier this year, making headlines as the biggest effort by employees to organize in the company’s history. They ultimately lost a vote that would have allowed the warehouse employees to unionize. For gig workers, especially those who work for ride-sharing companies like Uber and Lyft, unionizing is even more crucial as they face inconsistent pay, competition and little job security or benefits. That’s what prompted many Uber and Lyft employees to participate in nationwide strikes and protests last month.

Tech-Based Organizing Apps

Twenty-first-century problems require 21st-century solutions. Some tech actors have actually stood on the workers’ side in the fight to be heard. Who are they? App developers creating platforms designed specifically for workers to communicate and organize, with no managers allowed. The startup Unit is one such unionizing upstart, targeting smaller, privately owned companies — particularly in retail — whose employees can fly under the radar of larger national labor groups. Others include apps like Frank and WorkIt, both of which are platforms for employees to safely communicate and discuss initiatives to receive better working conditions and pay.

Liberal, Educated … and Anti-Vaxxer: Pandemic Births New Vaccine Doubters

  • The rapid speed at which vaccines are being developed and the political pressure from the White House to have one ready by November are turning more and more Americans into skeptics.
  • Experts warn that this caginess about the vaccine could have long-term implications.

Greer McVay insists she is “not an anti-vaxxer — not at all.” She is up-to-date with her own immunizations and had her son vaccinated when he was a child. But she fears the development of a vaccine for the coronavirus is being dangerously rushed, in part to improve Donald Trump’s prospects ahead of the presidential election in November.

“This situation is different, because of the politics that have been injected into the process and the speed at which they’re developing the vaccines,” says McVay, a communications consultant from California and a supporter of the Democratic Party. “Frankly, I don’t trust this president. It just gives me pause.” 

McVay, 53, is one of a growing number of “vaccine hesitant” Americans who have not previously identified with the anti-vaxxer movement, which has traditionally been dominated by libertarian Republicans and those on the left who preach the benefits of alternative medicine over pharmaceuticals. “I don’t fall into either category,” she says.

Rather, McVay fears that Trump will put pressure on the U.S. Food and Drug Administration to quickly approve a vaccine before the election. She cites as evidence the FDA’s decision to allow the use of hydroxychloroquine — a disproved drug touted by the president — to treat the virus before it performed a U-turn after several studies showed the medicine did not benefit patients. 

She is also mistrustful of Operation Warp Speed, a sprawling federally funded effort that has paid billions of dollars to drug companies — including $1.2 billion to AstraZeneca and $1.6 billion to Novavax — to manufacture hundreds of millions of doses of their vaccine “at risk” or without full clinical trials in advance of definitive data. “The way that they are expediting the process is by doing things concurrently,” she says. “They’re beginning manufacturing before they’ve even completed the trial.” 

Anti-vaccination sentiment is going into the mainstream.

Heidi Larson, London School of Hygiene and Tropical Medicine

The discovery of a vaccine before the election might well boost Trump’s chances by allowing him to claim he has turned the tide against a disease that has killed more than 173,000 Americans. But public health experts fear it could also lead to a hardening of anti-vaccination sentiment among people like McVay ahead of what will be one of the largest mass immunization programs in recent U.S. history.

Two vaccines have already been approved — one in Russia and a second in China — while eight are in the final stage of clinical testing.

“Anti-vaccination sentiment is going into the mainstream,” says Heidi Larson, director of the Vaccine Confidence Project at the London School of Hygiene and Tropical Medicine. “A lot of people you never would have imagined are now saying that maybe the anti-vaccination lobby has a point.”

Harvey Fineberg, the chair of a committee on the coronavirus set up by the National Academies of Sciences, Engineering and Medicine, says: “I am concerned about people resisting immunization for irrational reasons based on generic distrust of anything the president says.”

Polls show that as the pandemic has continued, U.S. citizens have become less confident about the safety of a vaccine. Polling by YouGov in May found that around 55 percent of American adults said they would get a COVID-19 vaccine. By the end of July, that figure had dropped to 41 percent — well below the 60 to 70 percent public health experts think will be needed to achieve “herd immunity.”

Joe Biden, Trump’s Democratic opponent, has seized on the surveys as proof that the president is fueling vaccine skepticism. “It’s not the usual anti-vaccine crowd — it’s beyond that — because people are losing faith in what the president says,” he said last month. 

However, there is also substantial opposition to vaccines in other high-income countries which are likely to be more skeptical about the safety of immunizations, according to a recent study by the Wellcome Trust, a British research charity. In France, less than half of people believe vaccines are safe, the report found. In Ukraine — the most skeptical country in the world — the figure is just 29 percent.

Academics term people who are unsure about vaccine safety “vaccine hesitant.” Many are highly educated and liberal. “If you want to map where the anti-vaccination movement is strongest, just look for your nearest Whole Foods,” says Barry Bloom, a professor of public health at Harvard University, referring to the high-end supermarket chain.

Those who study the phenomenon say they have begun to find anti-vaccination material being shared among a far wider group of people since the outbreak of the pandemic.

“My researchers have found Facebook groups which have nothing to do with vaccinations suddenly widely sharing misinformation about them,” says Larson. “There is a lot of anger and emotion in the world right now, and the debate around vaccines has been an opportunity for that to bubble up.”

One example of this is how supporters of QAnon, a pro-Trump network of conspiracy theorists, are increasingly sharing anti-vaccination material. High-profile members have been promoting the false theory that the coronavirus was deliberately developed and spread by Bill Gates, the Microsoft co-founder and pro-vaccination health campaigner. 

Much of the doubt stems from the breakneck speed at which coronavirus vaccines are being developed. The previous record for developing a vaccine is four years for mumps and that was more than five decades ago. If one is proven to be successful in October, it will have taken just nine months. Even some pharmaceutical executives, like Merck CEO Ken Frazier, have warned of the dangers of moving too quickly. 

Anti-vaxxers have also seized on the fact that some developers are using a relatively new technology called messenger RNA that attempts to alter the body’s protein-making machinery

In late June, Carrie Madej, a long-term anti-vaxxer physician from Georgia, released a video on YouTube that has been viewed more than 409,000 times, in which she mixed truths about mRNA vaccines — such as the fact that they are being studied in humans without having been first tested in animals — with outlandish theories. 

Madej is right about one thing: The battle to shape public opinion on vaccines will be won or lost online, says Neil Johnson, a professor of physics at George Washington University. 

Johnson recently published a paper in Nature concluding that the anti-vaccination movement was winning the online information war because it was organized around smaller “clusters” that were able to infiltrate groups of undecided people. He says the movement has its roots in the anti-vaccination sentiment toward measles jabs that has surfaced in recent years, and which has been blamed for a spate of outbreaks.

“It’s the parenting groups, the school parents’ associations — people who would never usually talk about vaccines, but now they are absolutely engaged,” Johnson says. 

Earlier this month, anti-vaxxer Facebook groups lit up with the news that AstraZeneca had secured protection from liability claims related to its vaccines; the administrators presented it as proof that the drugmaker knows the jab will cause serious side effects and is trying to indemnify itself. 

Anti-vaccination groups also have a proliferation of different messages that appeal to different people, notes Johnson, including: safety fears, doubts over whether COVID-19 really poses a risk to young people and children, skepticism over the role of the pharma industry and standard-bearers for vaccinations like Gates, and a general mistrust of science.

Even if an undecided person is not swayed by all of these arguments, just one is enough to make them hesitant, he says. 

“They each have different flavors versus the pro-vaccination vanilla message which is just ‘have your vaccine, it’s good for you,’” Johnson adds.

One question that concerns public health experts is how much the anti-vaccination movement is growing organically, and how much it is being stoked by a small but well-organized and well-funded group of activists. 

A study last year found that most anti-vaccination ads on Facebook stemmed from just two sources: a Californian organization called Stop Mandatory Vaccination and the World Mercury Project, headed by Robert F. Kennedy Jr., son of Robert F. Kennedy and a prominent anti-vaccination campaigner. 

Public health officials in the U.S. know they have to act fast to halt it if they want to ensure any COVID-19 vaccine provides herd immunity.

Part of that is about communication. Johnson warns that unless supporters of vaccinations can counter the anti-vaxxers with “guerrilla marketing” that reaches people online, “I think it’s a lost cause.”

Researchers suggest other tactics too. A report by Johns Hopkins University in July recommended delivering vaccines in more familiar surroundings rather than hospitals and large health centers, as well as making sure advocacy campaigns are led by community leaders rather than just doctors.

However, many public health experts fear that government compulsion is unlikely to be effective, and warn that heavy policing of vaccine uptake could backfire. 

“It would be very difficult to push people to get vaccinated with heavy government intervention,” says Bloom. “If you cannot even mandate face masks, how are you going to mandate that people take a personal risk with a vaccine?”

Others believe the current surge in people expressing doubts over a coronavirus vaccine will dissipate once one becomes a reality. Fineberg says many of the vaccines that have attracted opposition in the past were for diseases that had been all but eradicated, leading to a sense of complacency, whereas the coronavirus is a near and present danger.

“The big difference with COVID is that it’s not invisible … it is highly feared and enormously disruptive,” he says.

The fact that drugmakers have been able to quickly enroll volunteers in trials of their vaccines suggests that the anti-vaxxer movement might not be as strong as some fear. “Thousands of people, mostly young and healthy, have said, ‘Yes, I’ll volunteer, I’ll be the guinea pig.’”

Fineberg suggests that schools, universities and employers might have more success than the government in spurring vaccinations, especially if they insist that students and workers get vaccinated as a precondition of attending places of work or education. 

“If Congress extended vaccine liability protections to any institution that requires it, and insulated them, that would change the equation,” he says. Such a move would not be enough to change McVay’s mind. If her son’s university were to insist on his vaccination before he could attend classes, “I think my advice to him would be to sit out a semester,” she says. 

How Chinese Security Cameras Are Compromising US Military Bases

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Chinese surveillance cameras are still watching over U.S. military bases, just weeks before a federal ban on such equipment comes into force, according to a review of defense contracts. Cameras made by Hikvision, which is 42 percent owned by the Chinese government, remain in place at the Peterson Air Force Base in Colorado, the home of North American Aerospace Defense Command (NORAD) and the headquarters of Air Force Space Command.

The Peterson base spent $112,000 on Hikvision cameras in 2016 but is now planning to “evaluate these systems and replace them,” according to a base spokesperson. 

Meanwhile, a U.S. Navy research base in Orlando, Florida, spent $4,000 on Hikvision cameras even after the passage last year of the National Defense Authorization Act (NDAA), which bans federal agencies from buying cameras and telecoms equipment from Hikvision and two other Chinese suppliers, Dahua Technology and Hytera.

Any device creates an attack surface — a way into anything it’s connected to.

Steven Humphreys, chief executive, Identiv

Officials say the contract is unrelated to base security and that the cameras, which were being used as part of a training system, are not connected to the internet. Police departments in states including Massachusetts, Colorado and Tennessee are also still relying on Hikvision cameras. The Memphis Police Department alone has at least 1,500. Meanwhile, the U.S. State Department has bought more than $20,000 worth of replacement Hytera radio parts for the U.S. embassy in Guatemala, again after the NDAA was passed — as part of its work with the Policía Nacional Civil. Future restrictions would be reviewed as they come into effect, says a State Department official.

In 2017, an Army memo said Hytera radios were being used for special-forces training since the brand was “extensively used by the Islamic State.” Concerns about the safety of China-made technology have escalated during the past 18 months, as relations between the U.S. and China have worsened. The NDAA also bars federal agencies from buying from China’s Huawei, which supplies microchips to U.S. surveillance camera makers, and will extend to include how federal loans and grants are spent from July 2020. Hikvision says it is “disappointed” with the legislation, which was “quickly drafted without sufficient evidence, review or investigation.”


In the years leading up to the ban, Hikvision cameras were purchased by several arms of the military, although officials were reluctant to disclose whether they remain in use. The Fort Drum Army base, which acquired $30,000 worth of Hikvision cameras in June 2018, declined to comment. A tender for security cameras by Marine Corps Base Camp Lejeune last January noted that only Hikvision equipment would “work in network with other cameras.” The base declined to say whether the network still relied on the China-made cameras. Since 2015, the Defense Logistics Agency has spent almost $180,000 on Hikvision cameras for U.S. forces in Korea and a naval base in Florida.

The DLA says it “plans to inform the military customers who ordered the material that they should review the applicable section of the NDAA and determine whether or not it is appropriate for them to continue to use the equipment.” Authorities in Korea and Florida were unable to confirm whether the cameras remained in use.

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The Fort Drum Army base acquired $30,000 worth of Hikvision cameras in June 2018.

Source Chip Somodevilla/Getty

Hikvision’s rapid expansion into the U.S. surveillance market began in the 2010s, when it started selling cheap alternatives to devices made by brands such as Axis and Bosch. By 2016 it had become the second-largest supplier of video surveillance products in the Americas, with 8.5 percent of the surveillance camera market, up from nothing at the turn of the century, and second only to Axis’ 11 percent, according to IHS Markit. Low prices attracted small businesses and local law enforcement in particular. Former Memphis PD surveillance manager Joseph Patty, who now runs a security consulting business, says the brand became so popular because price was often the “bottom-line factor.”

But cybersecurity experts say all internet-connected devices, including cameras, can pose a threat to the networks they are connected to if they have security vulnerabilities. They could be used by rogue actors as backdoors to sensitive networks: Once in, such actors could steal information or shut down entire systems. 

“Any device creates an attack surface — a way into anything it’s connected to,” says Steven Humphreys, chief executive of security company Identiv. For example, a local police department’s network might be connected to larger organizations: “All you need is one [way in.]  … That is why the American government is worrying.”

This year, U.S. lawmakers have been increasingly vocal in warning that Beijing could use certain China-made technologies for hacking. Hikvision has also been strongly rebuked for selling surveillance tools to authorities in Xinjiang, where Beijing is accused of human-rights abuses.

Many authorities are now under pressure to switch to alternative systems. One security company said that more than a dozen federal agencies had approached it for advice, about half a dozen of which were working to replace the cameras. Hospitals, local governments and sensitive businesses, such as banks and critical infrastructure companies, had sought similar help, the company said. In 2018, Hikvision’s U.S. sales fell for the first time. Its share price has slumped 20 percent since the NDAA was announced.

Some are unconvinced that the Chinese government would want to access their camera footage. But what matters for hackers isn’t “what it’s pointed at, but that there’s a central processing unit attached to your network,” says a spokesperson for security company Genetec.

Muddying the water, and making it difficult to track the spread of Hikvision cameras, many U.S. brands have “white-label” agreements with the company, under which they buy Hikvision’s hardware, repackage it and sell it under their own names. This is a “real concern” for government security managers, says John Honovich, founder of video surveillance research site IPVM.

The NDAA does not explicitly ban the purchase of these products. But the software on devices made by Hikvision can be altered by the Chinese company, which sends updates to resellers, such as United Technologies-owned Interlogix. Large-scale Hikvision resellers, including United Technologies and TRENDnet, declined to comment. Panasonic-owned Advidia, which also sells Hikvision-made hardware, said it was monitoring the situation but did “not anticipate any changes at this point in time.”

Similarly, many U.S. camera manufacturers use chips made by Huawei’s HiSilicon. They are “fairly pervasive” in “nominally American” brands, says Identiv’s Humphreys. Smaller agencies are not always aware of the risks and do not always have the cash to replace systems, although comparably cheap alternatives to Hikvision have begun to emerge.

“This is a broad problem … about how we as consumers and organizations use and trust technology,” says Cesar Cerrudo, a fellow at the Institute for Critical Infrastructure Technology. If you don’t test it, “the reality is you don’t really know if it has backdoors.”

European Elections: Is the Party Over for the Center-Right?

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The political alliance that dominates Europe took shape on a cold March night in 1998 over dinner in a bungalow in western Germany. Around Helmut Kohl’s table were a gaggle of premiers and backroom fixers, the German chancellor’s trusted circle on European affairs. It was to be a fateful night for EU politics, one whose heavy hangover Europe’s center-right was still wrestling with before this week’s elections.

They gathered at the Kanzlerbungalow in Bonn because Kohl’s continent-spanning ambitions for the European People’s Party were floundering. Europe’s center-right was in the throes of an identity crisis. Through years of personal effort, Kohl had slowly opened up the EPP — a pan-EU alliance launched in 1976 with deep Christian Democrat roots — to other strands of center-right thinking. But by 1998 the expansion was not keeping pace with electoral reality.

The center-left was ascendant across much of Europe, while the EPP’s traditional Christian Democrat parties were reeling. In Italy, the EPP faced a defining test: Silvio Berlusconi, a vote-winning populist who, having crushed the Christian Democrats in Rome, was seeking to outflank the EPP with a new right-wing group. Wilfried Martens, an EPP founding father who attended the dinner, described it as a matter of “life and death” for the center-right movement.

Its fortunes are fading, its ranks of leaders diminished, its member parties bleeding votes to extreme nationalists, populists and liberals. 

“More than anyone else Kohl feared a scenario in which the EPP would be split into a left and a right wing,” the former Belgian premier wrote in his autobiography. “You could have the best program, but if you did not have the numbers there was little you could do, [Kohl] believed. It was clear as daylight that the EPP had to undertake a counteroffensive.”

Colleagues recall a frustrated Kohl saying the Christian Democrats did not rebuild Europe “to hand it over to the Socialists.” The counteroffensive hatched that night came to be called “the bungalow memo”: a seven-point blueprint for a center-right takeover of Brussels. The disagreements were plain, but the will to cement power trumped ideological coherence: “If we limit ourselves … we will never achieve a majority position,” the memo read.

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East German leader Erich Honecker and West German Chancellor Helmut Kohl toast one another during a 1987 visit.  

Source  Chris Niedenthal/The LIFE Images Collection/Getty


It was the final touch to a spectacular turnaround for the party, a big-bang expansion through the 1990s that would make the EPP an unrivaled network of influence in the EU — particularly for German Chancellor Angela Merkel. Its formidable political machine remains on top in Brussels, seemingly defying gravity. It holds less than a third of seats in the European Parliament and around the EU summit table, yet operates with outsize heft.

But its fortunes are fading, its ranks of leaders diminished, its member parties bleeding votes to extreme nationalists, populists and liberals. Whether it can renew its hold on power is one of the most important tests of next week’s European elections and their aftermath. 

Kohl’s party gained strength by embracing Berlusconi’s Forza Italia, French Gaullists and Nordic conservatives while reaching a working pact with Britain’s Tory members of the European Parliament. Two loose criteria for membership prevailed: a distaste for socialism and allegiance to the EU project. Looking east, it drew in the center-right of soon-to-be member states where Christian Democrats were marginal — including a liberal reformer in Hungary named Viktor Orbán.


By 1999, this political mergers-and-acquisitions spree had helped create the biggest party in the European Parliament, knocking the Socialists off the top spot for the first time. Within a decade, its representation around the EU summit table grew from two of 15 leaders to 16 of 27 in 2012, precooking positions on treaties, bailouts and assorted EU disputes.

“The EPP didn’t win through elections,” says Steven Van Hecke, a professor at KU Leuven, in Belgium. “It won by taking in parties.”

Its influence translated into jobs. Since 2004 the EPP has had a stranglehold on the presidency of the European Commission or the European Council, Brussels’ most important positions.

That generation of EPP leaders in Brussels is leaving office this year, just as the EPP’s grip looks shaky. The conservative parties the EPP embraced during the 1990s — from Spain, Italy and France — are all faltering. Mainstream political parties, both left and right, are feeling the squeeze.

Voters are expected to return a more divided European Parliament, with a slimmer pro-European majority, fragmented between multiple parties and hemmed in by populists who want to bring the EU house down. Some senior EPP figures even fear an upset in which their party lead is overturned.

Kohl’s EPP nightmare is again a possibility: a party split between left and right, short of the numbers to be effective, playing second fiddle to Socialists and populists. And this time the threat to the right is not from Berlusconi, but the far-right Matteo Salvini of Italy’s League Party and Orbán, the illiberal Hungarian premier and EPP bad boy.

“We will be much weaker, that is for sure,” says one central figure in the EPP expansion. “We’ve been dominant for 20 years. But this is not automatic; it is not a law of history.” 

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Party leader Helmut Kohl with his representative Angela Merkel and head of the party Wolfgang Schaeuble at a Christian Democratic Union conference in Dresden in 1991.

Source Thomas Imo/Photothek via Getty


On its way to becoming Brussels’ party of government, the EPP picked up two traits from Germany’s Christian Democratic Union party: its take-all-comers breadth and its effectiveness as a political machine.

The CDU was unique among the five Christian Democrat governments involved in launching the six-country European project in 1957. Its model of politics was synthesis, a lesson drawn from the dangerous Catholic-Protestant divide in prewar politics of the German right. The CDU sought to treat all traditions equally, be they conservatives, liberals or from the Christian Social wing. The priority: to monopolize the right and keep it bound to the center.

This approach to center-right reconciliation after 1945 became the EPP’s model for keeping up with the European project, as it expanded beyond Christian Democrat heartlands to the Protestant north and conservative east.

Kohl injected a sense of purpose and fraternity. From an early stage, the German chancellor took a keen interest in the EPP’s development, promising to respond personally to faxed policy proposals within 30 minutes, usually with a one-word scrawl in thick pen.

In the mid-1980s he initiated the tradition of pre-summit gatherings of EPP heads of government, to share problems and develop common approaches, a custom extended to party leaders in opposition and in applicant member states.

“It became a political family to me,” says Jyrki Katainen, a commission vice president and former premier of Finland. This collective spirit is something Katainen sees as distinguishing the EPP from the Socialist group, which struggled to rally its big stars in government, such as Britain’s Tony Blair; Gerhard Schröder, his German counterpart; or François Hollande of France. 

For the EPP, coordination and discipline meant power. Witnesses marvel at how today’s national leaders — some of the most powerful men and women in Europe — sit attentively at gatherings while Joseph Daul, EPP president, delivers “finger-wagging lectures” to the group. Whether on the question of job appointments, new treaties, specific national concerns of member parties or the eurozone crisis, party leaders and ministers try to act as a caucus, with broad positions socialized and prepared before formal EU deliberations.

The EPP view is far from unified on every issue, and it’s not always decisive. But it is a fixture of any big EU negotiation, part of the regular cycle of policymaking. “What was initiated by Helmut Kohl and Wilfried Martens was important,” says Antonio López-Istúriz, the EPP secretary-general. “People got used to making decisions inside the EPP, with an EPP flag. What felt artificial at the beginning became natural over time.”

Indeed, for some, the EPP way has become all too natural for the EU. While lacking the clout to transform the bloc alone, the EPP club has the numbers to stop change — as many center-left and liberal politicians have discovered. The EPP’s weight in Brussels has naturally narrowed the field of vision on policy — usually to the liking of Berlin.

“They are extremely powerful,” says Shahin Vallée, a former EU official and adviser to Emmanuel Macron, the French president. “There is a symbiotic relationship between the power of Merkel and Germany and the power of the EPP. The EPP is Merkel’s instrument to project power in Europe.”

Impatience with EPP dominance is undoubtedly growing in European capitals, just as the EU is braced to select new presidents for all the bloc’s top institutions, including the prized commission role. The EPP helped to establish the custom of the biggest group in European elections claiming the job, notably when Jean-Claude Juncker was appointed president in 2014 after leading the party’s election campaign as the so-called Spitzenkandidat.

This time it has a bigger fight on its hands. EPP lead candidate Manfred Weber, a Bavarian MEP, has no government experience, unlike all previous commission appointees. In the European Council, meanwhile, EPP leaders take up just nine of 28 seats. Macron is an outspoken opponent of the Spitzenkandidat process — in which the lead candidates of the winning party claim the commission job — and the “clan thinking” he sees as hurting the European project.

“The pro-European political spectrum in Europe should recognize itself in the institutions. And that, today, sadly, is not the case,” says Frans Timmermans, the Socialist Spitzenkandidat who spent the past four years as Juncker’s deputy. “After 15 years of conservative leadership, it’s almost like a ruling party in the commission. That’s not a healthy situation.”

EPP insiders admit the price they have paid for EU preeminence comes in the shape of Orbán and his virulent brand of nationalism. The Hungarian gives the EPP a familiar dilemma: How far can the alliance stretch its principles to keep a grip on EU power?

When it was threatened in the 1990s, the EPP’s approach was to colonize the conservative “peoples’ parties” so it could span the full spectrum of pro-EU right-wing politics. That tolerance extended for years as Orbán railed against immigrants, ran anti-Semitic campaigns and pursued a brand of illiberal government that has snuffed out the opposition in Hungary. Aware of Orbán’s many sympathizers within the EPP — who see him as having correctly taken a hard stance during the migration crisis — Daul wanted to tame the “enfant terrible” from “inside the family.”

But a line was crossed early this year when Orbán courted far-right leaders such as Salvini, lambasted EU bureaucrats for trying to “liquidate Christian culture” and ran election campaign posters against Juncker, the EPP commission president. Orbán’s Fidesz party was suspended in March and the EPP tone shifted markedly. “I don’t give a damn who stays and leaves the EPP,” Daul declared last week. “We have rules to respect.”

Kohl’s open-armed strategy had reached its limit. “That big-tent philosophy is no longer credible if the contradictions cannot be managed within one movement,” says Luuk van Middelaar, a Dutch political theorist and former EU official. “Orbán is beyond the pale, and they have no way to deal with that. They can only think of bringing people into the tent; they are ideologically unable to think about exclusions. The EPP are the big synthesizers.”

Sara Hagemann, associate professor in European politics at the London School of Economics, argues the election may determine whether Orbán will “remain something the EPP has to deal with internally.” Handling him as an external opponent could be easier for the party. But there are downsides: Losing Orbán’s seats could bring the Socialists close to the top spot in the European Parliament. The Hungarian could also act as a rallying point for the right in Europe — narrowing the appeal of the EPP, much as they feared Berlusconi would in 1998.

With the EPP divided over Orbán’s fate, some observers see the Hungarian as having the upper hand. He can gamble on the EPP being unwilling to expel him later this year while making the case for the EPP working with nationalist and anti-immigrant politicians such as Salvini. “I have the impression that the identity battle for Europe’s right is a fight Orbán is winning, not losing,” says Vallée. “He is pulling the EPP, and in reality the entire European political structure, to the right.”

Carl Bildt, a former prime minister of Sweden who was at Kohl’s bungalow dinner, sees the Orbán question as fundamental for the EPP. “They should have taken a firm line from the beginning,” he says. “It is obvious they underestimated Orbán. They thought they could manipulate him. Now, I know Orbán, and he is a bloody smart fellow. He was better at manipulating them.”

China’s Savings Pot Teases Global Wealth Managers

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When Chinese markets are in a slump, propaganda authorities often instruct official media to buck up investor sentiment. So it was in August, when the influential Securities Times trumpeted that international investors were “bargain hunting” in China’s stock market. The front page story was a backhand compliment that reflected the respect many Chinese investors pay foreign fund managers.

This air of expertise and prestige is perhaps foreign fund managers’ greatest asset as they seek to win a slice of what is forecast to become the world’s second-largest investment market — behind only the U.S. — within two years. With the global investment management industry suffering a near existential bout of anxiety from the rise of cheap passive funds, some now see China as their possible balm.

At a time when Washington and Beijing appear locked in a trade war, the potential opening of the Chinese investment market to American and other investment managers is one of the few areas where the world’s two biggest economies are building closer ties. China’s rapidly expanding middle class is prodigious at saving. The meager social safety net makes it imperative to stash money for old age, education or health care. As a result, the value of overall bank deposits, investments or insurance products has doubled over the past five years to $19 trillion at the end of 2017, and it will grow to $23.8 trillion at the end of next year, says Morgan Stanley.

To the frustration of Wall Street, the Chinese government has long restricted foreign access to this huge pool of money, with foreign groups limited to minority stakes in local mutual fund managers. Meanwhile, capital controls prevented both retail and institutional investors’ ability to place money with overseas asset managers.

China has only newly opened up, and only a tiny fraction of its potential has been utilized.

Bob Prince, Bridgewater, a hedge fund 

However, after several small steps, Beijing announced in November 2017 that foreign groups could own majority stakes in domestic mutual fund companies — just as U.S. threats about imposing tariffs on Chinese exports were heating up. China also promised to allow full foreign ownership within three years. Given the potential of managing mutual funds for Chinese investors, this has triggered a frisson of excitement across the asset management industry.

“China has only newly opened up, and only a tiny fraction of its potential has been utilized,” says Bob Prince, co-chief investment officer at Bridgewater, a hedge fund that recently launched an onshore fund in China. “If global investors aren’t thinking about it today, then they’ll quickly be behind the curve.”


UBS forecasts that annual fees for running Chinese mutual funds will expand fivefold to $42 billion by 2025 — an enticing prospect for investment groups facing intensifying fee pressures and rising costs elsewhere. A $42 billion fee pot amounts to nearly two-thirds of the total 2017 revenues of listed U.S. asset managers — or more than Fidelity and BlackRock’s total revenues combined.

In his annual letter to investors this year, BlackRock chief executive Larry Fink identified China as one of the asset manager’s biggest long-term prospects. “There’s no safety net, so they are probably saving more than any other country in the world,” says Fink.


According to other asset management executives, many industry heavyweights are now scrambling to come up with a more ambitious China strategy. However, they stress that cracking China will be a long, arduous process. There is also the risk it could end up a sinkhole for foreign groups that pour in time and resources but have little to show for their troubles. That danger is aggravated by China’s trade dispute with the U.S.

Beijing, after all, is opening the door to foreigners for its own reasons: It wants to tame its wild markets and help develop domestic asset management. But the government is unlikely to countenance foreign firms dominating the market. The history of foreign business in China is littered with companies whose high expectations were never close to being realized. “Non-Chinese participants in a lot of industries thought that the Chinese domestic market would be like the Klondike [gold rush] for them, only to see domestic Chinese companies dominate,” says Jean Raby, chief executive of Natixis Investment Managers.

This summer, UBS began trimming more than 100 jobs from its asset management arm, which has $800 billion under management, including 30 roles in the U.S. — historically the industry’s biggest market. But in a sign of the times, the Swiss bank’s Chinese business was untouched.

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Growth of China’s mutual fund industry.

Source FT

The U.S. remains the biggest investment market, accounting for about half of the $50 trillion or so of global assets under management, according to the international arm of the Investment Company Institute, a trade body. But the fees fund managers can charge have come under pressure as investors have shifted hundreds of billions of dollars into cheap index-tracking funds. At the same time, the cost of necessary investments in compliance, security and new technology has kept climbing.

In this environment, the potential for tapping China’s vast savings is causing palpable excitement. René Buehlmann, head of Asia-Pacific operations at UBS Asset Management, declined to comment on the job losses but says China is a priority. “There is an enormous domestic market developing,” he says. “Progress has been remarkable, given the size of the market.”

Oliver Wyman estimates that assets under management at Chinese fund companies will grow 10 percent a year, from about $7.4 trillion today to about $14 trillion by 2023, when they will account for 15 percent of the global asset management industry. At the same time, the structure of the domestic sector is likely to change radically.

Currently, about two-thirds of the industry consists of low-margin money market funds — Yu’E Bao, the online fund run by Alibaba’s finance affiliate Ant Financial, is the world’s largest money fund — and wealth management products distributed by local banks and trust companies.

These wealth products account for well over half of the $19 trillion under management in fund companies, banks, insurers and trust companies. But they are risky structured-finance products masquerading as high-yield deposits. Investors get a quasi-guaranteed return from the bank, which in turn uses the money to make risky, off-the-books loans to circumvent capital adequacy requirements.

But last November regulators un­veiled new rules that — once fully implemented by the end of 2020 — will ban these quasi-guarantees amid concerns over the expectation that state-owned banks would always shield investors from losses. Instead, wealth management products will have to be structured like mutual funds that are marked to market daily based on changes in the value of their underlying assets, thus ending the illusion of assured profits.

The withdrawal of guaranteed returns on commercial banks’ wealth management products will reduce their allure, allowing fund managers to compete with lenders on a more equal footing. Oliver Wyman therefore expects “traditional” asset management products to account for half of the $14 trillion domestic investment industry by 2023.

“The wealth management products are a controlled mess,” says one asset management executive. “But the authorities know what is going on, it’s not a secret, and the regulators want to wean people off them.”


Though years of complaints about barriers to entry helped prompt the recent measures, Beijing also wants foreign investment groups to help tame its retail-dominated, momentum-driven financial markets and nurture a more mature institutional asset management industry. In January 2017, Fidelity International became the first wholly foreign-owned group to register with China’s state-controlled industry association as a “private fund manager,” allowing Fidelity to begin selling funds to qualified investors.

Jackson Lee, Fidelity’s China country head, says the company’s commitment to China— especially its 500-strong back-office operation in Dalian — probably contributed to the regulator’s choice of Fidelity as the first foreign group to win a private fund licence. Yet, unlike many competitors, Fidelity decided against a mutual fund joint venture.

“Most of the JVs are run in a very local fashion. There’s really no sharing of day-to-day information, research and best practices. The foreign player mainly participates at the board level, not in day-to-day operations,” he says.

Fidelity’s move lit a fire under other firms uncertain about investing in China, according to Peter Alexander, managing director of Z-Ben, a consultancy that advises foreign asset managers in China. By late November, 15 of the top 50 global managers by assets under management had established wholly owned private fund entities, according to Z-Ben data. Of those, six have already issued their first products.

In April, the securities regulator followed up on the government’s promise from November 2017, issuing detailed rules that permit foreign groups to apply for stakes of up to 51 percent in joint-venture mutual funds.

But industry insiders suspect that the Sino-U.S. trade imbroglio may delay any U.S. applications. JPMorgan Asset Management has said it wants to raise its stake in its longstanding mutual fund JV with Shanghai International Trust, but is still in discussions to do so. Foreign executives say China routinely drags its heels on important approvals or uses them as diplomatic bargaining chips, even when companies meet the relevant requirements. A JPMorgan Asset Management spokesperson says it remains “committed” to expanding its onshore presence and talks are “progressing.”

Several foreign bank executives say Beijing could delay or prevent approvals to increase stakes in both fund management and securities joint ventures as a result of the trade war.

Some industry observers doubt that the private fund business can yield significant profits but should instead be regarded as a stepping stone toward obtaining a mutual fund licence that would allow the sale of products to the full universe of Chinese retail investors.

“It’s not as large in scope as the mutual fund client community, but it does provide us an opportunity to begin building our relationship with local distribution partners and have conversations with local advisers and their end clients,” says Ryan Stork, BlackRock’s Asia-Pacific head. He says BlackRock will eventually seek majority control of a mutual fund company but acknowledges the “journey towards majority ownership is going to take time.”

It remains uncertain how much foreign asset managers will be able to capture of the domestic market. Some groups fret that while China’s sheer size is enticing, it is too crowded and insular to be a realistic opportunity for foreign players for the foreseeable future.

“I don’t see where we have a comparative advantage managing money in the local market. Why would a local investor trust some foreigner to understand the Shenzhen stock market? It doesn’t make much sense,” says an executive at a U.S. fund manager that invests non-Chinese client money into China but has not sought entry into the local market.

Despite their differing strategies, foreign fund managers agree that success in China will require plenty of patience.

“It may sound like a cliché, but first of all you have to err on the side of caution,” says Min Yang, head of the China business of hedge fund Winton Group. “The Chinese market is its own special situation. The changes are fast and furious, so you need to do your homework and work with people who share a similar time horizon.”

Helping Chinese investors access foreign markets

Foreign fund managers have been banging on Beijing’s door for years to win a slice of the Chinese market. German fund manager Allianz and U.S.-based Invesco in 2003 became the first major foreign groups to establish minority-owned joint-venture mutual fund companies alongside Chinese partners. Others — including BlackRock, Credit Suisse, HSBC, JPMorgan, Morgan Stanley and Franklin Templeton — followed.

But for the next decade, progress on further market access largely stalled, even as the U.S. and E.U. chambers of commerce in China repeatedly asked for elimination of the joint-venture requirement in fund management.

In 2016, the U.S.-China Strategic and Economic Dialogue produced a commitment from Beijing to allow foreign groups to establish wholly owned “private fund management” entities. Such groups can sell funds to institutions and individuals with at least Rmb10 million ($1.4 million) in net assets. Since late 2016, 15 of the world’s 50 largest foreign asset managers have established wholly owned entities, according to Z-Ben Advisors, a consultancy.

For foreign fund managers, the most obvious competitive niche is helping to connect Chinese onshore money with global capital markets. But China still maintains tight control over outbound flows of portfolio capital.

Apart from the stock connect program that allows mainland investors to buy Hong Kong-traded shares, the main channel for offshore investment is the Qualified Domestic Institutional Investor scheme. Local funds can apply for QDII quotas to invest client money abroad, but these totalled only $103 billion at the end of October. Chinese fund companies control most of that, and with regulators engaged in a battle with capital flight, few expect big expansions to the scheme soon.