Fight or flight: Cathay Pacific

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Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. For centuries, national identity in Ethiopia was intimately tied to the Orthodox Christian church. But since the 1990s, Ethiopians have been free to choose their religion, and an increasing number of them have turned to Pentecostalism. So many that it's changing the country's politics. And the Faroe Islands off of Scotland don't have a lot in the way of tourist attractions. What they do have is a cute little species of seabird called the puffin. Problem is puffin numbers are dwindling fast just as tourism on the islands is taking flight. First up, though.

Hong Kong. Hong Kong.

Weeks of demonstrations in Hong Kong have rattled the nerves of businesses operating there. Mainland China used to be fairly hands off with the thriving territories businesses. That's now changed and an aggressive new approach has bruised a big player. The airline Cathay Pacific felt wrath of Beijing when China banned any cabin crew who had participated in the demonstrations from flying over the mainland. When she was asked about the ban, Hong Kong's chief executive, Carrie Lam, insisted that the status quo was good for business.

I cannot comment as a chief executive on the commercial decisions of individual companies. I hope you understand that. But I remain convinced that Hong Kong has her unique advantages in attracting overseas companies to come to Hong Kong. One of the most important strengths is a rule of law. That's why we have been doing so much to ensure that the rule of law is being upheld and respected in Hong Kong.

The fallout for Cathay is being watched carefully by the many multinational companies based in Hong Kong. For them, the territory remains a crucial gateway to China's massive market.

China's actions against Cathay Pacific have had far reaching and potentially very damaging consequences for Hong Kong's flag carrier.

Stephanie Studer is our China Business Correspondent.

And why this really matters is that businesses in Hong Kong are looking at the example of Cathay and thinking, might I be next?

So just run through exactly what's happened with Cathay Pacific.

Cathay Pacific has really become caught between two Interests on the one hand, mainland China and on the other, democracy loving staff in Hong Kong. Cathay Pacific began by saying publicly that it wouldn't dream of telling its employees what to think, that they had views on all sorts of matters. But then China's regulator on August 9 said that it was going to be banning cabin crew that had protested or even just shown support for the protests from flying into mainland China. And this it said was for safety reasons. This clearly looked quite bogus. Cathay though, caved immediately and it went on to fire four staff, including two pilots. But then to top it all, the CEO resigned.

So was that the extent of it?

Well, no, there was a lot more. And I think that it was what looked like a concerted attack from various parts of Chinese government and its state enterprises that shocked people. So for a start, its jingoistic mouthpieces denounced the company and social media was full of comments including a popular hashtag to boycott Cathay. Then a big state run bank put a strong sell recommendation on Cathay's stock. And then other SOEs said that they had told their workers not to take any Cathay flights, in effect a boycott from China Inc. Run by the state. And now the latest that we've heard is that employees, smartphones are being monitored.

I mean, that sounds like a fairly comprehensive response from the state and state run machinery. What is that going to mean for the airline?

It's going to have big consequences. I mean, some that I've spoken to are relatively sanguine about it. One Western banker in Hong Kong that I spoke to said that the resignation of the CEO was what he termed the pound of flesh that was needed and that it had been a relatively clean cut. But when it comes to its employees in Hong Kong, it's angered a lot of them with what they see as a subservient attitude to, to the mainland. In fact, a pilot has recently resigned who is also a pro democracy lawmaker, partly because of this fear that pervades the company, which is being referred to as a white terror.

Well, I mean, surely that is Beijing's intent, that this whole move is a warning shot from Beijing. How are other companies that have similar entanglements dealing with all this?

I think that companies are certainly looking at this and thinking this is a new level of intrusion. Multinationals based in Hong Kong who have big business operations in the mainland are used to red tape, they're used to intrusion from the Communist Party, haphazard enforcement of rules. But pressure to swap out your CEO takes it to a new level. A Foreign private equity manager that I spoke to in Hong Kong said that companies were. He termed it walking on eggshells at a big Western firm. You can't discuss the protests at work, and this is because it might anger mainland colleagues or clients. And there are quite a lot of internal notices going out to employees in Hong Kong to say similar things.

And how much of a risk do you think this poses for mainland China? I mean, its economy is slowing down. There's this trade war. Is bending the apple cart in this way problematic for mainland China?

Well, on the one hand, of course, it is in its interest to keep the one country, two systems set up that protesters and multinationals in Hong Kong are calling for. Hong Kong remains a very important gateway for these companies. They enjoy its legal setup. Of course, the trade war has made China look less appealing to some foreign businesses. So this is sort of piling on. I have heard that some multinationals who have Hong Kong as their Asian base and who were considering a move to Singapore, its perennial rival within the Asian financial world, and now decided to do it. But we don't know if this is just a trickle, which it may well be. For now. I think most multinationals realize that Hong Kong is the place that they need to be if they want to grow their business on the mainland.

And what about Beijing's intent here? The question has been how far would Beijing go to try to actually quell these protests? Do you think that this will have the intended effect of reducing the appetite for demonstrating, for sort of cowing people into a little bit more obedience?

Well, the interesting thing is that when you speak to protesters in Hong Kong, many of them will say, you know, if I lose my job, that doesn't matter. Losing Hong Kong would matter a lot more.

So.

So I think that on the whole, they're not going to take this brow beating. I mean, Beijing is really using with foreign companies and Cathay, first and foremost, an intimidation tactic. I think it's perhaps coming from a paternalistic view of the company. The notion that, you know, if your boss tells you not to do this, if it tells you not to go to the protests, then you won't go. And actually, I think it's had the opposite effect in Hong Kong.

Stephanie, thank you very much for joining us.

Thank you very much, Jason.

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In Ethiopia, Pentecostalism is flourishing after decades of religious intolerance. The faith's modern image and upbeat pop music attracts young worshippers to church services led by charismatic preachers known as prophets.

In the West, Pentecostalism is often associated with speaking in tongues and miracles. It is essentially a form of evangelical Protestantism, which emphasizes kind of direct relationship, personal relationship with God. And it's on the rise across swathes of Africa and the developing world.

Tom Gardner is the Economist correspondent in Ethiopia.

I went to this church in the center of Addis Ababa. The first thing that strikes you is it feels almost like a kind of a wedding. Very different from traditional Orthodox church in Ethiopia. The crowd is young and there's a band playing. There's a stage with a preacher sweating, shouting. Highly emotional, highly emotionally charged atmosphere. Everyone stands and raises their hands to the ceiling. One of the most striking things I saw was at this service, about halfway through the preacher's performance, you know, suddenly from the corner, a young woman dropped to the floor, her body writhing. She was screaming. Someone had to take hold of her baby that had been in her hands. And then she was kind of ushered to the front of the stage where she was cured of possess. Yeah, that was quite a remarkable thing to witness.

So how is Pentecostalism perceived in Ethiopia? Is it an accepted form of worship?

Well, the relationship between Pentecostals and the state and the established Orthodox church has been a rocky one. It was particularly bad under the Marxist regime known as the Derg, where they were essentially forced underground. They were arrested, they were beaten. Some church members were flogged as punishment for not chanting socialist slogans. Popular hostility, societal stigma was very rife. A big turning point was in 1995 when the new government of the day and the current government, the Ethiopian People's Revolutionary Democratic Front, introduced religion of freedom in 1995. And since then, it's really been an upwards trajectory for Pentecostals in terms of visibility and numbers. I spoke to lots of Pentecostals who had personal stories of persecution in the past. But one particularly horrifying one was from Pastor Ngusi Rober, who was the kind of guest, the star preacher at the church service I attended. And he told me this, you know, this appalling story, okay? One of his children died in infancy, and some of his neighbors in southern Ethiopia dug up the grave and hung the corpse on a post as a warning to others, Which was probably exceptional, but it was particularly illustrative of the kind of popular hostility that was possible in the past.

So given all that history, why is Pentecostalism becoming more visible now? What's changed?

Well, in the last year, you've had the appointment of a new prime minister, Abiy Ahmed. And what's striking is he's a devout Pentecostal. His predecessor was two, but from a slightly peculiar sect, so it wasn't as widely remarked upon. But now, you know, the prime minister, his closest allies, most of his close circle in the ruling coalition, are Pentecostal as well, often from the same church, following the same preacher. So you suddenly have this very visible public political presence of Pentecostals, which I think is quite a remarkable change in the history of Ethiopia. This was a country which for centuries was defined well, national identity was entwined with the Orthodox Church. And I think what you've seen, what has happened now is that has definitively and I think probably reversibly changed.

So what is it that attracts people to Pentecostalism?

Well, one older lady I spoke with, she told me that she brought into the faith along with her entire extended.

Family, to me, I swear by.

She said, we are attracted to the love of God. And they, the Pentecostals, know the truth, that God is the truth. Another woman converted from Orthodox Christianity. She said, you can come anytime and worship God. And I really love the music, which I think is quite revealing. It's often the church's modern image that attracts younger people to convert. One lady came from a Muslim family, and she was converted after staying with a Pentecostal family. She's now trying to convert her family, too. This was interesting because the typical Pentecostalist converted from Orthodoxy to Pentecostalism. Muslim converts are far smaller in number. I spoke to one family at the church who said Pentecostalism has Changed his life. He said, my life has changed so much. I was poor, but now God has given my family money. Which I think is very interesting. It's often a big part of the story is this perception or promise of wealth and material progress through conversion to Pentecostalism.

So among the people that you've met who follow it and more generally, what impact has Pentecostalism had on their lives?

Many of the young people that I spoke to would talk about empowerment, the sense that this personal salvation, this personal relationship with God is empowering. And there is, you know, there is some evidence, you know, ethnographic work from the rural areas in Ethiopia which does show that conversion to Pentecostalism or the spread of Pentecostalism is associated with rising individualism, kind of capitalist spirit, boom in businesses and the like, in part because people are freed from traditional obligations to share their wealth. There is certainly a kind of individualism and this sense of personal salvation.

It sounds as if there's a great deal of positivity around this. Did you hear anything or have you sort of seen any evidence that there are negative impacts?

Well, certainly, I mean, there's a lot of controversy around Pentecostalism in Ethiopia, particularly the latest iteration of it, which is kind of resembles the televangelists of the US or of Nigeria. You have their 24 hour satellite television channel, basically making big business out of Pentecostalism. I think there's a lot of concerns that people have been so snake oiled essentially through the promise of cure from hiv, from possession.

And what about Pentecostalism's influence on politics?

I think its influence on politics, particularly with this new prime minister, Abiy Ahmed, is really significant. The Pentecostal style of politics, the Pentecostal way of doing politics, which often means a kind of sense of divine mission. You can see that with the prime minister, he very much, he talks somewhat like a Pentecostal preacher. And his kind of, his, his way of doing politics has all the kind of indications that he is. This is a man, you know, with a belief in his own kind of divine purpose. And I think that is a particularly Pentecostal thing. And I think that will shape Ethiopian politics for many years to come.

Tom, thank you very much for joining us.

Thank you, Jason.

A loud pint sized bird with a brightly colored beak, the puffin is the star attraction of the Faroe Islands. But the archipelago owned by Denmark off the coast of Scotland is facing a crisis with its puffins.

Although it's not the official symbol of the Faroe Islands, it Could almost be because it is indelibly associated with these islands.

Tim Judah writes about Europe for the Economist.

The problem with puffins is that their numbers are in a state of collapse. In 1997, there were about one and a half million of them on the islands, but now their numbers are down by 80%.

And so why is this dramatic decline happening? What's cutting their numbers?

Well, there's probably two things. The first thing is that in the past, especially when the Faroe Islands were poor and there were lots of hafins, the Faroese ate a lot of them. I mean, there were years in past decades where they ate up to 200,000 of them a year. Now, that number might be down to only a thousand because hunting bans are in force in some areas. But actually what's happened is that another thing has kicked in over the last two decades, and probably no one knows for certain it's to do with global warming. And the reason is that the staple diet of a puffin, which is feeding its young, are sand eels. And what's happening is that because the temperature of the sea has gone up, this has affected the metabolism of sand eels. And so they're just less nutritious, and so there's just a lot less nutritious food around.

And is this just a problem in the Faroe Islands?

It's not just in the Faroe Islands that their numbers are going down. It's in the whole arc of the area where there used to be a lot of puffins, from Scotland to Iceland to Norway, even to Newfoundland and in Canada.

If at least some of the problem is hunting, why not ban hunting them?

In a sense, they regard it as part of their cultural traditions. So the government of the Faroe Islands is loathe to ban it completely because it really doesn't want to rile up any traditionalist voters. I mean, there's only 51,000 people who live on the Faroe Islands. So actually that means that there are not many voters.

So is there anything that can be done to reverse the decline?

One of the interesting things about the Faroe Islands is that since 2012, tourist numbers have doubled to 120,000 a year. And that will bring in about 800 million Danish kroner, or $121 million. So you begin to wonder maybe perhaps some of that money could be diverted to at least doing some research into how to save the puffin. You could perhaps slow or manage the decline by banning hunting of puffins completely. But when it comes to the question of global warming and the issue of sand eels. That's a question for the whole planet.

I'm tempted to ask if you've eaten any puffin.

I haven't eaten any puffin. And I have to say that when I went there, I thought maybe it would be quite interesting to try, but then I hadn't quite realized that puffins were in such peril. And actually, when I looked at the recipes, I have to admit, it rather put me off, especially since one of the main recipes is boiling puffins.

Fair enough. Tim, thank you very much for joining us.

Thank you for having me.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple Podcasts and you can subscribe to the economist@exterator.com radio. Offer 12 issues for $12 or 12 pounds. See you back here on.