Press clipping: Ethiopia’s media crackdown

Hello and welcome to The Intelligence from The Economist. Today in London, I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world. For years, the forested lands of Northern California yielded the very finest marijuana in America. Now that it's legal there, you'd think those growers would be rolling in cash. But thanks to state regulations, the industry's chances of survival are not high. And since the invasion of Ukraine, plenty of multinational businesses have made for the door in Russia. Many of them have taken a big short-term hit. But over the longer run, the markets seem to value the companies' decisions to go. First up, though. In Ethiopia's Amhara region, yet another cycle of unrest and crackdown. This time, the central government has gone after an influential armed militia called Fano, arresting more than 4,000 people in recent weeks. Government officials accuse 200 soldiers and a former general of unlawful killings in Amhara. But alongside a clampdown on those with guns comes a broader national campaign against those with pens and microphones. Scores of activists and journalists are now behind bars as government censorship is again becoming the norm in Ethiopia. The country has endured a year and a half of civil war that's spilled out of the region of Tigray into Amhara and even drawn in fighters from neighboring Eritrea. As Prime Minister Abiy Ahmed has been blamed for his role in stoking the conflict, it's not just his government that's been working to silence critics. And that downward pressure on both domestic and international press has now come for one of our own correspondents.

So last month, the campaign was launched by a group of activists linked to the Ethiopian government on social media to have me deported from Ethiopia. Where I'd been reporting on its 19-month-long civil war.

Tom Gardner is our Horn of Africa correspondent.

These activists with ties to the government said my coverage had been somehow biased, that I'd breached a code of professional ethics in some ill-defined way. I at first chose to ignore these allegations, knowing they were spurious. But within a fortnight of this happening, I was on a plane out of Addis Ababa, the capital and actually my home for more than 5 years.

So how did this come about, Tom?

Well, I have to say it's all a little bit murky in my mind, but the proximate cause appears to have been questions I posed privately about the work of a Western academic who conducted some research into the war which whitewashed the government's part in it. This sort of triggered at the start of May a strangely vicious online campaign against me, which was pretty swiftly picked up by state media. Demagogic pundits appeared on television. They accused me of working for the rebel group, the Tigrayan People's Liberation to confront the government's mortal enemy in this civil war. And by May 13th, the authorities had revoked my press accreditation and given me 48 hours to leave the country. According to the official letter that I received from the government, I had pursued a mistaken approach to reporting and that I was in some way biased. I didn't protest. I felt there had been a sort of alternate reality that had been created over the course of several months, to be honest. And the vitriol continued actually after my expulsion. A sort of right-wing pundit, Seyoum Teshome, who has ties to the Ethiopian government, continued to smear me on television. He boasted that I'd been sent out of the country because he proved that I was working with the TPLF.

That sounds like quite a pointed campaign against you, quite a traumatic one, in fact. Is that unusual in Ethiopia right now?

Well, I think the very online nature of my treatment was a little bit distinct, but in terms of harassment of journalists, this is sadly the norm. Ethiopia's once quite promising new government has been drifting back into authoritarianism amid the ruins of this civil war. And many Ethiopian journalists, as well as activists, have been arrested just in the short time since I left the country a few weeks ago. Around the time of my expulsion, one person had just been violently abducted by armed men from his home. Since then, others have been spirited away to unknown places. In the past, some have been handed out of the country. 19 have been detained, mostly without charge, over the last few weeks. And then I should add, there have been other foreign journalists besides myself since the civil war began who've been either banished or barred from the country. In fact, the country's own human rights commissioner has recently called the latest round of arrests a new low in a country with a pretty dark history of ill-treating journalists already.

But still, the very vocal, the very visible campaign against you seems unusual. Why do you think you've been singled out here?

There's a dwindling pool of foreign reporters and indeed independent reporters left in the country. So I think that gave me outsized prominence, perhaps. I would say that our coverage at The Economist has been critical of all sides, but the fact that it's been critical of the government's role in this civil war and the way it's prosecuted it, I think, has definitely ruffled feathers. And that kind of prominence means that I have been targeted fairly frequently over the past year and a half. Last year, a magazine in Ethiopia ran a cover story which accused me and other journalists of being part of a grand British conspiracy to overthrow the Prime Minister's government. A WhatsApp message of mine, a private WhatsApp message of mine to other journalists, entirely non-incriminating, was published on state media as well. I've been called a CIA agent more times than I can count. Online and beyond Ethiopia, this sort of propaganda war seems to have broken out with the involvement of lobbying groups and individuals, some of them not Ethiopian academics with emotional ties or otherwise to the country and to the government. I sort of got dragged into this propaganda battle, frankly, and I think that's how I ended up on a plane out of there.

And you mentioned the word propaganda. Is that to say you think a lot of this is government organized, or is this just government sympathizers making themselves known?

I think it's very hard to say precisely. I think the nature of these things and the nature of the way the Ethiopian government does its business is you can never be entirely sure. I mean, the prime minister is not going to put it in writing that he wants an online troll army to wage a propaganda war against foreign journalists, I don't think. I think there's something Putinesque about it all, the way that there's always kind of deniability there. But certainly there is a symbiosis between the world of online activists and trolls and kind of nationalistic propaganda being pushed by state media and the government at home.

But whatever its source, is the campaign working? Is the propaganda landing among the Ethiopian people as Abiy would like?

Yes, I think so. I think Ethiopians, as well as some influential outsiders, clearly doubt that any war crimes have been committed at all, save for those by the other side. I think both sides have been guilty of falsehoods and exaggeration in this conflict, just as their forces have both committed atrocities. But I do think the most effective disinformation efforts, those efforts designed to corrode trust in any independent reporting about the conflict, those have come from the government and its online affiliates. I can give you an example of this. At the start of the conflict, a social media account established by the government called State of Emergency Fact Check was launched. And basically, here was a government denouncing victim testimonies, impugning the motives of journalists who reported them, and essentially chipping away at any sort of trust there might have been among Ethiopians in independent reporting on the conflict. As one Ethiopian journalist told me recently, fake news is whatever the government doesn't like.

And so if the campaign then is broadly working, or at least sowing the confusion that's intended, and independent voices are being silenced, what's to be done?

I do believe in an ideal world, Ethiopian reporters would be at the forefront covering their country's conflict, shining a light on them. But because of the dangers they face, many choose to maintain a low profile, to self-censor, or avoid covering the conflict at all. I know exactly the difference between the risks I faced and those by Ethiopian journalists. I saw my friend being beaten by police last year whilst covering the conflict. I escaped with just a few blows to the head. He feared for his life. I didn't, for the most part. This means that the field is left open to media outlets abroad, some who may not appreciate context or nuance, or more troublingly, really, to state propagandists at home. And that's where we're at now. Independent local voices are silenced and foreign ones are increasingly harassed or expelled. And the Ethiopian government's war on information is going to get worse, I think, before it gets better.

Tom, thanks very much for your time.

Thank you, Jason.

California is the world's largest legal market for marijuana. The state legalized medical use in 1996 and 20 years later, in 2016, made the recreational kind legal too.

The cannabis gold rush is on. Legal medical and recreational marijuana comes to the Golden State Monday.

In the 6 years since that Proposition 64 was enshrined into law, the market has blossomed. Last year, sales topped $5.2 billion. But local growers aren't seeing as much of that green as they'd like. Held back by taxes and regulations that other states don't have, California's whole joint enterprise is at risk.

Humboldt, Mendocino, and Trinity Counties make up what is known as the Emerald Triangle, which is a region about the size of Massachusetts that is famous for growing weed.

Erin Braun is our Mountain West correspondent.

It's really hard to get there. Humboldt County is about 4 hours north of San Francisco. The roads are winding. You have to drive through redwood forests. But that isolation allowed farmers to grow in relative seclusion when cannabis was still illegal in California. The business was really lucrative for a long time. One farmer I talked to sold a pound of weed in 1990 for $5,800. But since legalization, the industry has been crippled by really high taxes and onerous regulations.

You might have thought that opening the market up would bring in more consumers as well and just make things easier. Why has making the market legal made things harder for the people doing it?

For a lot of people, when pot was legalized, it was a relief. They were able to tell their families what business they were in, for example. But as more and more growers enter the market, supply surged. And because interstate commerce is banned because weed is not legalized at the federal level, That weed has nowhere to go. So there's this huge supply glut in California. A consultancy in 2017 estimated that the state is only able to consume about 20% of the pot that it produces. And last year was kind of the perfect storm. Prices plummeted to about $400 a pound. Labor was really scarce. And there is a flat cultivation tax that farmers have to pay, and that was raised to $160 a pound to counter inflation. So when you're only making $400 and more than a fourth of that goes to taxes, it's tough to make a profit. The price has recovered a bit since then, but farmers were still telling me that running a profitable legal weed business is basically impossible. And a lot of that actually has to do with the way that weed was legalized back in 2016.

And how has that contributed?

So in 2016, pot in California was actually legalized via a ballot measure. And the way that proponents got it to pass was to allow local municipalities, cities, and counties to decide themselves whether they would legalize pot. But that meant that in those places that decided against it, which was about two-thirds of the state, the black market was still flourishing. And that puts legal growers at a disadvantage because people on the black market aren't paying taxes, aren't doing safety checks, aren't doing all the things that are costing lots of time and money. And so to make ends meet these days, some farmers in Humboldt County are running cannabis tours where tourists from the Bay Area come sample their weed and visit a bunch of dispensaries and farms. One farmer I talked to wants to have glamping on his farm. And a lot of them have just gone back to the black market because they think it's easier, even if it is scarier to operate that way. By Comparing sales figures with drug use surveys, economists estimate that really only about a quarter of the weed sold and consumed in California today is legal.

So is it a question of changing the legal market or perhaps clamping down on the illegal market?

There are a couple of ways that the state could address the problems with the legal market. One is to ramp up enforcement on the black market, which does consist of some criminal enterprises that operate in the Emerald Triangle. But there's this legacy from the war on drugs in the 1980s that is really harmful. Johnny Casale, who is a small farmer that I visited up in Humboldt, told me that the heavy-handed measures that they used in the '80s bring back really bad memories for him.

And, you know, as a 15-year-old kid, when a Black Hawk helicopter is sitting 100 feet over your head with 4 guys and AR-15s, It's, you know, it's scary, it's traumatic. And the one thing that most of this community has in common is this trauma that we're still dealing with today. And so—

And cracking down on the black market is really unpopular with law enforcement as well. The county sheriff in Humboldt, William Honsal, told me that nobody wants to go back to the war on drugs era and that he's worked hard to work with farmers to see what they need to recuperate from that.

And we have a lot of the old farmers that still have a lot of PTSD based upon the helicopters flying low, officers or deputies, you know, doing fast rope out of the helicopters and going into gardens and that kind of stuff. There's just these images of almost like Vietnam, like a Vietnam War image here in Humboldt County.

And even if Mr. Hansel, for example, wanted to crack down on the black market, he says he doesn't have the resources to do so. Humboldt County is absolutely huge, and of the 120 deputies that they've got, only 4 of them are devoted to marijuana.

So if it's unpalatable to deal then with the illegal market, then what can be done with the legal one?

There are a bunch of measures that the state could take. The first one, and the one that economists point to as the thing that would make the biggest change, is to either compel or incentivize these cities that have still banned weed to legalize it. And there's a grant program that exists that would help municipalities to do that. But the thing that farmers mentioned the most to me that would help them is tax reform. So getting rid of the cultivation tax, for example, which is what the governor has actually said he would also like to do. And there are a couple of bills in the state legislature floating around that would also address tax reform. Some Humboldt farmers I talked to really hope that federal legalization will save them by creating this big national market. They want people all over the country to look at Humboldt pot like really good wines or craft beer and say, that's top-shelf stuff. That's what I'm after.

And do you think that would work, though? Is that how the market would play out if it were federally legal?

I think there's a chance that some of that happens. There's a lot of talk about how to brand Humboldt County, basically, if and when weed is legalized at the federal level. But because interstate commerce has been banned, pot industries have cropped up in states across the nation that don't have the climate to otherwise grow weed. So for example, in Oklahoma, there is a flourishing weed industry, and all of their pot is grown indoors because of the, you know, hot, dry climate. But they've made it much easier to set up business than, for example, in California. And so there's this question of if and when weed is legalized, do businesses go to these states where it's easier to do business, even if the legacy industry doesn't exist like it does in California? In the meantime, though, before pot is legalized at the federal level, state regulators have this chance to reform the industry. And if they don't, they might see the $5 billion sector go up in smoke.

Erin, thanks very much for joining us.

Anytime, Jason.

From banks to breweries, many companies chose to leave Russia after the invasion of Ukraine. Starbucks will exit Russia after nearly 15 years, joining a wave of American companies pulling out of that country in response.

McDonald's is selling its business in Russia in response to the war in Ukraine. Burger King said it wasn't consistent with its values to continue operating there. PepsiCo added themselves to the growing list shortly after that, suspending sales as well as promotional and advertising activities. Mounting pressure.

And although they've taken a financial hit, it seems that kind of decision isn't necessarily bad for business.

Since the war in Ukraine began, roughly 1,000 international firms have curtailed their Russian operations to some extent.

Rebecca Jackson writes for The Economist.

Recently, McDonald's announced that it was selling off its 847 restaurants in Russia. And Starbucks has also pulled out. They used to have 130 stores and 2,000 employees in the country.

And what impact is that having on those businesses that suddenly don't have a Russian arm?

So in the last month, quarterly reports have been trickling in. And what these show is that companies really suffered in the first quarter because of these pullouts. McDonald's announced that closing its restaurants in Russia cost the company $127 million just in the first quarter, which ended this past March. Renault, which is a car company, recorded a $175 million write-down following suspension of business in Russia. Oil and gas firms that pulled out of Russia gave up even more. After abandoning its 20% share in Russia's Rosneft, BP reported a $24 billion write-down. Shell and Exxon also reported great losses. But there might actually be some hope because it turns out that shunning Vladimir Putin is playing out surprisingly well in the stock market.

What do you mean by that?

So despite these losses, despite the huge write-downs, investors actually tend to prefer companies that pull out of Russia. They seem to be more confident in the long-term prospects of firms that are choosing to leave. So according to an analysis by researchers at the Yale Chief Executive Leadership Institute, The stock market has actually rewarded companies that divested.

To what extent? What did they find?

So what the Yale team did is that they took the 1,000 companies that have pulled out of Russia to some extent and they scored them. The best scores were given to companies that cut ties completely, and the worst scores were given to companies that just continued to operate business as usual. And what they found is that since the day of the Russian invasion, between February 24th and April 19th, On average, the shares of firms that withdrew completely went up by 3.6%, and the shares of companies that continued as usual lost 6.8%. So what this means is that investors are really rewarding companies that are pulling out, and the companies that have failed to do so are really facing challenges in the stock market.

So in blunt terms, it's just a good business decision at this stage to pull out of Russia if you're there.

So it seems so, but it's sort of hard to tell because for one thing, this analysis doesn't actually take into account the long-term trends, what was happening returning to the share prices before the Russian invasion. So it could be, for example, that the companies that chose to pull out were just more in tune with their investors, with their consumers, and that they were just overall better companies. But it seems that that probably wasn't the case. And the researchers have some evidence to show that actually it was the invasion itself that caused this decline. So overall, the findings suggest that the marketplace did place more weight on the reputational effects of doing business with Russia than the economic losses that the companies showed in the first quarter. So on this, at least, the stock market seems to prefer the moral high ground.

Thanks very much for joining us, Rebecca.

Thanks so much for having me.

That's all for this episode of The Intelligence. Let us know what you think of the show. Drop us a line at podcasts@economist.com or leave us a rating wherever you listen. We'll see you back here tomorrow.