Right down: Le Pen barred

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The Economist.

Hello and welcome to the Intelligence from the Economist. I'm your host Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world. Home rental costs have been going up and up in recent years. Our correspondent explains what's going on and asks whether those of us who can't afford to get on the housing ladder have any chance of respite and Oleg Gordievsky came from a family of spies, so it made sense when he became a KGB officer. But he also ended up spying for Britain and later defecting. Our Obitri's editor remembers his extraordinary double life. But first. It was a political earthquake. Marine Le Pen's outspoken view. Her views on immigration and Islam have made her one of the most popular politicians in France. She brought the Hard Right party her father founded into the heart of the country's political system and had led the polls for the first round of the 2027 presidential election. Yesterday she was banned from running for any elected office for five years. A criminal court in Paris found Le Pen and a number of other members of the National Rally Party guilty of misusing 4 million euros of Europe public funds to finance their party. The penalty was unusually and unexpectedly harsh. It ruins Le Pen's bid to succeed Emmanuel Macron as president and leaves the National Rally Party in disarray.

Marie Le Pen seemed absolutely livid yesterday as she left the courtroom before the presiding judge had even read out her sentence. She just walked out, carried her handbag, disappeared into the car and was off. She muttered under her breath, unbelievable.

Sophie Pera is our Paris bureau chief.

She has clearly not seen this coming. It was a shock to her. To her party. It was a worse sentence than anyone had expected. On French TV channel TF1. Last night, she called it a political decision that reflected the practices of authoritarian regimes.

So where does this leave her party, the National Rally?

Well, I think they don't really have a plan B. And that's the problem. Nobody had prepared for this. She does have a deputy, in effect. He's actually the official head of her party, Jordan Bardella. He's a very smooth operator. He's very popular on TikTok. A lot of young people like him. In the reporting that I've done around France, he's spontaneously mentioned as one of the most popular figures in France. But he's 29 years old and so of limited experience. And the idea had been that he would be prepared as Marine Le Pen's prime minister if she's elected president, not that he would run for the presidency itself. So I think the general view, and even when I've been talking to figures within the party, is that he is not ready for the presidential election yet. But that is something they are now going to have to prepare for, in all likelihood.

And what happens to Le Pen now? Because she can appeal this, right?

Well, she can appeal, and this sentence applies while she appeals. So it all depends on how long that takes. You know, an appeal doesn't just happen overnight. It can take one to two years. That would mean that it might drag on into the period of the next presidential election in 2027. That is one option that's available to her. Another is that she could appeal to the Constitutional Council, that's France's highest constitutional body, and put in an emergency appeal on the grounds that the freed of the electorate has been compromised. But whether that can be heard in time and whether the Council would rule in her favor is an open question. So her options are limited. And that's the problem. I think that the fact that she's very angry is quite apparent. That makes her potentially a troublesome presence for the government, because she is the leader of one of the three big blocs in Parliament. She helped to topple the previous government last December, and she could choose to do that again. I mean, actually, she would then lose her seat, potentially because she is not allowed to run again for Parliament. She's a member of Parliament at the moment, but she might want to do that in order to express her frustration and anger at the system.

And, Sophie, what happens with the election in 2027? We already know that Macron can't run because he's already had his terms and now Le Pen can't run. What will happen?

Well, it does throw everything wide open, if indeed she cannot run. In 2027, she was the leading candidate in the sense that polls even at the weekend showed she was way ahead in the first round of voting. We haven't had polls for the second round for over a year, so I think that those are probably not valid. But nonetheless, you have to go back to 1974 to find a French presidential candidate who hasn't won, having gained over 30% of vote in the first round. So she was looking in a very strong position. Now we have the potential scenario of Jordan Bardella being the candidate in the centre. And I think for the rn, the National Rally as a whole, it could work both ways. And we've talked about this on the show before. The newer voters that have been drawn to the National Rally, as it has become more respectable under Marine Le Pen's stewardship, may be put off by what has emerged during this trial. I mean, this was a total of over 4 million euros that was siphoned off from the European Parliament to the National Party and what the judges called a system of which Marine Le Pen was the heart. And I think that those voters who had seen this as the new party may be put off by her. On the other hand, the fact that she's called this a political decision, that there is a sense of outrage at the idea that there might have been a political stitch up by the judges, will probably reinforce her core voters and those who feel that the system, whatever they do, is out to get her.

And Sophie, as you say, she said, this is a political decision. Bardella went further. He said, french democracy has been executed. Where does all this leave French democracy?

I mean, I think it's an unfortunate outcome for France. One has to respect the independence of the judiciary. The judges applied the law, the law was passed by Parliament, and it has stiffened the sentences that are available for judges to apply in the case of this kind of breach of the law. And that is what they've done. So there have been a lot of commentary about how this is exactly what France should be doing, is tightening up, fighting corruption, making sure that its elected politicians are answerable. There was a poll that came out, interestingly, that suggested that two thirds of the French actually support this decision and think that it was a fair ruling by the judges. But I think for France, it is complicated politically because it means that the candidate who has over 10 million voters behind her and is in a strong position for the election, has been ruled ineligible by the judges. And that is potentially going to fuel the idea that we've heard this in America, we've heard this in other countries in Europe, where there have been strong populist parties pushing the message that courts are anti democratic and that there is a censorship of candidates on the nationalist far right. And that, I think, is going to be potentially storing up a problem for France in the future.

Sophie, thanks so much for talking to me.

Pleasure, Rosie.

Across North America, across Australia, New Zealand, rich Asian countries and Europe, rents are seeing their fastest sustained increase in decades.

Callum Williams is our senior economics writer.

And in some locations, rental markets have gone truly bananas.

So you say rents have been rising, but what sorts of increases are we really talking about?

Well, in some countries, the change from before the pandemic has been pretty extreme. So in France, for example, rents for a long time weren't really increasing at all, and now they're increasing at a kind of decent clip, 2% or so a year. But then there are other countries, Australia, Portugal, the uk, where at times, in recent months, rents have been nearing 10% year on year. So really, really very, very fast rises. And in fact, even in some countries where house prices have come down a lot because interest rates have gone up, you're seeing rents accelerate very rapidly. So, for example, in New Zealand, house prices are about 15% off their recent peak, but rents are up by about 14%.

So, Callum, why are rents rising so fast?

Perhaps the biggest factor is monetary policy. So what's happened over the past few years is that central banks have put up interest rates quite a lot. Now, this has had an impact in some countries on house prices where they've come down, but the weird effect actually has been to make rents go up. And basically the reason is because as interest rates have gone up, it's become harder to afford a house. And that means that people who would have bought a house before are now looking to rent instead. And so what that's basically meant is that demand in the rental sector has gone up. But that's not the only way in which higher interest rates make rents higher. When rates go up, that increases the landlord's borrowing costs. And what often happens, actually, is that the landlords will pass on their higher interest rates to tenants in the form of higher rents. And then the kind of third big thing that's going on is that in recent years, really since 2021, lots of countries across the world have seen an unprecedented surge in migration from other parts of the world. Now, because migrants tend not to have often a lot of money and certainly don't have a credit history in their new country, where they live. That means they often go into the rental sector. And that's also helped to drive lots of demand for rental properties.

So does that mean we should be blaming central banks for this?

Basically, yes. They are responsible for a lot of what's happening. And in fact, if you look at what central bankers have been saying and read between the lines, they do recognize what they've done. And what it basically means is that renters have kind of borne the brunt of a lot of the rise in interest rates, because, of course, a lot of homeowners are on fixed rate mortgages, especially in the US And a lot of homeowners own their home outright. So it's about 50% of homeowners across the rich world who own their home. They don't have a mortgage, and so they haven't actually seen any increase in their outgoings. Renters tend to be younger, they tend to be poorer. And so this is a really, really big deal for a lot of people. And in fact, you can see this now showing up in the homelessness figures. In the US And Canada, for example, the number of people who are homeless has increased very sharply since shortly before the pandemic. So this is. Yeah, this is a really big problem.

So where does that leave those of us who can't buy a home and are forced to rent?

Well, in the short term, they're in a really tough situation when rents are increasing by 8 to 10% a year. That is a big problem. In the short term, they have also this big problem in that there hasn't been the supply of new rental housing coming to market. So when the pandemic struck, people fled city centers. And city centers are often where developers will build flats and apartments, which tend to be rented. That didn't happen. And so there's this kind of supply problem in the market as well, which is also pushing up rents. That said, I think it does now appear to be the case that rental inflation has probably peaked across the rich world. That does not mean that rents have stopped rising, and it certainly doesn't mean that rents are going to come down. But it does seem as though the problem has stopped getting really, really a lot worse. So there is a glimmer of hope on the horizon. But if you're a renter, you're definitely in for a tough few years.

Callum, thank you very much for talking to me.

Thanks, Wendy.

When Oleg Gordievsky decided in July 1985 he would defect from the Soviet Union, the first thing he did was barricade the door of his Moscow flat.

Ann Ro is the Economist Obituary's editor.

And that way, if he had any late night callers from the kgb, they would be slowed down just a bit. He'd once been a star in the ranks of the kgb. He'd been recruited straight from the Moscow State Institute of International Relations, and he'd soon been found not only to have great expertise in languages, but also have a highly retentive memory and a good intelligence, all those things that would be useful in a spy. And he was good at cross country running too. So he rose very swiftly through the ranks of the kgb. First of all, he was posted to East Germany, then to Copenhagen and then in the end to London, where he was on track in 1982 to become the Resident, which was the name for the highest agent in Britain. But then he was called back to Moscow for what they called a confirmation of his appointment as resident in London. He suspected a trap right away, but because he had a strong sense of duty and loyalty to the kgb, in some senses, he decided he would go. And he was subjected to five hours of interrogation when he was drugged with doctored brandy and shouted at, but still didn't give anything away of the fact that he was leading a double life. Because in fact, he was also working for Britain's Secret Intelligence Service, MI6. He had long wanted to be a spy. He'd been brought up in the household where his father was a member of the nkvd, which was the forerunner of the kgb. And he also felt that if he wanted to go abroad in the Soviet era, almost the only way to do that was to join a group of spies and get sent overseas. He liked the spy craft too. He liked the idea of having to find a dead letterbox or practice what was called dry cleaning, which was escaping surveillance and being very calm, not looking round. He liked the idea of leaving messages for people according to a code which lets you leave banana skins or bent nails around in certain places which told people what she was doing next. All this was very glamorous and extremely exciting. At the same time, though, he'd got an alternative influence in his life which was starting to question the Soviet regime. He grew up under Stalin or the end of Stalin's regime, and his mother, who was a common sense woman with a peasant background, was very contemptuous of the Soviet regime. He then noticed things. He didn't like the propaganda that was around the place, the forced parades and that sort of thing. When he was 12, he managed on his radio to hear Voice of America, although it was hard to pick it up through all the jamming. Then he was sent abroad and there he saw very clearly how people hated the Soviet regime when they were artificially put under it. For example, in East Germany, he saw the distress of people when the Berlin Wall went up. He saw some of them leaping into the canal rather than live with that wall. Then he went to Copenhagen in Denmark, and he was astounded there to be in a properly Western country and see the energy of it, the beauty, the goods in the shops. He could even go to a library and fill his bags up with books. He was astonished. And he realized that freedom and democracy were the side he wanted to support. He wanted to fight for freedom. He did not want to be working for an evil totalitarian regime. And once he had decided that he wanted MI6 in Copenhagen to come and cultivate him, he himself was meant to be recruiting, cultivating contacts for the kgb. But now he wanted to make himself an object or a subject of interest to the British intelligence service. So when, in 1968, the Soviet Union invaded Czechoslovakia, he deliberately called his wife back in Russia and told her how disgusted he was with Soviet policy. Knowing that the phone was tapped by MI6 and thinking that this would encourage them to be interested in him and to approach him, He said there was nothing he missed about Russia. He couldn't stand the thought of Putin and called him an abomination. So he had no wish to return. In 2008, he featured on a radio program in Britain called Desert Island Discs, and the second record that he chose was the great Russian singer Fyodor Chaliapin singing the song of the Volga Boatsman. There could be nothing more patriotic than that. But the recording he chose was so faint and crackly, so far away, was almost beyond imagination, very much as a Voice of America had first sounded to him when, long ago, he had first heard the voice of the West.

Ann Rowe on Oleg Gordievsky, who has died aged 86. That's it for this episode of the Intelligence. We'll see you back here tomorrow.