The Red Folder

Archived June 17, 2024.

Key stories for the week, brought to you by Lindsey Zhao and the Red Folder team.

Reading for the sake of reading sucks. Telling yourself to read to win a round is nice but ineffective. This condensed news brief helps you understand current domestic and international issues, analyze the news, and gives you opportunities to read more.

Publishing since January 2024.

International Stories

4 key international stories for the week:

1) Lam’s Shift to a Vietnamese Police State Justin Palazzolo

Vietnam has always had a penchant for unconventional politics. In fact, in response to Freedom House giving the country a 19/100 rating for human rights, the Vietnamese parliament gave itself 76 years to implement basic human rights reform by setting a deadline in 2099.

However, given the dysfunctional state of Vietnamese politics, perhaps 76 years for basic policy on freedom of speech and racial discrimination isn’t excessive for Vietnam’s government, but instead a necessity. Currently, Vietnam is facing an unprecedented level of political turmoil as the Communist Party of Vietnam(CPV) has sacked many of its top leadership in a power struggle that is being veiled as an anti-corruption effort. In just the last few weeks, four members of the country’s politburo, the ruling committee of the CPV, have been removed following the removal of the president and deputy prime minister last year.

Unequivocally, the anti-corruption campaign termed the “blazing furnace” is less about government corruption and far more about lawfare in an ideological power struggle between hardline communists known as “police generals” and members of the CPV’s leadership who favor economic and political liberalization. While graft is systemically prevalent in Vietnam, the ‘blazing furnace’ that was set alight in 2016 has not burned away institutional corruption which still remains endemic, rather it has burned away the CPV section that was pushing liberalization. With the presidency and the politburo in the hands of CPV hardliners, many in the liberalization faction are being forced to resign quietly or face an investigation.

All of this political change opened the door to the presidency for the CPV hardliners who were looking to push Vietnam away from privatization and secure government power. This has led to To Lam being confirmed as the new president by Vietnam’s National Assembly. The position of president is all but ceremonial in Vietnam, however, his confirmation makes it incredibly likely for him to be the next CPV General Secretary, which is the most powerful position in the country. As the likely General Secretary, he will have the next half-decade to shape Vietnam’s direction in the context of the two issues that frame Vietnam’s politics: corruption and liberalization.

Lam, as the former Minister of Public Security, has run the anti-corruption effort of the CPV since 2016. There is no doubt that corruption will retain its place as a government priority under Lam since it remains an arguably worsening issue, with convictions tripling, from 839 to over 2270 convictions between 2022 and 2023. However, Lam’s experience does little to instill confidence that he is the man to finally wipe out corruption. Analysts accuse Lam of collaborating with CPV hardliners and the security establishment-dominated politburo to wage a purge of the CPV. This is substantiated by the fact that even after 8+ years of effort, Vietnam still ranks 83rd out of 180th when it comes to corruption. After all, with nearly a decade of Lam’s control as Minister of Public Security, substantial progress against graft remains elusive while Lam’s security establishment has seen its power grow exponentially.

Furthermore, Lam’s Ministry of Public Security has committed numerous abuses. In 2021, a video of Lam eating a 1150 USD (half a year’s wages for an average Vietnamese worker) gold-crusted steak at Salt-Bae’s London restaurant emerged while Vietnam was under a harsh COVID lockdown, bringing immense criticism. When an online influencer parodied this video, he was sentenced to over 5 years in prison for “spreading propaganda about the state”. This is not a mere one-off incident as under Lam’s Ministry of Public Security, Vietnam has become the 5th worst jailer of journalists in the world. This has sparked justified fears that Lam’s vision of Vietnam could be an increasingly authoritarian one and has raised questions about whether Lam has the integrity as President to pursue corruption amongst his own political allies.

Furthermore, Lam’s presidency and likely tenure as General Secretary will profoundly impact the economy of Vietnam. Lam will continue his anti-corruption campaign at the minimum and likely on a bigger scale. This will produce massive economic blowback as in 2023, only 63.4% of the country's budget was actually used since officials now fear handling government funds and incurring corruption investigations upon themselves. This has resulted in contracts for infrastructure or business licenses falling through as developmental policy becomes a victim to a government that is grinding to a halt. All of these factors combined caused GDP growth to fall from 8.02% to 5.05% between 2022 to 2023, signs of an economic slowdown that the CPV is willing to bear for increased centralized control. Even worse, the one bright spot that carried GDP growth, the growth of foreign direct investment(FDI) by 7.4% to 6.3 billion, is also placed at risk by Lam’s leadership.

Lam is likely to follow his dogmatic CPV allies in enforcing Directive 24 while General Secretary. The order requires the CPV to limit cooperation with foreign organizations and individuals whenever possible. This order will likely reverse and deter foreign investment in Vietnam which has been steadily increasing over the last 5 years. With a more authoritarian and less politically and economically liberal Vietnam, it is unlikely that foreign companies will see Vietnam as an ideal investment area. Vietnam stood to benefit immensely from Western companies that are decoupling from Xi’s China, but Lam has chosen to shut the door on liberalization.

Lam’s tenure will likely push the nation as a whole farther from the West’s growing interest and closer to China with a nearly matching government. Lam will throw a wrench into the U.S. diplomatic efforts with Vietnam to build a Pacific barrier to hedge itself against China. After all, it’s no surprise that Lam would look to his authoritarian next-door neighbor to build his own police state.

Read More Here:

2) What Went Wrong for Modi and the BJP Evelyn Ding

Narendra Modi, India’s superstar president. For the last decade, Modi has surged to superstar status to voters across India. The reason for his success is his storytelling ability, which has given him an exceptional grip over the imagination of Indians. Through his monthly radio show and social media, Modi draws on his story as someone who came from a humble economic background. He offers advice to young Indians preparing for exams and praises women’s leadership abilities in agriculture. In essence, he projects himself as a president in touch with the ordinary people and committed to solving their problems. Modi’s brand appeals to a sweeping segment of India’s population that covers diverse languages, ethnicities, religions, and geographies of around 1.4 billion people.

In fact, polling suggests Modi’s popularity is at an astonishing 75%. This number dwarfs the approval rating of any other large democracy, and it makes Biden’s 38% approval rating pale in comparison. Ahead of the election results, Modi confidently predicted a landslide victory for his party. He claimed he would win 400 seats out of India’s 543 seat parliament, which would give him a supermajority to pass sweeping legislation and constitutional changes.

How India’s Democracy Works

India has a parliamentary democracy. A party typically form alliances with other parties in what is known as a coalition.

Their biggest opponent is the Indian National Developmental Inclusive Alliance (INDIA), a coalition of opposition parties including the Congress party. An alliance of parties, or a single party, needs at least 272 votes to have a “majority” and be able to govern.

Election Results

The BJP party itself won 240 votes, which fell short of its predicted 400 votes and also the necessary 272 votes to have a majority. Even so, the National Democratic Alliance (the BJP-led alliance) won 293 seats, giving this alliance enough seats to win a majority. In comparison, INDIA (the Congress-led alliance) won 232 seats, and the remaining 18 seats were won by other parties.

Essentially, even though the BJP won enough votes to stay in power, it was nowhere near the landslide victory they predicted. As a result, the BJP will have to negotiate and compromise with its alliance parties in the coming term.

So, where did Modi go wrong?

Despite Modi’s popularity and charisma, his presidency has been criticized for its slide toward authoritarianism, stagnating economy, and incendiary nationalist rhetoric.

First, Modi has been accused of using anti-democratic practices to consolidate his own power. According to the nonprofit and NGO Freedom House, which classifies India only as “partly free,” the BJP has harassed journalists and other critics of the party. Their actions have ranged from threats to raids on media offices. Furthermore, Modi has cracked down harshly on opposition parties themselves. Recently, three members of the opposition INDIA alliance were jailed on corruption charges. Congress, the main opposition party, saw their bank accounts frozen which disrupted campaign financing. The opposition politicians accuse Modi of having a personal vendetta against them, and abusing his political powers as president. They have tapped into Indians’ fear of Modi’s rising authoritarianism, declaring that the BJP could further restrict basic rights and remove constitutional protections for minorities.

Second, Modi has suffered on the issue of the economy. Even though Modi went to great efforts to boost the GDP (building infrastructure and turning India into a manufacturing hub) — and even though India is one of the world’s fastest growing economies — the economy is doing poorly in the eyes of many ordinary people who cannot obtain jobs or afford basic necessities. Wage growth is static and India’s unemployment rate is at a 45 year high, according to the think tank, Centre for Monitoring Indian Economy. This is largely because the economy has failed to create enough jobs for its large and expanding youth population. The opposition party, Congress, has capitalized on the high unemployment rate. Like political opponents often do, they blame the incumbents for the country’s economic woes and gloat that it is not their fault. To win over voters on the economy, the Congress party has promised to increase welfare payments for women and create three million additional government jobs. This has attracted many voters over to their side.

Third is Modi’s extreme brand of Hindu nationalism. What was once a fringe ideology has become the centerpiece of Modi’s campaign. Even though Muslims make up 14% of India’s population, instead of trying to win them over, Modi has instead opted for alienating them. This has the effect of energizing his own voters belonging to the Hindu majority. To kick off his election, Modi presided over the grand opening of a new Hindu temple. This was in equal parts controversial and symbolic, as this Hindu temple was built on the hotly contested site where a historic mosque used to stand. (The mosque was torn down in 1992 by extremist Hindu nationalists.) And ironically, even though Modi opened the Hindu temple in Ayodhya to shore up support, he lost Ayodhya’s symbolically significant seat. This could be due to a larger trend: namely, voters are growing tired of divisive religious rhetoric. Instead of being energized by Modi’s nationalist sentiments, they are turning away from it. The opposition encouraged this by arguing for social resistance to Modi’s religious nationalism. Voters are instead more concerned about major voting issues like the economy and democracy. As one Uttar Pradesh farmer put it, “Politics based on religion is worthless ... What we want is 24/7 electricity, enough water for irrigation and opportunities for our children.”

These new election trends are extremely significant. India is the world’s biggest democracy: 1.4 billion population, 969 million eligible voters, 640 million voters who turned out. What’s more impressive than the sheer scale of the democracy is the fact that its democracy is thriving even after the dominant party has lost. But the BJP must take notice of what voters are calling for, if it wants to reverse the crumbling of its party.

Read More Here

3) Tinubu Turns the Tables Sahana Srikanth

One of Nigerian President Bola Tinubu's most famous quotes is “Let the poor breathe”. His reign has made that impossible.

Two years ago, Nigeria’s economy was the largest in Africa. But now, it’s expected to drop to fourth place by the end of 2024. Poverty levels are projected to rise this year, with approximately 4 in 10 individuals facing severe economic hardships. Around 87 million people are below the poverty line, comparable to 2.2 times the size of California.

But what’s behind the massive economic downfall the country is facing?

Bola Tinubu was elected 15 months ago and inherited a struggling economy. However, his administration executed multiple economic policies that caused major price rises for Nigerian citizens. This included scrapping energy and gasoline subsidies, floating the currency, and attempting to address dollar shortages.

The effects of his policies have made it difficult for Nigerians to sustain themselves.

A fossil fuel subsidy is a government action that lowers the cost of fossil fuel energy production and reduces the price energy consumers pay. Nigeria imports almost $20.7B in refined petroleum, making this product the top most imported product in the nation. While the country is a major oil producer, it remains heavily dependent on imported petroleum products. This can be attributed to years of underinvestment and mismanagement of domestic refineries. Fuel subsidies in Nigeria protected people from high oil prices, making it easier for consumers to use oil.

However, in May of 2023, Tinubu publicly stated “The subsidy [could] no longer justify its ever-increasing costs..” and hinted that the money previously spent on subsidies would now be reallocated. More specifically, the Nigerian government previously paid about $500 million monthly to subsidize petroleum imports, according to Mele Kyari, chief executive officer of the Nigerian National Petroleum Company Limited. Tinubu claimed that the funds would be rechanneled into better public infrastructure, education, and healthcare.

It didn’t come without backlash, though. During the tenure of GoodLuck Jonathan, who tried to end subsidies in 2012, organized labor unions threatened to go on a nationwide strike. Surprisingly, after negotiating with Tinubu’s administration, they took back these threats and let Tinubu proceed.

Nigerians claimed the subsidy was the most useful implementation of a predatory government. And they were correct, as when these subsidies were removed, gas prices soared by 200% (triple the previous amount). This had devastating impacts on the general population.

Locals rely on gas-powered generators and oil-based energy to light households, run businesses, and make food. Many Nigerians are working various jobs to support their household, but this still wasn’t enough to afford the skyrocketing prices resulting from the subsidy removal. The New York Times details the story of Mr. Garba, a hospital worker with 12 children dependent on his income. Working in the emergency room, he is paid $150 a month, which is scarcely $5 a day. For his volunteering, he occasionally receives $3.30 to aid diphtheria patients. He was forced to sell his car when subsidies were removed, and could not afford rice, cassava, and meals in sufficient quantities.

Food access has become a crisis across Nigeria, and not just due to affordability. People are killed, injured, and stampeded in crowd rushes towards food aid. In February of this year, almost 25 Nigerian students were hurt in a rush to get food donated by their school. In March, a stampede at a university in the central state of Nasarawa took the lives of 7 students.

It’s clear that the people of Nigeria require support, but this has been tapering off. Financially stable relatives and strangers often visit the emergency room to pay the bills of those who need vital care. In 2024, the number of visitors has been shockingly few. Additionally, doctors note that the number of patients visiting hospitals has halved because the sick cannot afford transportation.

Still, the government’s priorities haven’t been aligned with the interests of the people. Tinubu’s administration twice devalued the national currency, the naira. Against the dollar, its value has slipped – having lost between 40% and 70% of its value. The country of Nigeria cannot produce enough food for its growing population, and currency devaluation is causing these imports to exponentiate in cost.

The previous leadership of the Central Bank of Nigeria controlled the naira tightly against the dollar to avoid currency plummeting. So why did the government allow the currency to devalue?

Tight control of the naira would mean the official exchange rate is maintained fairly high, making it difficult for people and businesses to access dollars. Because of the resulting declining foreign investments and reduced revenue from crude oil export, there was an accumulation of foreign exchange demand. Tinubu’s administration likely expected that a unified exchange rate would encourage investment and then restabilize the naira. However, this would only occur if dollar inflows to Nigeria prevailed. Since this did not happen, the demand for dollars outweighed the supply, leading to further depreciation of the naira. In simple terms, more naira are required to purchase the same amount of dollars, leading to a weaker naira.

Their strategy had negative impacts on Nigeria, but they are taking small steps to address it. Tinubu directed the release of food items and palliatives to help families affected by hardship and set up a commodity board to regulate soaring prices in the country. Additionally, he created the Presidential Economic Coordination Council (PECC) to aid the financial management of Nigeria, bringing 12 cabinet ministers together to cooperate on economic challenges. To address immediate economic challenges, the president set up the Economic Management Team Emergency Taskforce to develop and execute a six-month emergency economic plan within two weeks.

So far, Tinubu has introduced buses around states for mass transit at affordable prices, investing $80 million to acquire natural gas-fueled buses. He intervened in unfriendly fiscal policies by funding 75 enterprises with $60 million to improve productivity. For lower-income Nigerians, the government has been floating programs of consumer credit and social welfare. However, massive funding investments are still required in health education and infrastructure. The jobs and employment opportunities promised by Tinubu's administration have yet to be implemented, and until they are successful, Nigerians will see their problems prevail.

It is clear that there’s work to be done. The question lies in if the government can do it.