Offers succinct commentary on topical issues that cut across both rich and poor countries. Entails critical insights on poverty, inequality, health, macro-policies and many more
Mortality statistics have a direct bearing on life expectancy (at birth). Higher morality leads to lower life expectancy and vice versa. COVID-19 represented a major mortality shock over the last 70 years, but its impact was uneven across the world.
The United States experienced the third highest loss in life expectancy because of COVID-19 in a sample of 29 high income countries. Only Bulgaria and Slovakia had worse outcomes. It is also worth noting that: ‘in the United States, the pandemic has accentuated the pre-existing mid-life mortality crisis’. (Scholey, 2022).
The countries that do well are in Northwest Europe, especially the Nordic countries.
Paul Krugman suggests that the decline in life expectancy in the United States is regionally concentrated with ‘red states’, where political conservatism holds sway, suffering disproportionately from COVID 19 deaths.
There is a statistically significant negative association between the magnitude of the decline in life expectancy and vaccination uptakes – high declines are associated lower vaccination incidence.
Figure 1: COVID-19 and life expectancy in a sample of high income countries
Here is a chart which looks at both life expectancy at birth for men and women (eO) and inequality in life expectancy as measured by the Gini coefficient (gO) over the 2010-2020 period in India. There is a sharp decline in life expectancy among both men and women between 2019 and 2020, with levels equivalent to what prevailed in 2010 for women and 2014 for men. In terms of years lost, ‘…the mortality pattern of COVID-19 reveals a drop of 2.0 and 2.3 years for men and women, respectively, between the pandemic year 2020 and the non-pandemic year 2019’. (Yadav et al, 2021).
Inequality in life expectancy – which was falling consistently between 2010 and 2019 rose sharply after that. In sum:
“The COVID-19 pandemic has negative repercussions on life expectancy and inequality in age at death and has slowed the mortality transition in India.”(Yadav et al, 2021)
I reflect on how and why Gautam Adani – a leading member of India’s Billionaire Raj – became the victim of a stock marker rout. He was once regarded as the second richest man in the world. His net worth has taken such a hit that he is now ranked the 18th richest in the world, while his group of companies has lost more than USD 100 billion within the space of a week.
Rishi Sunak’s spectacular rise in British politics has understandably drawn a great deal of global attention. His achievements are indeed for the history books: the first ever non-white British Prime Minister of Indian heritage who is also a practicing Hindu; the youngest in more than 200 years. His conspicuous status as one of the richest Prime Ministers in British history owes much to his marriage to Ms Akshata Murthy, the daughter of the Indian tech billionaire Narayana Murthy. Rishi Sunak, like very many British former Prime Ministers, is the beneficiary of elite education (Winchester College, Oxford, Stanford Business School).
In September, it appeared that Rishi Sunak was destined to become the ‘nearly man’ having lost comprehensively to Liz Truss when the rank-and-file members of the Conservative party voted for her in droves. There was a certain irony in the ascension of Liz Truss because Rishi Sunak was blessed with a strong show of support by his fellow MPs but the plebians in the party decided to disregard the collective will of the plutocrats in Parliament.
Fate smiled on Rishi Sunak when the Prime Ministership of Liz Truss imploded spectacularly in the wake of her pristine neoliberal agenda of using unfunded tax cuts, primarily directed towards the rich, to drive growth. The ‘markets’ rebelled at such fiscal profligacy at a time of high inflation and rising public indebtedness spelling the end of Ms Truss and her Prime Ministership. She could only depart with the indelible label of the shortest serving Prime Minister in British history. This paved the way for Rishi Sunak’s rise facilitated by the ‘kingmakers’ of the Conservative Party (the 1922 Committee) who changed the rules of selection to give a very high degree of weight to a candidate’s popularity among MPs. The only remaining contender (Penny Mordaunt) did not stand a chance, while the disgraced former Prime Minister Boris Johnson, seeking a triumphant return, simply gave up. Rishi Sunak was duly anointed as the leader of the Conservative Party without even having to seek endorsement from rank-and-file members.
Does the rise of Rishi Sunak in British politics herald a new era for ethnic minorities in multicultural Britain? As someone who lived in the UK for ten years during the early 1970s and early 1980s as a student (A levels and University education), I was struck by how far Britain of that period has evolved. I still recall the racist slurs (‘Paki’) that were occasionally directed at me and my family and the horrendous bashing from racist thugs that two of my friends endured. As Aamna Mohdin notes, ethnic minorities at the time were subjected to a ‘sustained campaign of terror’ by nativist agitators. Furthermore, in 1980, the year Rishi Sunak was born, there was not a single person of colour in the British Parliament. Multicultural Britain of the 21st century has thankfully moved beyond the primitive rage of the nativists of the 1970s and 1980s.
Image 2: ‘Skinheads’ in the 1980s notorious for being associated with ‘Paki-bashing’.
It is thus legitimate to ask: does the phenomenal political elevation of Rishi Sunak mean, as Indian politician Shashi Tharoor who is also a fierce critic of British colonial rule says, that Britain has ‘outgrown racism’. I am not so sure. I like to think that the British Conservative Party consists of overt racists and forward-looking realists prepared to allow for pragmatic accommodation with ethnic minorities. Racists are captive to primordial emotions that overcome their judgements. Hence, they yearn for an insular and nativist agenda that belies current circumstances. Realists know how to hide their racial prejudices while having full faith in the superiority of Western/European civilisation. Realists know that the UK, for decades now, has embarked on an irreversible path towards a multicultural, multi-faith future. Realists realise that there are many potential Rishis in waiting. They can no longer be ignored as natives who serve ‘vindaloos’ to white clients or mind the corner store through all sorts of odd hours. Furthermore, realists feel much more at home with the ‘pucca sahibs and begums’ of colour rather than the ‘white trash’ in some forgotten part of Northern England who can’t even speak English with the right accent. More importantly, the realists are fully aware that these pucca brown sahibs and begums can be relied upon to project a ‘holier-than-thou’ attitude to demonstrate their Britishness. Hence, one has the glaring example of Suella Braverman who has returned as home secretary to continue her role as aggressive culture warrior and who is keen to pursue her anti-immigration agenda. She is also on record as saying that Britain should not feel apologetic about its colonial past. In sum, I would argue that the realists in the Conservative Party are happy to have the fig leaf of diversity reflected in Rishi Sunak and many of his colleagues who are in the frontbench.
Video insert of Suella Braverman extolling the virtues of the British Empire
There are multiple reasons to believe that Rishi Sunak is most unlikely to disrupt the status quo of an iniquitous society that cuts across class and race. Hence, the Conservative Party is in a safe pair of hands. His coronation does not connote a new era for multicultural Britain. Rishi Sunak is a self-proclaimed ‘proud Thatcherite’. He voted for Brexit. He believes in a low tax, fiscally conservative regime. He will be preoccupied with soothing the frayed nerves of the markets through fiscal consolidation regardless of its socio-economic consequences. This is a conventional Conservative way of responding to economic challenges. Hence, one might see a replay of the fiscal austerity program under David Cameron that ‘broke Britain’.
Broken Britain today manifests itself in many ways, but most notably in large-scale poverty and deprivation. According to the comprehensive poverty line devised by the Social Metrics Commission, 22 percent of the population were deemed to be poor even before COVID-19. Ethnic minorities were conspicuous for very high poverty rates. Other surveys show that nearly 5 percent of the population are ‘food insecure’ with a sustained increase in the utilisation of foodbanks. With an incipient energy crisis and the lingering effects of COVID-19, poverty in the UK is likely to get worse. Do not expect Rishi Sunak to acknowledge these challenges and seek to act upon them. It is only a matter of time before the first person of colour to become British Prime Minister shows his true ideological colours.
There are, as Ronald Suny points out, two contending narratives on the brutal Russian invasion of Ukraine and the humanitarian catastrophe that it has created. The dominant version familiar to many in the West is that Ukraine is the hapless victim, and perhaps the first of many, of Russian neo-imperialism. The architect of neo-imperial intent is Vladimir Putin. Such a narrative is enunciated as a morality play, with a cast of characters that range across victims, villains, and heroes. It is a story in which the victim, a morally righteous David (in the form of President Zelensky of Ukraine), is pitted against a vile and villainous Goliath (manifested in the Russian President Putin). US-led Western heroes of NATO are aiding and abetting David with weaponry, financial assistance, moral support, UN-led condemnations, and crippling sanctions on Russia. They are protecting liberal democracy in Ukraine in particular and East Europe in general. They are defending a ‘rules-based’ global order.
At the same time, the US and its Western allies are exercising restraint because they are ruling out any attempt to engage in a direct confrontation with a nuclear-armed Russia. The expectation is that this strategy will pay off as Russia concedes defeat and decides to end its invasion of Ukraine. Any attempt to seek a negotiated settlement with Russia is seen as appeasement which will only embolden Putin. It will entail a betrayal of the aspirations of the Ukrainian people to remain a sovereign nation and embrace the liberal democratic West through eventual EU and NATO membership.
The alternative view is that the perfidious Russian invasion of Ukraine is a tragedy foretold, especially by foreign policy experts and scholars of international relations in the US. Its roots lie in egregious errors of US foreign policy, and it has to do with NATO.
It was under President Bill Clinton that the project to expand NATO ‘eastward’, that is, to incorporate the ex-Soviet Republics in Eastern Europe, gathered pace. Bill Clinton and his cheerleaders celebrated such expansion. Then-Senator Joe Biden played a pivotal role in this cheerleading exercise proclaiming that ’50 years of peace’ was within the grasp of humanity. Much more knowledgeable observers were alarmed.
On June 26, 1997, a group of 50 prominent US foreign policy experts that ‘..included former senators, retired military officers, diplomats, and academicians, sent an open letter to President Clinton outlining their opposition to NATO expansion’. They considered a ‘…US-led effort to expand NATO (to the former Soviet Republics) ‘ as a ‘…policy error of historic proportions’. They highlighted the fact that ‘In Russia, NATO expansion…continues to be opposed across the entire political spectrum’ which will ‘…bring the Russians to question the entire post-Cold War settlement’. They proceeded to argue that Russia, struggling to recover from the political and economic calamity of the dissolution of the Soviet Union, ‘…does not now pose a threat to its western neighbours and the nations of Central and Eastern Europe are not in danger’. This warning was duly ignored and the US Senate ratified NATO expansion starting with Poland, Hungary, and the Czech Republic in April 1998.
‘I think it is the beginning of a new cold war. I think the Russians will gradually react quite adversely and it will affect their policies. I think it is a tragic mistake. There was no reason for this whatsoever. No one was threatening anybody else. This expansion would make the Founding Fathers of this country turn over in their graves. We have signed up to protect a whole series of countries, even though we have neither the resources nor the intention to do so in any serious way. [NATO expansion] was simply a light-hearted action by a Senate that has no real interest in foreign affairs.’
In 2007, Vladimir Putin gave a much-noted speech at the Munich Security Conference (MSC) where he expressed his clear disapproval of a US-led ‘unipolar model’ that emerged after the end of the Cold War proclaiming that ‘I consider that the unipolar model is not only unacceptable but also impossible in today’s world’. Most importantly, he observed:
‘NATO expansion … represents a serious provocation that reduces the level of mutual trust. And we have the right to ask: against whom is this expansion intended? And what happened to the assurances our western partners made after the dissolution of the Warsaw Pact? Where are those declarations today?’
Yet, in April 2008, the US and its NATO allies welcomed Georgia and Ukraine to be members of NATO, although when it was likely to happen remained unspecified. The irony is that, as Stephen Walt points out, Ukraine was a non-aligned country until then.
One could argue that Russia’s response to the ‘serious provocation’ (Putin’s words as uttered in 2007 – see above) of NATO expansion entailed the use of military force and the use of pro-Russian proxies to protect its security concerns. The Russo-Georgian war of 2008 is consistent with this interpretation. The annexation of Crimea in 2014 and a grinding conflict in Eastern Ukraine led by pro-Russian separatists might be seen as responses to the so-called Maidan revolution that led to the ouster of a pro-Russian Ukrainian President. Sadly, in this contentious affair, the US was not an innocent bystander. As Ted Galen Carpenter notes, US politicians openly aided and abetted the progenitors of the Maidan revolution in which unsavoury far-right political forces played an important role.
Those who support the view that NATO’s reckless eastward expansion and its offer to incorporate Ukraine as a member of NATO at some point in the future provoked Russian aggression also point out that the US would react in much the same way if faced with similar circumstances. Suppose Mexico was to seek a security alliance with Russia or China and allowed its territory to host foreign army bases. The US would react aggressively. This, Peter Beinart explains, would be a re-affirmation of the Monroe Doctrine formulated nearly 200 years ago in which the US states that it has the unique right to exercise its sphere of influence in its own hemisphere and any attempt by ‘foreign powers’ to tamper with this right will be perceived as ‘dangerous to its peace and security’. Hence, Putin’s 2007 proclamations appear to be a Russian version of the Monroe doctrine.
It is impossible to prove the veracity of this interpretation of the historical context to the current tragedy that is unfolding in Ukraine today. It is entirely possible that Russia would have invaded Ukraine even in the absence of NATO enlargement. This counterfactual cannot be dismissed, but those who subscribe to it do not have a tangible solution other than seeking the comprehensive defeat of Putin’s Russia. Short of this seemingly unattainable goal, what is a way forward?
Sanctions are certainly likely to cripple the Russian economy, while indirect military support to Ukraine would sustain this highly uneven conflict between David and Goliath. Despite sanctions, Russia will probably continue its brutal military interventions in Ukraine simply because sanctions, while causing a great deal of pain borne by ordinary people, do not lead to changes in the core strategy of a particular regime (think of Cuba, North Korea, Iran, Venezuela and similar examples). As the IMF has warned, the longer the crisis in Ukraine persists, the greater the adverse consequences on the global economy. This is primarily because of adverse energy and food price shocks caused by further disruptions to supply chains already reeling under the impact of COVID-19. The poor and vulnerable in parts of the world far removed from Ukraine are likely to bear the brunt of adverse price shocks.
Those who subscribe to the view that NATO’s eastward expansion is a central part of the narrative on the war in Ukraine suggest it ‘could really be ended with a diplomatic solution in which Russia withdraws its forces in exchange for Ukraine’s neutrality’ (Jeffrey Sachs). There are small, prosperous countries in Europe, such as Finland, that peacefully co-exist with Russia without being members of NATO. Henry Kissinger, perhaps the personification of the US foreign policy establishment and leading scholars of international relations – such as Stephen Walt,John Mearsheimer, and others – fully concur with this prescription of ‘Finlandization’ of Ukraine.
Micheal Mandelbaum, one of the 50 who raised formal objections to the NATO enlargement project in 1997, has wistfully reflected on an alternative scenario. ‘Imagine, he says, a different global configuration, with Russia aligned with rather than opposed to the United States’. Indeed. Imagine!
Durable global and regional peace is likely to happen when the US and its Western allies move away from treating Ukraine as a morality play in which they, and they alone, are the defenders of a rules-based international order in a multi-polar world. Will they have the humility to acknowledge that the NATO enlargement project has probably led to unintended, but tragic, consequences? Will they embark on the delicate task of persuading the current regime in Ukraine that its best future lies in being a non-aligned nation buttressed by mutual security guarantees from Russia and the US and its allies? Will the West, in cooperation with Russia, be prepared to offer a massive reconstruction package to enable Ukraine to move beyond the ruins of war? Only time will tell.
The Royal Commission Report into Misconduct in the Banking, Superannuation and Financial Services Industry will be released to the public this afternoon (4 February 2019). The Commission had already published an Interim Report in September 2018.
The Interim Report had hardly anything good to say about the industry. Rather, the Commission used the word “greed” to describe the industry’s behaviour and how the industry largely treated the ordinary customers. Otherwise, how can one explain fees charged for services not provided? Fees charged to dead people?
The Australian banking industry had been politically very successful for decades. In the post-GFC years, the industry used the excuse of ‘rising costs of funds’ in international markets for raising their interest rates asynchronous to the RBA’s rate decisions. Nobody raised an eyebrow when the major four banks reported record profits year after year while still crying poor about rising costs of funds. The crux of the matter is the banking industry fell into a culture of profit at any cost and bank executives’ remunerations were linked to profit and revenue. Thus, the bank executives in Australia all they cared for was whether they were contributing to the bank’s revenue and profit. Bank leaders did not care enough whether their employees were doing the right thing for their customers. If the bank management were thinking that they were more focused on creating shareholder wealth, shareholders thought differently. ANZ, NAB, and Westpac – all received a ‘first strike’ 2018 under Australia’s ‘two strikes’ rule. CBA received a ‘first strike’ in 2016.
So, the bottom line is: yes, we want our banks to be profitable and financially strong. Yes, we need strong banks for a strong economy. But the profit must be clean.
The so-called ‘growth convergence’ literature posits that poorer economies will grow faster than richer ones and eventually catch up with them, but this is conditional on the presence of ‘fundamentals’ – good policies and inclusive institutions.
It will take Bangladesh more than 45 years to reach the current per capita real GDP of the USA, but in terms of life expectancy, a remarkable degree of convergence seems to have taken place.
There are several states in the USA in which life expectancy is lower than in Bangladesh. See the table below.
Arkansas
South
73.9
45
Oklahoma
South
73.8
46
Tennessee
South
73.8
47
Alabama
South
73.8
48
Louisiana
South
73.8
49
Kentucky
South
73.6
50
Mississippi
South
72.6
51
West Virginia
South
72.2
Life expectancy in the USA has diverged from trends in other rich nations. The figure below provides an example.
When one examines ‘healthy life expectancy’ (HALE), that is, the average number of years that a person can expect to be healthy, Bangladesh has apparently almost caught up with USA! See the table below.
Indicator
Bangladesh
United States
Healthy Life Expectancy (HALE) at birth
62.4 years (2023)
64.6 years (2023)
Overall Life Expectancy at birth
72.7 years (2023)
78.5 years (2023)
Years spent living in poor health/disability
~10.3 years
~13.9 years
How did this ‘longevity revolution’ in Bangladesh happen? A complex confluence of factors has led to this outcome. They are explored in a complementary commentary on my Substack platform.
Dr. Satish Chandra Mishra, an economist educated at Oxford and Cambridge with senior past experience at the United Nations (UNDP), OECD, and USAID, is the Founder and Executive Director of Arthashastra Institute, Bali,Indonesia.
Draw a line on a map from the Bay of Bengal through the Malacca and Sunda Straits to the Coral Sea. Three capitals sit on it: New Delhi, Jakarta, Canberra. Nobody planned it that way. Geography did.
For most of the last eighty years, these three countries barely spoke to each other. India looked inward, then toward its own neighbourhood. Australia looked toward London, then Washington. Indonesia looked toward nobody in particular. By design.
That design has a name: bebas aktif, free and active. It is not indecision dressed up as principle. Indonesia won its independence in 1945. A decade later, in 1955, it hosted the Bandung Conference, where newly independent nations from Asia and Africa agreed to refuse conscription into either Cold War camp, the meeting that gave the Non-Aligned Movement its name. Bebas aktif was Indonesia’s own translation of that idea into policy, and seventy years on, it still shapes every conversation Jakarta has with Canberra, or with Delhi.
If Indonesia has spent seven decades declining to pick sides, why would three years of paperwork change that? Isn’t this just two bilateral relationships wearing a trilateral costume, with Indonesia as the reluctant middle party in both?
On the evidence, it is the wrong one.
First, the pace. Between August 2024 and August 2026, Australia and Indonesia signed a treaty-level Defence Cooperation Agreement, ran their largest-ever combined military exercise, and then signed a second, broader security treaty on top of the first. India and Indonesia, in the same window, transferred BrahMos missiles, a deal that had sat in negotiation since 2023, held up because it was never a simple purchase. India and Australia finished a trade agreement, then a fuller one behind it. None of this was inevitable. Agreements this dense do not happen between countries hedging for form’s sake.
Second, the money has started following the paperwork rather than preceding it, which is the harder direction. Indonesia’s non-oil trade surplus with India passed the Philippines and closed in on the United States in 2025. Indian investment in Indonesian nickel and pharmaceuticals has moved from announcements to plants. Australia’s goods trade with Indonesia under their partnership has nearly doubled
since 2020. Trade agreements are cheap to sign and easy to ignore. These have not been ignored.
Third, Indonesia has not stopped being non-aligned. It has started treating non-alignment as something to be defended actively rather than simply declared. When Indonesia’s own defence and foreign ministers sat down with their Australian counterparts in Melbourne this August, the first thing out of Jakarta’s mouth was reassurance: the new treaty, they said, changes nothing about bebas aktif. Canberra’s own language, meanwhile, calls the same treaty a “deeper strategic alignment.” Two governments, one signature, two readings. That gap is not a flaw in the relationship. It is the relationship, working as designed.
Fourth, the institutions are starting to outlast the summits that produced them. A defence dialogue does not need Modi or Albanese or Prabowo in the room to keep meeting. A tariff schedule does not need a joint statement to keep applying. Somewhere between 2024 and now, the India-Indonesia-Australia relationship stopped being a sequence of leader-level photographs and became something closer to furniture. Nobody notices furniture. That is rather the point of it.
If the trend is already running in the right direction, why does it need any help at all?
Because trends that run on their own eventually stop running on their own. Every one of the agreements listed above still needs a domestic parliament, a domestic ratification process, or a domestic budget line to survive contact with its own government. Australia has already ratified its side of the 2024 defence agreement; Indonesia has not finished ratifying its side, eighteen months on. That is not obstruction. It is simply how democracies work, and all three of these countries are, unfashionably, democracies, which move at the speed of their own institutions rather than the speed of their prime ministers’ enthusiasm.
There is also an election calendar to reckon with, in all three capitals, on staggered but overlapping schedules through the rest of this decade. Agreements signed by one government can be quietly starved of budget by the next, not through hostility, but through neglect, which is the more common way policy dies. The next two to three years are the period in which these frameworks either get locked into institutions that survive a change of government, or they do not, and the region reverts to what it has mostly been for the last eighty years: three countries that trade politely and cooperate occasionally, without ever quite becoming partners.
Is that outcome likely? No. Is it impossible? Also no. Nothing about middle-power cooperation is self-executing. It requires someone, in each capital, to keep doing the unglamorous work of ratification hearings and budget lines long after the joint statement has stopped making news.
None of this requires India, Indonesia, and Australia to become allies in the way that word is used in Washington or Beijing. Indonesia will not sign a mutual-defence pact, and nobody serious is asking it to. What it requires is smaller and more achievable: that three governments finish what they have already started, rather than letting good agreements expire quietly in a filing cabinet marked pending.
The three capitals on that line through the Bay of Bengal did not choose their geography. They are choosing, right now, whether to do anything with it. History does not offer many second invitations of this kind. It offers this one, for perhaps three more years, and then it moves on to ask someone else.
A Medical Crisis, Four Fathers, and an Uncomfortable Question
By Aunul Islam
Aunul Islam, read for hisPhD at Imperial College, London.He graduated from the University of Manchester. He is a Quality Assurance Specialist in Higher Education and a Technology Consultant. He is an ex-civil servant of the UK government. A keen gardener, he finds solace through nature in this dysfunctional world order.
Imagine four fathers faced with the same tragedy.
Three belong to different faiths. Their beliefs differ, their prayers are directed in different ways, and their understanding of God is not the same. What they have in common is limited financial means.
The fourth father is an atheist. He is immensely wealthy.
When their children are diagnosed with a life-threatening illness, the three men of faith rely on ordinary hospitals and the treatment available to them. They pray, hope, and trust that their children will recover.
The atheist places his trust in medicine and uses his wealth to secure treatment at one of the world’s leading medical centres.
Months later, the results are stark. The atheist’s child survives. The other three children do not.
The outcome raises a question many would hesitate to ask:
Is money more powerful than God?
The scenario is striking because the three fathers come from different religious traditions. Whatever their theological differences, they face the same practical limitation: they cannot afford the level of care available to the wealthier father. In the end, it is not their faith that distinguishes them from the atheist, but their financial circumstances.
From a purely material perspective, the conclusion appears obvious. Money provided access to better facilities, specialists, technology, and treatment. Wealth translated directly into opportunity. In this instance, money seems to have achieved what faith did not.
The question recalls a theme explored in F. Scott Fitzgerald’s The Great Gatsby. Gatsby believed wealth could overcome every obstacle and secure the future he desired. Fitzgerald never denied the power of money. On the contrary, he showed how dramatically it shapes lives and opens doors. Yet he also questioned whether money alone could provide everything people seek.
The medical scenario presents a more sobering version of that dilemma. Here, wealth does not buy luxury or status; it buys possibility. It increases the odds of survival itself.
For many observers, this is precisely why money can appear almost godlike in modern society. It influences where people live, how they are educated, how they are represented, and, increasingly, the quality of healthcare they receive. While faith may offer comfort and meaning, money often determines access.
None of this proves or disproves the existence of God. It simply highlights a reality that many find uncomfortable: in the world as it exists, financial resources can have a decisive impact on human outcomes.
Perhaps, then, the real question is not whether money is more powerful than God. It is whether modern society has created conditions in which money often exercises a form of power that many once associated with the divine.
As The Great Gatsby suggests, wealth may not answer life’s deepest questions, but for those standing outside the doors it can open, its power can seem almost limitless.
Dr. Satish Chandra Mishra, an economist educated at Oxford and Cambridge with senior past experience at the United Nations (UNDP), OECD, and USAID, is the Founder and Executive Director of Arthashastra Institute, Bali,Indonesia.
In 1981, Guy Abeille, a French budget official, invented a number. President Francois Mitterrand needed something simple to say to ministers demanding money. Abeille opted for three percent of GDP budget deficit as a working hypothesis and an expedient rule of thumb. No model produced it. No theory backs it. It was all the result of an evening’s improvisation.
No one could have predicted the future of such a hurried conjecture. The IMF and World Bank put it on the global map. They stamped that figure into loan conditions and credibility assessments. Soon a rule of thumb hardened into doctrine. Rating agencies and index makers watched it. Investors took their cue from it. A rule invented in a single fireside evening soon took on all the attributes of a new theocracy.
Ironically, it was the very countries, Germany and France, that within six years of putting it into the Maastricht treaty, waived their own penalties in 2003. Brussels suspended the whole framework again for four straight years through the pandemic and the war in Ukraine.
At the same time, economies that actually closed the gap with the rich world never let this ceiling slow them down in the first place. China ran deficits and directed state investment at whatever scale the moment required, for four decades, and grew from poverty to the world’s second-largest economy without pausing to check a number invented in Paris. South Korea’s own developmental state did not industrialize inside that constraint either. India, its own fiscal responsibility law notwithstanding, has repeatedly missed and revised its deficit targets in the pursuit of growth it judged more urgent than the arithmetic.
In the age of discontinuity unfolding before our very eyes today, it is time to understand that slow to moderate growth, and low fiscal deficit, go beyond a prudent policy choice in the world today. On the contrary, giving up on accelerated growth is the hidden danger of our own imagining and lack of national confidence.
The reasons are very familiar. We live in an age of AI, trillion dollar oligarchies and the end of a unipolar world: something humankind has never witnessed before.
In this fast evolving world, India and Indonesia together have an undeniable claim to form Asia’s second pole to China’s own rise. That claim rests on history, strategic location and economic weight: not on how faithfully either has adhered to a 3 percent budget deficit ceiling.
The 3 percent ceiling also ignores strategic emergencies. Consider defense. Indonesia has spent roughly 0.8 percent of GDP on its military for a decade, the lowest ratio in Southeast Asia, well behind Malaysia and Thailand, a fraction of Singapore’s. A nation with the largest archipelago on earth, contested waters on more than one border, and ambitions to sit at the top table of a multipolar Asia cannot get there on a budget this thin. In similar circumstances most governments would simply choose to ignore the 3 percent rule.
Nor is Indonesia in a weak position to do so. Against the world’s fifty largest economies, its deficit sits somewhere in the middle, not the end. Its public debt, near 41 percent of GDP, is much lower than the average 69 percent for the group.
Indonesia has a population still young while much of the world ages, a democracy that has produced five peaceful transfers of power since 1999, and an excellent fiscal position despite its low tax to GDP ratio. It has earned the right to be more ambitious; to stand up and be counted on the global stage.
But the growth that history demands today cannot only be high. It has also to be inclusive, or it will not hold the country together long enough to matter. A nation spread across thousands of islands and hundreds of ethnic communities does not stay unified on GDP growth alone; it stays unified when growth reaches Ambon as well as Jakarta.
Nation-building and high growth are not two separate projects competing for the same rupiah. They are the same project.
This is generational work, sustained across a change of government and a change of decade the way China’s and Korea’s own commitments were, not one finance minister’s project.
A rule invented in one evening in Paris, enforced ever since by institutions that have never themselves obeyed it, ignored outright by every economy that actually grew enough to matter, was not founded on the dry logic of economic reasoning. It was based on an inherited faith that defies both logic and the needs of the day.
In fact, Abeille’s 3 percent rule was never meant to answer any serious question at all. It was a guess, a hunch, a convenience of the moment that founded an economic theocracy.
Faith and investor confidence worked when the world stood still long enough to turn hunch into prejudice. That is not the case now.
Indonesia does not merely need a different figure to replace 3 percent. It needs to face the emerging global future with logic and reason rather than inherited faith. It is time for an open, rational debate about what kind of fiscal rule actually serves a country ready to stand inside Asia’s second pole, and to breach the technological frontier.
In 1981, Guy Abeille, a French budget official, invented a number. President Francois Mitterrand needed something simple to say to ministers demanding money. Abeille opted for three percent of GDP budget deficit as a working hypothesis and an expedient rule of thumb. No model produced it. No theory backs it. It was all the result of an evening’s improvisation.
No one could have predicted the future of such a hurried conjecture. The IMF and World Bank put it on the global map. They stamped that figure into loan conditions and credibility assessments. Soon a rule of thumb hardened into doctrine. Rating agencies and index makers watched it. Investors took their cue from it. A rule invented in a single fireside evening soon took on all the attributes of a new theocracy.
Ironically, it was the very countries, Germany and France, that within six years of putting it into the Maastricht treaty, waived their own penalties in 2003. Brussels suspended the whole framework again for four straight years through the pandemic and the war in Ukraine.
At the same time, economies that actually closed the gap with the rich world never let this ceiling slow them down in the first place. China ran deficits and directed state investment at whatever scale the moment required, for four decades, and grew from poverty to the world’s second-largest economy without pausing to check a number invented in Paris. South Korea’s own developmental state did not industrialize inside that constraint either. India, its own fiscal responsibility law notwithstanding, has repeatedly missed and revised its deficit targets in the pursuit of growth it judged more urgent than the arithmetic.
In the age of discontinuity unfolding before our very eyes today, it is time to understand that slow to moderate growth, and low fiscal deficit, go beyond a prudent policy choice in the world today. On the contrary, giving up on accelerated growth is the hidden danger of our own imagining and lack of national confidence.
The reasons are very familiar. We live in an age of AI, trillion-dollar oligarchies and the end of a unipolar world: something humankind has never witnessed before.
In this fast evolving world, India and Indonesia together have an undeniable claim to form Asia’s second pole to China’s own rise. That claim rests on history, strategic location and economic weight: not on how faithfully either has adhered to a 3 percent budget deficit ceiling.
The 3 percent ceiling also ignores strategic emergencies. Consider defense. Indonesia has spent roughly 0.8 percent of GDP on its military for a decade, the lowest ratio in Southeast Asia, well behind Malaysia and Thailand, a fraction of Singapore’s. A nation with the largest archipelago on earth, contested waters on more than one border, and ambitions to sit at the top table of a multipolar Asia cannot get there on a budget this thin. In similar circumstances most governments would simply choose to ignore the 3 percent rule.
Nor is Indonesia in a weak position to do so. Against the world’s fifty largest economies, its deficit sits somewhere in the middle, not the end. Its public debt, near 41 percent of GDP, is much lower than the average 69 percent for the group.
Indonesia has a population still young while much of the world ages, a democracy that has produced five peaceful transfers of power since 1999, and an excellent fiscal position despite its low tax to GDP ratio. It has earned the right to be more ambitious; to stand up and be counted on the global stage.
But the growth that history demands today cannot only be high. It has also to be inclusive, or it will not hold the country together long enough to matter. A nation spread across thousands of islands and hundreds of ethnic communities does not stay unified on GDP growth alone; it stays unified when growth reaches Ambon as well as Jakarta.
Nation-building and high growth are not two separate projects competing for the same rupiah. They are the same project.
This is generational work, sustained across a change of government and a change of decade the way China’s and Korea’s own commitments were, not one finance minister’s project.
A rule invented in one evening in Paris, enforced ever since by institutions that have never themselves obeyed it, ignored outright by every economy that actually grew enough to matter, was not founded on the dry logic of economic reasoning. It was based on an inherited faith that defies both logic and the needs of the day.
In fact, Abeille’s 3 percent rule was never meant to answer any serious question at all. It was a guess, a hunch, a convenience of the moment that founded an economic theocracy.
Faith and investor confidence worked when the world stood still long enough to turn hunch into prejudice. That is not the case now.
Indonesia does not merely need a different figure to replace 3 percent. It needs to face the emerging global future with logic and reason rather than inherited faith. It is time for an open, rational debate about what kind of fiscal rule serves a country ready to stand inside Asia’s second pole and to breach the technological frontier.
Dr. Satish Chandra Mishra, an economist educated at Oxford and Cambridge with senior past experience at the United Nations (UNDP), OECD, and USAID, is the Founder and Executive Director of Arthashastra Institute, Bali,Indonesia.
A Glass More Than Half Full
Indonesia’s story is one of the more remarkable transitions of our era. Within a single generation, the country has built the world’s third-largest democracy, reduced poverty from roughly a quarter of the population during the 1997–1999 Krismon crisis to 8.25 percent by September 2025, and decentralised political power to more than 500 popularly elected regional governments. Unemployment ended 2025 below 4.8 percent. Government debt stands at approximately 40 percent of GDP. Inflation ended 2025 below 3 percent. GDP growth has averaged close to 5 percent per annum for two decades, the 2020 pandemic contraction aside, and reached 5.11 percent in 2025. By any serious comparative standard, these are impressive fundamentals. But such credentials were not enough to save Indonesia from a concerted attack from the heavy hitters of the investment rating agencies and global index providers. II. The Engineered Shock In a six-week window between late January and early March 2026, Indonesia experienced one of its most severe episodes of capital market instability in recent memory. The sequence merits scrutiny. On 22 January, President Prabowo delivered a well-received address at Davos, outlining Indonesia’s investment ambitions and the Danantara architecture. Five days later, MSCI froze index changes for Indonesian stocks and warned that it could reclassify Indonesia from Emerging Market to Frontier Market status, a demotion that would oblige emerging-market index funds to sell Indonesian equities. The next day the Jakarta Composite Index (JCI) fell more than 8 percent intraday, triggering a mandatory trading halt; a second halt followed the day after, and approximately USD 80 billion in market capitalisation was erased over the two sessions. On 5 February, Moody’s revised Indonesia’s sovereign outlook to negative. Fitch followed in early March with a negative outlook. The reasons offered ranged across market shallowness, governance anxieties over the dismissal of Finance Minister Sri Mulyani, concerns about Danantara’s management, and ancillary grievances including cabinet size and the school meals programme. The timing invites scrutiny. Whether by design or by the constrained logic of global financial markets reacting simultaneously to the same inputs, the effect was a sharp public rebuke at the precise moment Indonesia was projecting confidence and soliciting capital. III.
The Credibility Problem
Any serious assessment of January 2026 must be set against the agencies’ wider record. That record is, to put it plainly, poor. The 1997–1998 Asian financial crisis is the most conspicuous example. Having failed entirely to anticipate the crisis, the major agencies then downgraded the affected economies more aggressively than the deterioration of their fundamentals warranted, amplifying panic rather than providing analytical ballast. Enron and Parmalat both carried investment-grade ratings until days before their collapses. The 2008 global financial crisis confirmed what the Asian crisis had suggested: the agencies systematically misrated vast quantities of subprime mortgage-backed securities, a finding the US Financial Crisis Inquiry Commission described as central to the financial meltdown. The conflict of interest embedded in the ‘issuer pays’ model had not been reformed — merely obscured. The structural bias toward procyclicality and herd behaviour visible in those failures is present in the January 2026 Indonesian episode. The question is not whether Indonesia has genuine structural challenges. It does. The question is whether the agencies’ interventions reflected a rigorous assessment calibrated to Indonesia’s specific historical and institutional context. The evidence suggests they did not.
The MSCI Question
A central irony of the MSCI intervention is that the structural characteristics it cited — market shallowness, concentrated ownership, limited free float — have been comprehensively documented for decades. A landmark 1999 World Bank study established that fifteen Indonesian family groups controlled 61.7 percent of total stock market capitalisation, and the single largest family group alone accounted for 16.6 percent. This architecture has been known to any serious analyst for more than twenty-five years. If the concerns were genuine and longstanding, why were they escalated into a market-destabilising public threat within days of the President’s Davos appearance, rather than addressed through the constructive regulatory engagement MSCI ordinarily employs? Indonesia’s Financial Services Authority (OJK) is aware of the free-float and transparency deficits and has set out reform targets in its Capital Market Development Roadmap. Meaningful reform of entrenched corporate ownership structures takes years, not months. A credible analytical institution would acknowledge this reality. Threatening destabilising reclassification on a politically compressed timetable serves no remedial purpose.
Indonesia Is Not Greece, and It Is Not Argentina
The spectre implicit in the agencies’ interventions is sovereign default or fiscal crisis. This possibility deserves to be examined honestly, and honestly it deserves to be rejected. Indonesia has serviced its debts in full since the rescheduling that followed the 1997–1998 crisis. Its debt-to-GDP ratio of approximately 40 percent is well within any sustainable analytical range and is far lower than that of many developed economies carrying AA or AAA ratings. Its banking sector, reformed after the catastrophic failures of 1997–1998, holds capital well above regulatory minimums. Greece’s crisis arose from fiscal excess within a monetary union that removed the exchange rate mechanism, compounded by deliberate financial engineering to obscure public finances. Argentina’s recurrent crises reflect a specific history of monetary instability and creditor disputes that bears no structural resemblance to Indonesia’s situation. Drawing implicit analogies between Indonesia and these cases through rating outlooks and index signals is not responsible analysis. Rating agencies are well-suited to assess debt default probabilities in economies with stable institutional trajectories. They are structurally ill-equipped to evaluate the political economy of systemic transformation — which is precisely what Indonesia is navigating.
Toward an Honest Dialogue Among Equals
The January 2026 shock bears the hallmarks of an intervention whose timing and framing served purposes beyond objective credit analysis. What is clear is that the effect was a significant economic penalty administered at a moment of political transition — and that the analytical justifications do not withstand serious scrutiny. Indonesia, for its part, has genuine reform obligations. Greater stock market transparency, improved free-float ratios, a clearer governance and enterprise plan for Danantara, and a persuasive medium-term fiscal framework are all within reach. These reforms should be pursued not to placate foreign rating agencies, but because well governed institutions serve Indonesia’s own citizens first. The rating agencies retain a legitimate function. Reliable, impartial sovereign assessment channels capital toward creditworthy borrowers and signals genuine fiscal mismanagement. These functions matter. But they depend on credibility the agencies have repeatedly squandered — through the Asian crisis, the corporate rating scandals of the early 2000s, and the catastrophic misratings of 2008. What credibility remains rests on market convention, not demonstrated accuracy. What is required is an honest dialogue between Indonesia and the institutions that judge it — conducted between equals rather than between examiner and examinee, and one that takes a quarter-century of demonstrated institutional resilience seriously rather than treating each governance challenge as though it occurred in an institutional vacuum. The agencies aspire to teach. Perhaps, in the process, they will learn. That would be the first step toward the trust that both sides currently lack — and that both sides genuinely need.
