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JUST after 5:30pm on September 28th, a three-metre-high tsunami struck Palu and Donggala, two cities on Sulawesi, an island in the east of Indonesia. It had been triggered by a 7.4-magnitude earthquake out at sea 30 minutes earlier. The wave was devastating. Bridges were smashed, homes toppled and cars swept away. An eight-storey hotel, with around 60 guests, was reduced to rubble. Many people have been left without shelter or electricity. Television footage showed looters stealing food from a shop. The current death toll stands at 832; many others have been injured. The fate of thousands more is unknown.
Such disasters are not unusual in Indonesia. The archipelago stretches along the Pacific Ocean’s “ring of fire”, which has around 130 active volcanoes. Earthquakes and tsunamis are common. Since 2017, 197 earthquakes of magnitude 6 or more have taken place across the world; 18 were in Indonesia. In 2004 a tsunami flattened huge parts of Aceh and Nias, killing over 100,000 people. It is the country with the second-highest risk of tsunamis, after Japan, according to an index compiled by the European Commission.
Yet the death toll this time is particularly high. That is partly because Central Sulawesi, the province which was struck, is among the poorest in Indonesia. And unlike in much of the country, the number of people who are poor has not fallen in the past few years. Wages lag behind the national average. Infrastructure is ropey; potholed roads are common.
And a mistake by officials at the BNPB, the national disaster-relief organisation, could have made matters worse. They issued a tsunami warning soon after the earthquake struck—only to revoke it 30 minutes later. Critics say this caused confusion, and is why hundreds of festival-goers failed to evacuate a beach at Palu. BNPB officials say the tsunami struck while the warning was still in effect.
Either way, this has already been Indonesia’s deadliest year for natural disasters since 2010. An earthquake in Lombok, a tourist island near Bali, in August already killed more than 500.
The actual death toll is likely to be higher. Search-and-rescue efforts have not managed to make contact with many small towns and villages that were in the path of the tsunami. That is because roads have been blocked and power outages have cut lines of communication. Jusuf Kalla, the vice-president, who is from Sulawesi, has warned that casualties could run into the thousands. That would make this the one of the worst natural disasters since the tsunami in Aceh.
And the experience in Lombok is not promising. Aftershocks meant that the island was shaken by three big quakes over the course of ten days. More recently health officials have declared a state of emergency following an outbreak of malaria. Many families have refused to sleep indoors and camped in tents, making them more vulnerable to mosquitoes. More misery may be on its way for the people of Sulawesi.
“I BOUGHT an island” is the simple answer given by Thaksin Shinawatra, former prime minister of Thailand, as to how he became a citizen of Montenegro. Deposed in a coup in 2006, Mr Thaksin was stripped of his Thai passport. Hence his need for another one. At one point he seemed to be collecting them. A colleague once claimed he had six. His Nicaraguan one, he says, has lapsed.
If “home”, as Robert Frost, an American poet, put it, is where, when you have to go there, they have to take you in, Mr Thaksin is one of many to find that the home he inherited at birth is not enough. The number of “investment migrants” is growing. Thousands of passports are bought and sold every year, almost always by the wealthy. The number of commercially acquired residence permits runs into the hundreds of thousands. A burgeoning “CRBI” industry (citizenship and residence by investment)—of consultants, lawyers, bankers, accountants and estate agents—is busy advising well-heeled investors, chafing at the constraints of their paltry single citizenship, on how and where they can acquire another, or at least a long-term resident’s visa.
The industry, however, is under a cloud. It is suspected of commercialising and trifling with rights and privileges that patriots regard as sacred; and of making life easier for crooks and terrorists. For the European Union in particular, the issue is delicate. It touches on one of the most “national” of competences—who lives in a country and bears its passport—yet has Union-wide consequences. An EU-member-country’s passport is also an EU passport; a “Schengen” visa grants access to 22 EU members and four other countries.
Citizenship as commodity
To meet the demand for long-term visas and passports, more and more countries are flaunting their attractions. About 100 offer a “residence by investment” programme. Over a dozen offer citizenship—including five Caribbean island-states, Vanuatu, Jordan and, within the EU, Austria, Cyprus and Malta. The latest entrants to this market are Moldova, which in July signed a contract with a consortium that will design its citizenship-by-investment scheme, and Montenegro itself, which in the same month announced it would in October launch its own formal programme. The modern business tends not to mention one of its pioneers, the Kingdom of Tonga in the South Pacific, which in 1983 began selling passports for a few thousand dollars with few questions asked. Today the CRBI business traces its ancestry to a law passed in 1984 in tiny St Kitts and Nevis, offering citizenship to foreigners who made a “substantial” investment. Today its population is about 50,000. Half as many outside the country hold passports.
Even more important to the industry’s scale, in 1986 Canada introduced a residence-by-investment programme. It proved a magnet for Hong Kongers nervous at the impending handover to China in 1997. Canada withdrew its federal scheme in 2014, but, at the provincial level, Quebec continues to offer one. These days, mainland China remains the main market for most schemes.
Other countries followed Canada, including, in 1990, America, which introduced EB-5 visas, requiring investment of at least $1m, or at least $500,000 if into a “targeted” area of high unemployment. The total size of the CRBI business is unknown. The Investment Migration Council (IMC), a lobby group, estimates that 5,000 people a year acquire a citizenship this way, investing some $3bn. Far higher numbers are tied up in the “residence” business. America alone, for example, issues about 10,000 EB-5 visas each year. Henley and Partners, a CRBI consultancy that advises both governments (including Malta and Moldova) and migrants, says it has facilitated more than $7bn in foreign direct investment.
Businesses which took part in the IMC’s annual get-together in Geneva in June reported buoyant demand. But, of the two most popular destinations, Canada’s federal programme is closed, and America’s EB-5 scheme has a waiting list for Chinese applicants estimated at 18 years. Demand is rising in countries such as Brazil, India, Russia and Vietnam. Chad Richard Ellsworth of Fragomen, a New York law firm specialising in immigration, believes that the investment route is becoming more popular, because of the “restrictionist environment” affecting other ways of securing residence abroad, such as asylum and work visas.
That environment, however, also colours views of investment migration. At a time when immigration is controversial, the idea that residence rights and even citizenship can be acquired for cash strikes many as unsavoury. The numbers involved are trivial compared with total migration flows. In 2016, for example, 863,000 non-EU citizens were granted EU citizenship; every year America naturalises 700,000-750,000. But investment migrants embody the freedoms available to the winners from globalisation. So they are an obvious target of the backlash against it: the kind of people that Theresa May, Britain’s prime minister, once dismissed as “citizens of nowhere”.
Shopping for this year’s passport
The fact that some of the passport-queue-jumpers are crooks makes the business even more unpopular. “Allowing cheats and criminals to buy residency is a scandal,” harrumphed a column in the Times of London in June. Nowhere now is as lax as Tonga once was, but the suspicion lingers that this is a business where money helps dodgy people cut corners. Low Taek Jho (“Jho Low”), a Malaysian-born financier wanted in connection with the looting of 1MDB, a Malaysian state investment fund, is now a citizen of St Kitts. Mehul Choksi, an Indian billionaire wanted in connection with a $2bn fraud at Punjab National Bank, moved in January to Antigua and Barbuda, where he has been a proud citizen since last year.
EU-member schemes have also been controversial. In 2014 the European Parliament passed a (non-binding) resolution that EU citizenship should not have a “price tag”. Malta’s scheme has attracted the most scrutiny. The assassination in a car-bombing last year of Daphne Caruana Galizia, a campaigning journalist, drew attention to her multifarious allegations of government corruption. Of the many legal actions (including 47 libel suits) she faced at the time of her death, one was a letter from lawyers for Henley and Partners, architects of the citizenship programme.
Both the EU and the OECD, a club of rich countries, are looking leerily at CRBI schemes. Later this year, the European Commission, the EU’s executive, is to publish a report on those offered by EU members. The industry fears the worst. In August Vera Jourova, the justice commissioner, told Die Welt, a German daily, that the Commission was “extremely concerned”. “We don’t want any Trojan horses in the EU,” she said.
The EU also takes a dim view of other countries that use visa-free access to the EU as an inducement to investment migrants. It has yet to punish any country with the most obvious sanction—withdrawing visa-free access, as Canada has done with St Kitts, Antigua and Barbuda and others. But the EU is introducing online travel-authorisation requirements even for foreigners who do not need visas.
Meanwhile, the OECD is concerned that these schemes can be used to circumvent its efforts to crack down on tax evasion and money-laundering. It argues, for example, that a tax evader can dodge reporting rules by taking citizenship or residency in a second country and opening a bank account in a third, claiming tax residence in the second, without mentioning any connection with the home country. Early this year it conducted a public consultation on what to do about CRBI schemes. The next article describes one such arrangement, in the United Arab Emirates.
Speaking on the margins of the IMC’s annual forum, Christian Kälin, Henley’s chairman, plausibly argued that the industry saw regulation as both inevitable and welcome. Indeed, the forum itself seemed designed to burnish its credentials as respectable—even virtuous.
This claim rests on a three-pronged argument. The first points to the economic benefits to the countries running CRBI programmes. As Henley’s Paddy Blewer puts it, they are boons to “small countries with limited industrial capacity looking to kick-start their economies”. Not only do they attract investment directly, they bring in rich people who may well invest more and, more generally, put the country on the global map of the wealthy.
An often-cited example is Dominica, devastated in late 2017 by Hurricane Maria, following the havoc wrought by Tropical Storm Erika two years earlier. The IMF calculates CRBI income in the country at 10% of GDP and 16% of government revenue. Without it, recovery would have been even harder. Another avowed success story is Malta, where the investment-migration industry claims some of the credit for strong recent economic performance. Its Henley-designed scheme is closest to a simple passport-for-sale model, requiring a one-off non-refundable “contribution” of €650,000 ($765,000).
Requiring investment is a more uncertain way of raising money—it can be taken out, after all. And even Mr Thaksin, for example, says he has “not had the time” to develop his Montenegrin island. But pure sales schemes are politically unpalatable, even in Malta, where other requirements were added—to buy or rent property, for example, and invest €150,000 in approved shares or bonds. Mr Kälin says part of Henley’s expertise lies in calibrating the sums involved: “Set it too high, and you only get shady oligarchs.” (Like Cyprus, Malta appeals to Russians.)
The second argument is the benefit to the migrants themselves, portrayed as those Bruno L’écuyer, chief executive of the IMC, calls “unlucky in the passport lottery of life”. Many CRBI customers simply want the ease of movement some passports offer. Of those actually moving country, many have legitimate reasons to want residency elsewhere—fear of political persecution, for example, or simply wanting to send their children to better schools abroad. Both of these are common motives in the biggest market, China. The industry presents itself as defending liberalism and globalisation at a time when they are under threat.
The third strand of the argument covers those who want passports or residency rights for less pure motives: to dodge taxes or the police, to launder ill-gotten money or, at worst, to engage in terrorism. To counter the perception that these are the clients countries are seeking, the main topic at the Geneva forum was how to weed such applicants out. Delegates spoke of due diligence, “know your customer” and other checks. Jonathan Cardona, the director of Malta’s programme, says it has approved more than 900 passports in four years, but rejected 22% of applicants, mainly because of a “lack of clarity” about the source of their wealth. That is a high percentage, suggesting that the bar set for applicants is high, or that they include a large number of the shady; or both.
Clearly, it is not in the interests of the industry to be seen as an accessory after the fact to illegal activity. So there is little reason to doubt that the respectable end of it is serious about its due-diligence procedures—up to a point. Only about half the countries in the world allow their citizens to hold dual nationality. China is not one; and it has strict exchange-control rules. It seems unlikely that all Chinese investment migrants have alerted the authorities to their plans, or gained permission to take the money out.
So due diligence seems to cover only some countries’ rules. If and when more regulation comes, this distinction will be hard to codify. But as ever more countries jump on to the CRBI bandwagon, competition will intensify. Moldova, for example, says one of its advisers is likely to try to win customers by setting the investment-price lower, and offering speedier processing. The question of how to keep out the undesirable will become more urgent.
ON JUNE 29th 1918 Martín Salazar, Spain’s inspector-general of health, stood up in front of the Royal Academy of Medicine in Madrid. He declared, not without embarrassment, that the disease which was ravaging his country was to be found nowhere else in Europe.
In fact, that was not true. The illness in question, influenza, had been sowing misery in France and Britain for weeks, and in America for longer, but Salazar did not know this because the governments of those countries, a group then at war with Germany and its allies, had made strenuous efforts to suppress such potentially morale-damaging news. Spain, by contrast, was neutral, and the press had freely reported on the epidemic since the first cases had appeared in the capital in May. Before the summer was out, the disease Spaniards knew as the “Naples Soldier”—after a tune from a popular operetta—had been dubbed the “Spanish illness” abroad, and that, somewhat unfairly, was the name which stuck.
Spanish flu was probably the worst catastrophe of the 20th century. The current estimate is that it killed at least 50m people and perhaps as many as 100m. At minimum, therefore, it ended the lives of three times as many as died in the first world war (in the region of 17m). It was probably also more lethal than the second world war (60m), and may well have outstripped the effects of both wars put together. The death toll was so high partly because Spanish flu was truly pandemic (some 500m people, more than a quarter of those then alive, are believed to have been infected), and partly because of its high mortality rate (5-10%, compared with 0.1% for subsequent influenza epidemics).
Understanding what happened is therefore important. Two questions in particular need answering. One is: what made this outbreak of influenza so much more lethal than both previous and subsequent ones? The other is: given that knowledge, what defences need to be put in place to nip any similar outbreak in the bud?
Origin of a species
The first cases of the 1918 flu to be recorded officially as such were at Camp Funston, a military base in Kansas, on March 4th 1918. That morning, Albert Gitchell, a mess cook, reported sick. By lunchtime the camp infirmary was dealing with dozens of similar incidents. The highly contagious nature of the Camp Funston outbreak suggests, however, that Gitchell was not the real “patient zero”. An emerging flu strain tends not to infect people very well at first. Researchers hunting for the individual Gitchell caught it from have therefore scoured records for an earlier, more localised outbreak of respiratory disease that quickly petered out.
At the moment, there are three theories as to where the 1918 flu first manifested itself. John Oxford, a British virologist, has long argued that it was in a British army camp at Étaples on the northern French coast, not far from the Western Front. Here, an outbreak of “purulent bronchitis”, characterised by a dusky blue hue to the face, was reported as early as 1916. Such blue faces were also characteristic of fatal cases of Spanish flu.
In 2004 John Barry, an American journalist, put forward a rival theory. He claimed that a small but severe outbreak of flu-like disease in Haskell County, Kansas, in January 1918, could have seeded the later one at Camp Funston. The camp’s catchment area for recruits included Haskell.
In 2013 a third hypothesis joined these two—or rather was revived, since it was fleetingly popular in the years immediately following the pandemic. According to Mark Humphries, a historian at Wilfred Laurier University in Waterloo, Ontario, the 1918 flu began in Shanxi province, China, where an epidemic of severe respiratory disease in December 1917 had doctors squabbling over its identity. Some thought it was pneumonic plague, a respiratory variant of bubonic plague to which China was distressingly prone. Others suspected a form of influenza.
Since they could not agree, and since it was also difficult to explain how the flu might have travelled from that remote and poorly connected region to the rest of the world, the theory fell by the wayside. Dr Humphries gave it new life when he pointed out that China, though neutral in the war until 1917, nevertheless played a role earlier than this date by providing Allied forces with a body of workers—the Chinese Labour Corps—who were recruited from provinces, including Shanxi, and shipped via Canada to Europe.
Dr Humphries’s hypothesis is weakened by work published the year following his proposal, by Michael Worobey, an evolutionary anthropologist at the University of Arizona, Tucson. Dr Worobey suggests that the 1918 human flu virus was genetically related to a virus circulating in North American birds at the time. The truth, though, is unlikely to be known unless and until a comparison can be made between the genetic sequence of the 1918 virus (which was determined in 2005, by Jeffery Taubenberger and Ann Reid of the Armed Forces Institute of Pathology in Washington, DC) and the sequences of each of the putative ancestors, of which, at the moment, no known samples exist.
The Blue Death
Whatever its origin, once Spanish flu got going it spread rapidly. It traversed the world in three waves, of which the second—that of the northern-hemisphere autumn of 1918—was the most severe. For that reason, the autumn of 2018 is marked by many as the epidemic’s centenary.
That second wave was preceded by a milder one in the spring of 1918 and succeeded by a final wave, intermediate in severity between the other two, in the early months of 1919. The disease lingered on, though, until at least March 1920, with cases being reported that month in Peru and Japan. Indeed, Dennis Shanks, an epidemiologist at the Australian Army Malaria Institute, in Queensland, recently reported that the epidemic continued on some Pacific islands for another year, with cases still being reported in New Caledonia as late as July 1921.
In the mind of Paul Ewald, an evolutionary biologist at the University of Louisville, in Kentucky, the 1918 virus’s global reach and its particular virulence were shaped by a common factor. Both were a consequence of the trench warfare of the Western Front.
Its virulence, in Dr Ewald’s view, was a result of the abnormal evolutionary environment that the trenches provided. Normally, natural selection causes a virus that is transmitted directly from host to host to moderate its virulence. The longer the host stays alive, the more new hosts that initial victim is likely to come into contact with. Less virulent strains are thus favoured, and so spread. Observation shows that such drops in virulence do, indeed, happen in most influenza epidemics.
Dr Ewald, however, suggests that the war forced the 1918 virus down a different evolutionary path. The large numbers of young men packed into trenches in eastern France for days or weeks on end were, first of all, living cheek by jowl, making contagion easy, and, second, quite likely to die of causes other than influenza before they could pass it on. In these circumstances the strategy favoured by selection would be to breed rapidly in a new host’s body, shedding lots of virus particles as this happens, even if that risks killing a host—for the host may soon be unavailable anyway.
Historians confirm that the virus did indeed race through the trenches, killing as it went. Those soldiers who survived then took it home with them when they went on leave. This process was exacerbated by the demobilisation which followed the armistice of November 1918 that ended the fighting, with American, Australian, Canadian and New Zealand troops returning home, and also soldiers from the European combatants’ colonies in Africa and Asia.
Most of those who fell ill from Spanish flu experienced nothing more than the symptoms of ordinary flu—a sore throat, fever and a headache. The unlucky, however, began to have difficulty breathing. Their faces took on a mahogany hue and they bled from their noses and mouths. Mahogany deepened to blue, an effect doctors dubbed “heliotrope cyanosis”, and before long their entire bodies turned black.
The actual cause of death in most cases was pneumonia brought on by opportunistic bacteria. This made diagnosis complicated—for in 1918 the concept of a “virus” was a newish one. Most of the world’s doctors therefore thought they were dealing with a bacterial infection. The 1918 influenza thus appears in historical records under a kaleidoscope of labels ranging from the common cold to pneumonic plague. That is one reason why estimating the death toll accurately is hard.
At the molecular level, the explanation for the virulence of the Spanish flu remains unknown. But there are clues. Shortly after Dr Taubenberger and Dr Reid had worked out its genetic sequence, a group led by Terrence Tumpey, a virologist at the Centres for Disease Control and Prevention in Atlanta, Georgia, reconstructed the virus by feeding its genes to cultured human kidney cells in a dish, and forcing them to churn out viral particles in the way that human lung cells do during the normal process of infection. This reconstructed virus is now being studied at high-security biocontainment facilities in America.
One promising line of inquiry is the 1918 strain’s version of haemagglutinin, a surface protein that helps the virus break into a target cell (see article). When this is swapped into a strain of virus normally almost harmless to mice, it makes that strain deadly.
Such work is controversial. Some critics point to possible military applications. Those working in the area, such as Dr Tumpey, prefer to emphasise its potential help to the job of creating better flu vaccines.
The glittering prize of such work would be a universal vaccine—something that protects recipients against all possible versions of the virus. One approach to creating such a vaccine exploits the observation that, although the convoluted head of the haemagglutinin molecule (which is the target of most existing vaccines), is highly variable in its composition, the stem that anchors it to the rest of the virus is not. A vaccine aimed at the stem might thus be universally effective.
Vaccines which employ this principle are already in clinical trials. But even if they do work, they might not be as universal as their supporters hope. Sceptics point to a phenomenon called imprinting, that might cause a “universal” vaccine’s efficacy to vary between individuals who have had different histories of exposure to flu.
Imprinting is the name given to the observation that an immune system mounts its most effective response to the first flu strain it ever encounters. A memory of this first response is retained by the system and subsequent responses are therefore likely to be poor matches for new and different strains, whether caught from someone else or introduced by inoculation as vaccines. To the extent that haemagglutinin’s molecular stems really are the same in different strains, the effects of imprinting should be diminished. But they may not be abolished entirely.
Imprinting probably shaped the 1918 pandemic. One of its surprises was that people in their twenties and thirties were particularly vulnerable, while the elderly—normally a high-risk group for flu—were actually more likely to survive than they had been in flu seasons throughout the previous decade. The first flu virus that most of those who were young adults in 1918 were exposed to as children was the one that caused the pandemic of the 1890s. This belonged to viral subtype H3N8 (subtypes are named after particular versions of haemagglutinin and a second surface protein, neuraminidase, that they contain), and was thus a different beast from the H1N1 strain with which they were confronted in 1918, so imprinting would have harmed their response.
By contrast, there is evidence that those who were elderly in 1918 had often been exposed when young to viruses circulating earlier in the 19th century which contained H1 or N1. In their cases, imprinting would have helped their resistance mechanisms.
Understanding imprinting could assist efforts to predict who will come off worst in a future pandemic, and to build a better universal vaccine. The imprinting story is unlikely to be simple, though. For example, there seems to be cross-reactivity between some subtypes of influenza, meaning that exposure to one offers protection against another. America’s National Institute of Allergy and Infectious Diseases is planning a large study of imprinting in infants, to explore these effects.
The better vaccines promised by this sort of research are one arm of an effective response to a new pandemic. The other is early detection. The world has, thankfully, moved on from the point where a high-ranking health official can stand up four months into a flu pandemic and be ignorant of the situation in countries beyond his own. But the ability of a virus to spread around the world has increased hugely.
Troops demobilised after the first world war went home by railway and ship. Now, passenger airliners mean that a virus in one part of the planet could cross to that place’s antipodes in a day. Moreover, though humanity at large is not as crowded together as were the troops in the trenches, the world’s population has quadrupled since 1918. About half of it now lives in cities, with a proximity between neighbours unknown to the far more rural world of a century ago. Monitoring systems are much better than they were in 1918, so the chances are that a threatening influenza outbreak would be picked up quickly. But the conditions needed for a pandemic to happen do exist. As with liberty, so with health: the price of retaining it is eternal vigilance.
AVIATION geeks have few more enjoyable hobbies than speculating which airlines will merge next. But last week brought news of one potential deal worth taking seriously. On September 20th Bloomberg, a news service, reported that Emirates of Dubai is looking into taking over Etihad Airways, the flag carrier of neighbouring Abu Dhabi, a merger which would create the world’s largest airline group (see chart). Both carriers denied that talks were under way, but some sort of tie-up may nonetheless be on the cards.
The two have plenty in common. Both have “super-connector” business models, whereby they connect passengers on flights to and from other cities via their hubs in Abu Dhabi and Dubai, which are only 130km apart. They fight over much the same market. Etihad competes directly on the same routes as Emirates on 96% of its capacity, reckons OAG, a data firm.
In other respects the differences are stark. Etihad’s financial woes explain the motive behind a deal. In 2003 Abu Dhabi started trying to copy Emirates, which had grown from a minnow in the 1980s into the world’s biggest airline (by international passenger-miles) by luring flyers away from other full-service airlines in Europe and Asia. Abu Dhabi set up its own flag carrier, and to gain scale, spent billions buying stakes in other airlines to funnel traffic through its hub.
The strategy imploded last year with the bankruptcies of two of its investments, Air Berlin and Alitalia, resulting in losses for Etihad of $1.95bn in 2016 and $1.52bn in 2017. Fitch, a credit-ratings agency, predicts that the airline will remain in the red until at least 2022. That has made the UAE’s government, which is dominated by Abu Dhabi and Dubai, keen on a tie-up. Aviation accounts for 15% of GDP, and is seen as a good source of jobs for local Emiratis.
For Emirates, a deal could eliminate a competitor and increase its economies of scale. But the airline is cautious, says Saj Ahmad of StrategicAero Research, a consultancy. It is nervous that taking on Etihad’s liabilities, which include over 160 plane orders worth tens of billions of dollars, will wreck its profits.
Politics might get in the way of any savings to be gleaned from a deal. Abu Dhabi’s ruling Al Nahyan family, which used its oil wealth to bail out Dubai in 2009, would not want to lose face, which would probably mean keeping two hubs and brands in both Abu Dhabi and Dubai, forgoing the potential efficiency savings from moving to a single hub airport.
What is likeliest is a merger of operations only, just as Emirates is already doing with flydubai, a low-cost carrier also owned by the Dubai government. This would enable Emirates to reap the benefits of a deal without Etihad’s liabilities. The two have already started to co-operate along these lines, notes Mark Martin, a consultant based in Dubai. In January the two began to work together on aviation security and in June they struck a deal on sharing pilots.
For international passengers flying via the Middle East to and from other places, such a tie-up would be no loss. The Europe-to-Asia market would remain highly competitive. But for local Emiratis flying in and out of the UAE, having all the country’s airlines on one team would restrict competition. Since the UAE’s antitrust watchdogs are under the thumb of the governments that own the airlines, they will get no say in the matter.