IBS

EPA

A DECADE or so ago, thinkers and pundits were fond of discussing the emerging threat of cyber attacks as a matter of international affairs. The growing reliance of advanced economies on the internet, and the increasing use of the internet by governments and armies, seemed to offer vulnerability along with riches and convenience. The scare of the “Y2K bug” seemed to highlight the danger, at least until it became obvious that the bug was of no threat to anyone.

Now, despite preoccupation with more old-fashioned sorts of terrorism and war, is there, again, reason to fret about the cyber sort? Revelations this year that hackers successfully broke into Pentagon computers, followed by off-the-record confirmation by officials speaking to the Financial Times this week that the assailants were connected to China’s army, have brought the issue back to the fore. Reports suggest that the online intruders were probably engaged in espionage, downloading information. The ability to spy is threatening enough. But hackers may also discern vulnerabilities in computer systems and inflict damage. One fear is that hackers who peeked into the American government’s networks could possibly, one day, work out how to shut them down, at least for a time.

The Pentagon is presumably better able to protect itself against cyber attacks than most. Other targets have been shown to be more vulnerable. The potential impact of cyber-vandalism became obvious this year when Russian hackers unleashed the biggest-ever international cyber-assault on tiny Estonia, after the Baltic country caused offence by re-burying a Russian soldier from the second world war. “Denial of service” attacks, when huge numbers of visitors overwhelm public websites, crippled Estonian government computers. Some breathlessly called it the first direct Russian attack on a NATO member.

The Russian government claimed in that incident that the hackers were incensed ordinary Russians. But some experts said they saw Kremlin footprints. In the current Chinese case the script has been repeated; some at the Pentagon say they can pin the attacks on the People’s Liberation Army. Germany’s government has protested to China’s rulers, saying it too was once hacked by the PLA. Other governments, such as the British one, say that cyber-attacks are increasingly common problems. China, too, says it has been a victim of cyber-assault, and that it takes the issue seriously. In all likelihood—as with the more traditional spying of the cold war days—many countries are attempting some sort of cyber-attacks, while condemning others who do it.

Some of the more effective cyber snoops and vandals may not be government employees. Rather, as pirates would once loot on behalf of particular governments, a few of today’s more effective hackers may be freelancers acting perhaps with tacit official approval. But governments are also developing capability themselves. A Pentagon report this year on China’s military forces said baldly that the country was developing tactics to achieve “electromagnetic dominance” early in a conflict. It added that, while China had not developed a formal doctrine of electronic warfare, it had begun to consider offensive cyber-attacks within its operational exercises.

Cyber-attacks present an attractive option to America’s foes, as a form of guerrilla or asymmetrical warfare. In 2002 the Pentagon ran a war-game with the evocative title “Digital Pearl Harbour”. In it, simulated attacks showed only temporary and limited effect (for example shutting down some electricity supplies). But this week’s revelation may show that America has underestimated its Chinese rival.

The legal world has always been slow to keep up with technology, and the international law of cybercrime is no exception. The first international legal instrument on the subject was the Council of Europe’s Convention on Cybercrime. It requires members to pass appropriate laws against cybercrime—including unauthorised access and network disruption, as well as computer-aided traditional crimes like money-laundering and child pornography. It also mandates a certain level of law-enforcement to prevent laxer jurisdictions from becoming cybercrime havens. But its reach is limited. It came into force in 2004 among just six Council of Europe members; others have since joined, including America at the start of this year. No other non-member of the Council of Europe has joined. This means that the Chinese shenanigans, whatever they were, continue to exist in a legal netherworld.

IN HIS early years there was little to suggest that Taddy Blecher would end up in Johannesburg's inner city, surrounded by youngsters from poor backgrounds. An actuary turned management consultant, Mr Blecher first stepped into a township by mistake. “I was terrified and thought I was going to die,” he remembers. In 1995 he was on the point of emigrating to America, but at the last minute he decided to stay and make a difference. He spent the next four years teaching transcendental meditation in township schools. This was quite a stretch from his upbringing as a “white Jewish guy in Johannesburg”, but he describes it as the best time of his life. He and three partners then started CIDA City Campus, an almost-free business university for students who cannot afford mainstream higher education. (Students are charged only $21 per month in tuition, and some also receive additional financial help.) In a country where poverty and poor skills remain endemic, he has become a local hero.

Mr Blecher, a Harry Potter lookalike with contagious enthusiasm, is passionate about education. The apartheid system deliberately provided sub-standard schooling to the country's black majority; today, good education is still beyond the reach of many poor South Africans. In addition, too few manage to finish high school, and many of those who make it to university drop out, often because they cannot afford it. “It drives me crazy,” says Mr Blecher, becoming agitated. “We are throwing away our people.” As a result, masses of unskilled South Africans cannot find jobs, while firms complain of a crippling lack of skilled people. Decades of apartheid also weakened any spirit of entrepreneurship. The government's “black economic empowerment” policy seeks to redress the economic injustices of apartheid by nudging companies to bring in black shareholders and appoint more black employees, managers, board members and suppliers. But critics point out that this has created a small elite of dealmakers and passive minority shareholders rather than much-needed black entrepreneurs.

Believing that a new way of thinking about education was needed, Mr Blecher decided to start a free university. “Education needs to be holistic,” he says with conviction. “The school system is not producing a happy society, and people are not awake in the way they should be.” Besides providing tertiary education to youngsters who could not afford to attend existing universities, he hoped to help people find direction in their lives (Mr Blecher is an advocate of transcendental meditation in this regard) and help to transform communities. “My deepest interest”, he explains, “is to help people realise how great they are.”

Mr Blecher turned to local companies for help. A bank made its old office building in downtown Johannesburg available free. Mr Blecher's former employer gave him a desk and a phone line at its offices. CIDA City Campus opened its doors in 2000. Today 80% of CIDA's income comes from donations, amounting to about 50m rand ($7m) a year. Sponsors include Dell, JPMorgan, Sir Richard Branson and Oprah Winfrey, plus an impressive list of local firms. Students help to run the school, providing them with experience and keeping costs down. Many teachers are professionals who offer their services free.

Today about 1,500 students are enrolled at CIDA. The business school offers a general Bachelor in Business Administration (BBA) course, as well as practical specialities such as information technology, construction and entrepreneurship for those who qualify. In July CIDA's School of Investments opened its doors, complete with a simulated trading room. But the central philosophy is to provide a lot more than education. Mr Blecher describes CIDA as “a whole ecosystem created to support kids.” Many students come from very poor rural backgrounds, and moving to Johannesburg means a huge adjustment and often extreme financial hardship. Some start with a residential one-year foundation course to plug academic holes before enrolling in the BBA degree. Counsellors are provided and a wardrobe is also at hand for those who need to smarten up for job interviews.

Students are also required to volunteer for community work when they go back home during the holidays. Some teach, while others mentor teenage orphans responsible for looking after younger siblings. But all of them have to give something back to their communities, furthering Mr Blecher's dream of healing South Africa. Often the first members of their families to go to university, graduates then step into a life that was previously out of reach. The former actuary points out that CIDA's graduates will collectively earn 150m rand in salaries this year, which by his calculations amounts to a net present value of 5 billion rand over their 40-year careers.

Mr Blecher's odd mixture of new-age earnestness and hard work has made CIDA a beacon of hope, both at home and abroad. As well as adding further specialist courses, CIDA hopes to open new schools elsewhere in South Africa. But behind its success linger some concerns. CIDA remains intimately associated with its founder and chief executive, and there are questions about whether it would survive without him. Though it is no longer mandatory, the exact role of transcendental meditation in the curriculum remains controversial. It still raises suspicions and tensions among some students, staff and donors. CIDA's fast growth has overwhelmed its administrative systems. And although the specialist degrees are by most accounts excellent, some employers are said to have been disappointed by the general BBA graduates they have hired. The quality of education will need to improve if CIDA's degree is to compare with that of mainstream universities. There is no shortage of goodwill or ability within the school to sort these things out. But sorted out they must be, if CIDA is to live up to its inspiring vision.

THE Oceanic II has been cruising the oceans under various guises for more than 40 years, but her next voyage will be her most unusual. From September 5th the liner will become home to about 200 undergraduate and postgraduate students participating in the maiden voyage of The Scholar Ship (groan), a seaborne university. The renamed ship has been refitted with lecture halls, seminar rooms and a library to transform it into a floating campus. Wireless technology has been installed, providing access to an on-board intranet housing course materials and lecture schedules.

Starting in Piraeus, near Athens, students will spend 16 weeks on board, being taught courses such as international business and conflict studies. Sea-bound classes will be complemented by onshore activities. The liner will stop off in Lisbon, Panama City, Auckland, Shanghai and other places en route to its final destination, Hong Kong. A second voyage, taking a new batch of students to Europe, will start in January.

Start-up capital and cruise-industry expertise have been provided by Royal Caribbean Cruises, but those hoping for roulette wheels and sequinned cabaret singers will be disappointed. Students must organise their own social activities. Academic credibility is bestowed by a consortium of international universities. At the end of the voyage Australia's Macquarie University will award successful students credits that can count towards a full degree elsewhere.

Enrolment is not cheap: the September voyage costs just under $20,000. Take-up has so far fallen well short of an initial forecast of 600 students. Yet kooky as it sounds, the idea of an ocean-going campus does fit into wider trends. One is internationalisation. Whether opening campuses abroad or organising exchange programmes, universities are keen to burnish their multicultural credentials. Another hot trend is “experiential” learning—getting students out of the classroom into different environments.

A cruise ship scores highly on both counts, claims Mike Bonner, the venture's chief operating officer. The students, drawn from 35 countries, will find it hard not to mix with people of other nationalities. And if the passenger numbers do not increase, there is an obvious money-making fallback. Having lots of young people who do not know each other trapped in a confined space is a perfect reality-TV format.

WHEN the personal computer (PC) turned 25 last year, many anniversary articles read like obituaries. There was general agreement that the PC had become a commodity product, its makers mere box-shifters, and that growth prospects were mediocre. Further consolidation was all the industry had to look forward to. The announcement on August 27th that Acer, a Taiwanese PC-maker, would pay $710m to buy Gateway, a smaller American rival, seems to fit that picture.

The combined firm will be the world's third-largest PC-maker by unit shipments. Acer will have the size and global presence to compete with the two American heavyweights, Hewlett-Packard (HP) and Dell, as well as Lenovo, a Chinese firm which will drop to fourth place if the deal goes ahead (see chart). But the takeover also shows that there is still life in the PC business—and will be for years to come.

Worldwide PC shipments have lately been growing by about 12% a year—better than expected, though still a far cry from the late 1990s, when the industry sometimes grew at more than twice that rate. Yet this figure does not do justice to the market's current dynamism.

This year the number of PCs sold will reach an all-time high of nearly 260m. Much of the growth is being generated by consumers and small businesses. Both increasingly prefer laptop PCs to desktops; in some countries, such as Japan, the former already outsell the latter. In America, the world's biggest PC market, this will happen by the end of the year, according to IDC, a market-research firm. Above all, emerging economies such as China and India are making manufacturers happy: their rising middle classes and small businesses have discovered the PC. In China, shipments are growing nearly four times as fast as in America.

Only two years ago most industry observers would not have dared to predict that HP would be best placed to benefit from these growth opportunities. But today its well-designed machines, distinctive marketing and vast network of retail partners appear to be just what the doctor ordered. Consumers are quite willing to order desktop machines online, but they prefer to touch laptops before buying them, since they are much more of a fashion statement than a beige box under the desk, says Charles Smulders of Gartner, a market-research firm. HP is also present worldwide, notably in China, where it is the number two behind Lenovo.

No less surprisingly, Acer is similarly well placed, having staged one of the more stunning turnarounds in the PC industry after an ill-fated attempt to enter the American market in the 1990s. Like HP, it sells through retail and has put an emphasis on design and marketing. Buying Gateway will boost Acer's presence in America. In Europe, meanwhile, it plans to acquire Packard Bell, a PC-maker based in the Netherlands. Lenovo has been in talks to buy Packard Bell, but Gateway says it intends to exercise an option, obtained last year, to purchase the firm.

In contrast, the market has been moving away from Dell, once the industry leader. Its hyper-efficient supply chain and online-only sales model were perfect when corporate customers were driving growth. But competitors have cut costs and online-only is not enough when selling to consumers and in emerging economies. Having lost the top spot to HP, Dell has started to give itself a makeover: selling through Wal-Mart, a retail giant, for example, and adding colour to some products.

Lenovo, for its part, faces difficulties too. Since it acquired IBM's PC division in 2004, its main customers have been corporations. The firm is by far the leader in China and will continue to dominate this market, thanks to its retail relationships and the fact that it does not outsource manufacturing. Yet Lenovo has been struggling to expand elsewhere.

Fortunes could always be reversed, of course. Consumers could lose their appetites for laptops and businesses might start to upgrade their ageing PCs to make use of Windows Vista, the new Microsoft operating system that so far has not managed to give the industry much of a boost. But this would not change the overall direction of the PC market. In its second 25 years, it will increasingly resemble the car industry. Cars may well be a commodity, but they come in all shapes and sizes, for every lifestyle and need. In future, PCs will also be more about taste and tailored products and much less about technology.

EMOTION is said to play a part in many car purchases, but it is less likely to be a factor when buying a car company. Even so, the reaction this week to the first pictures of Jaguar's new XF saloon (pictured) will have done nothing to still the beating hearts of the half-dozen or so likely bidders for Jaguar and Land Rover, the two British marques being auctioned together by their beleaguered owner, Ford.

But who will buy it?

It would be hard to exaggerate the importance to Jaguar of the XF, which is certain to be one of the stars of the Frankfurt motor show in September. It represents a complete design departure from the frumpy “retro” look with which Jaguar has saddled its often well-engineered saloons for the last decade. If the XF's swooping lines and elegantly modernist interior are a hit with younger customers who would never previously have thought of owning a Jaguar, then the firm, under new ownership, may have a future after all.

Although Ford has refused to name the prospective buyers, they include Tata Motors (a division of Tata Group, an Indian conglomerate), probably another Indian car company, Mahindra & Mahindra, and at least four private-equity firms. These include Cerberus Capital Management (which relieved Daimler of Chrysler), One Equity Partners, Ripplewood Holdings, and Texas Pacific Group.

All the bidders are now deep into due diligence as they prepare to table non-binding offers at the end of September. As well as poring over the books, they are touring facilities and examining plans for future products. They are also competing in a beauty contest for the backing of potentially hostile unions, which fear for the jobs of 19,000 members employed in several British factories. Ford is publicly confident of concluding a sale by early next year at the latest. But reaching a sensible valuation of the two marques, which Ford says must be sold together because their operations have become so tightly integrated, is not proving easy.

Judging how far the XF will halt the slide in Jaguar's fortunes—its sales have fallen by almost half from a peak of 130,000 a few years ago—is only one question among many. How long will the weak dollar eat into the sales and earnings of both makers? Is it necessary to have three factories and a separate design centre to build fewer than 270,000 cars a year? What will happen to Jaguar and Land Rover, which make relatively big and thirsty vehicles, if the European Commission goes ahead with its plan to impose upon car manufacturers an average CO₂ emission target of 130g/km by 2012? And how will the onset of a global credit squeeze affect what private-equity groups can pay for a capital-intensive business with a time horizon of three to five years?

The answer to the last two questions may depend on the kind of deal that Ford is prepared to do. All the possible bidders seem likely to want something similar to that wrung from Daimler by Cerberus. The German firm not only agreed to hold on to a 20% equity stake in Chrysler, but also provided substantial financing. Any new owner will want to ensure that Ford retains an interest in the future of the business, in part because it may be possible to persuade the commission to count Jaguar and Land Rover as part of Ford's bigger and more economical range for the purpose of measuring emissions.

As for Ford, its priority is just to get a respectable deal done. Alan Mulally, its chief executive, is adamant that running luxury brands has no part in the company's future. He also concedes that the credit market's tightening “absolutely is an issue”. Lovely though the XF may be, Mr Mulally wants someone else to be its proud owner as soon as possible.

IT WAS supposed to democratise the internet and turn America's city-dwellers into citizen-surfers. In 2004 the mayors of Philadelphia and San Francisco unveiled ambitious plans to provide free wireless-internet access to all residents using Wi-Fi, a technology commonly used to link computers to the internet in homes, offices, schools and coffee-shops. Across America, hundreds of cities followed suit. Yet many municipal Wi-Fi projects have since been hit by mounting costs, poor coverage and weak demand. This week Chicago became the first big city to abandon its plans for a city-wide network. “Everyone would like something for free,” says Chuck Haas of MetroFi, a supplier of municipal Wi-Fi systems. But the numbers do not add up.

Most city governments did not want to build or run the Wi-Fi systems themselves, so they farmed the job out to specialist firms such as EarthLink and MetroFi. These companies initially agreed to bear all expenses, expecting to sign up 10-25% of each city's population for a fee-based wireless service. In some places this was to have been supplemented by a free service at lower speed, or supported by advertising. Some cities also planned to subsidise access for poor residents.

But municipal Wi-Fi schemes have been struggling to make ends meet. EarthLink, which runs networks in Philadelphia and New Orleans, recently admitted that “the Wi-Fi business as currently constituted will not provide an acceptable return.” This week the firm said it would lay off 900 workers, including the head of its municipal Wi-Fi division, the future of which is now in doubt.

The root of the problem is that city-wide Wi-Fi, which relies on outdoor radio transmitters, does not provide good access inside buildings, since it uses weak signals which do not always penetrate thick exterior walls. Proponents of the technology also underestimated the number of transmitters that would be needed to provide blanket coverage. Most networks deployed between 2004 and 2006 used between 20% and 100% more nodes than expected, which pushed up costs.

Worse, the networks that have been completed have attracted few users. Taipei's city-wide WiFly system, the largest such network in the world, was reckoned to need 250,000 regular subscribers by the end of 2006 in order to break even, but had attracted only 30,000 by April 2007. America's biggest network, around Tempe, Arizona, was aiming for 32,000 subscribers, but had only 600 in April 2006 and has not provided figures since.

EarthLink and MetroFi have responded by asking city governments to act as “anchor tenants” and agree to spend a guaranteed sum on the service. Minneapolis and Portland, Oregon, accepted such contracts from the beginning; their Wi-Fi schemes are proceeding relatively smoothly. But most cities have balked at the change. Chicago's plans foundered when EarthLink and AT&T, the two firms bidding to build its network, demanded anchor-tenant commitments. MetroFi has lost four contracts since April after asking municipalities to subscribe upfront. The consortium planning to build a Wi-Fi network across 1,500 square miles (3,885 square km) of Silicon Valley also wants to switch to an anchor-tenant model.

One problem with the anchor-tenant approach is that few municipalities are in a position to do much with the networks. Despite vague talk about wireless parking meters and enabling building inspectors to submit reports using Wi-Fi hand-helds, most cities lack the back-office systems needed to do such things. “You're building them a better track,” says Craig Settles, a telecoms consultant, “but they don't even have running shoes yet.”

The one bright spot for municipal Wi-Fi is public safety. After the terrorist attacks of September 11th 2001, governments at all levels in America set about improving communications between emergency workers. Dedicated radio spectrum has been set aside, and several cities have built Wi-Fi networks to transmit images from surveillance cameras and the like. The hope is that separate systems providing internet access can piggyback on these networks, as EarthLink has done with a Wi-Fi system originally built for public-safety purposes in New Orleans. Equipment providers now make nodes that put both the necessary transmitters into a single box, making such roll-outs cheaper.

Some cities will be able to make this approach work, and may then be able to offer their residents free, or at least relatively cheap, Wi-Fi access too. But many others will not, and will have to follow Chicago in abandoning their utopian dreams of city-wide networks. With Wi-Fi, as with most things, you get what you pay for.

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RARELY if ever has a company risen so fast in so many ways as Google, the world's most popular search engine. This is true by just about any measure: the growth in its market value and revenues; the number of people clicking in search of news, the nearest pizza parlour or a satellite image of their neighbour's garden; the volume of its advertisers; or the number of its lawyers and lobbyists.

Such an ascent is enough to evoke concerns—both paranoid and justified. The list of constituencies that hate or fear Google grows by the week. Television networks, book publishers and newspaper owners feel that Google has grown by using their content without paying for it. Telecoms firms such as America's AT&T and Verizon are miffed that Google prospers, in their eyes, by free-riding on the bandwidth that they provide; and it is about to bid against them in a forthcoming auction for radio spectrum. Many small firms hate Google because they relied on exploiting its search formulas to win prime positions in its rankings, but dropped to the internet's equivalent of Hades after Google tweaked these algorithms.

And now come the politicians. Libertarians dislike Google's deal with China's censors. Conservatives moan about its uncensored videos. But the big new fear is to do with the privacy of its users. Google's business model (see article) assumes that people will entrust it with ever more information about their lives, to be stored in the company's “cloud” of remote computers. These data begin with the logs of a user's searches (in effect, a record of his interests) and his responses to advertisements. Often they extend to the user's e-mail, calendar, contacts, documents, spreadsheets, photos and videos. They could soon include even the user's medical records and precise location (determined from his mobile phone).

Google is often compared to Microsoft (another enemy, incidentally); but its evolution is actually closer to that of the banking industry. Just as financial institutions grew to become repositories of people's money, and thus guardians of private information about their finances, Google is now turning into a custodian of a far wider and more intimate range of information about individuals. Yes, this applies also to rivals such as Yahoo! and Microsoft. But Google, through the sheer speed with which it accumulates the treasure of information, will be the one to test the limits of what society can tolerate.

It does not help that Google is often seen as arrogant. Granted, this complaint often comes from sour-grapes rivals. But many others are put off by Google's cocksure assertion of its own holiness, as if it merited unquestioning trust. This after all is the firm that chose “Don't be evil” as its corporate motto and that explicitly intones that its goal is “not to make money”, as its boss, Eric Schmidt, puts it, but “to change the world”. Its ownership structure is set up to protect that vision.

Ironically, there is something rather cloudlike about the multiple complaints surrounding Google. The issues are best parted into two cumuli: a set of “public” arguments about how to regulate Google; and a set of “private” ones for Google's managers, to do with the strategy the firm needs to get through the coming storm. On both counts, Google—contrary to its own propaganda—is much better judged as being just like any other “evil” money-grabbing company.

That is because, from the public point of view, the main contribution of all companies to society comes from making profits, not giving things away. Google is a good example of this. Its “goodness” stems less from all that guff about corporate altruism than from Adam Smith's invisible hand. It provides a service that others find very useful—namely helping people to find information (at no charge) and letting advertisers promote their wares to those people in a finely targeted way.

Given this, the onus of proof is with Google's would-be prosecutors to prove it is doing something wrong. On antitrust, the price that Google charges its advertisers is set by auction, so its monopolistic clout is limited; and it has yet to use its dominance in one market to muscle into others in the way Microsoft did. The same presumption of innocence goes for copyright and privacy. Google's book-search product, for instance, arguably helps rather than hurts publishers and authors by rescuing books from obscurity and encouraging readers to buy copyrighted works. And, despite Big Brotherish talk about knowing what choices people will be making tomorrow, Google has not betrayed the trust of its users over their privacy. If anything, it has been better than its rivals in standing up to prying governments in both America and China.

That said, conflicts of interest will become inevitable—especially with privacy. Google in effect controls a dial that, as it sells ever more services to you, could move in two directions. Set to one side, Google could voluntarily destroy very quickly any user data that it collects. That would assure privacy, but it would limit Google's profits from selling to advertisers information about what you are doing, and make those services less useful. If the dial is set to the other side and Google hangs on to the information, the services will be more useful, but some dreadful intrusions into privacy could occur.

The answer, as with banks in the past, must lie somewhere in the middle; and the right point for the dial is likely to change, as circumstances change. That will be the main public interest in Google. But, as the bankers (and Bill Gates) can attest, public scrutiny also creates a private challenge for Google's managers: how should they present their case?

One obvious strategy is to allay concerns over Google's trustworthiness by becoming more transparent and opening up more of its processes and plans to scrutiny. But it also needs a deeper change of heart. Pretending that, just because your founders are nice young men and you give away lots of services, society has no right to question your motives no longer seems sensible. Google is a capitalist tool—and a useful one. Better, surely, to face the coming storm on that foundation, than on a trite slogan that could be your undoing.

AP

AS RECENTLY as two years ago, a forest fire came close to burning down the home of Costas Karamanlis. The Greek prime minister’s seaside villa outside Athens escaped the conflagration. But the event prompted Mr Karamanlis to promise strict measures to dissuade developers from building on land cleared by the blaze; satellite photos, for example, would be taken at regular intervals to help enforce Greece’s law banning construction in forest areas.

Mr Karamanlis and his conservative government have failed to deliver. This week the emergency services struggled to contain the worst forest fires to strike Greece in more than a century. The latest blazes sweeping the countryside have left more than 60 people dead. The problems of tackling the fire were compounded by the forestry department’s lack of access to satellite pictures that could have enabled fire-fighters to find and douse blazes before they caused serious damage.

Many perished trying to escape from Zacharo, a village in the Elis district in south-west Greece, as it was engulfed by flames. Other villages in the Peloponnese region were still being evacuated on Wednesday Aug 29th, six days after the fires started. Homes in more than 100 villages were gutted, livestock died and the olive crop was destroyed. So far the fires are reckoned to have caused €5 billion-worth of damage by some estimates.

The government, preparing for a snap election on September 16th, was quick to come up with some financial assistance for the stricken: €13,000 in cash, equivalent to more than a year’s income for most villagers from Elis, was handed out to anyone affected by the fires. Few were grateful; many who escaped from burning villages said they felt the emergency services had let them down.

Greek forestry officials blame arsonists for more than half of the fires. The remainder, they claim, were caused by flying sparks from electricity pylons or human carelessness. Seven people were arrested in the aftermath of the fires that struck Elis and Evia, an island in the Agean Sea near Athens; both the anti-terrorist squad and the intelligence service joined the hunt for fire-raisers.

Conspiracy theories are rife. Hardline members of Mr Karamanlis’s New Democracy party claim that the left had organised a fire-raising campaign to discredit the party and damage its chances of being re-elected. But there is probably no single culprit. An exceptionally hot summer following on the heels of a winter drought has made Greece’s resinous pine forests even more flammable than usual. Strong winds helped a spark from a chainsaw start one big fire.

Eye witnesses claim that several fires in the Peloponnese were started deliberately. Arsonists certainly have strong motives for starting blazes. Rising incomes have fuelled a construction boom. Demand is high for land near the sea to build second homes. Although Greek law states that builders cannot put up homes on forest land, developers are practised at getting around the rules.

Because Greece still lacks a land registry covering the whole country—a programme to put this right paid for by the European Union is moving at snail’s pace—it is easy to have burned land reclassified as farmland, which can then be sold for development. And in many places local officials are open to bribery to ease the issuing of planning permits without asking too many questions. Politicians often declare an amnesty for illegal buildings ahead of an election.

Will things be different next summer? Better fire-fighting is a priority. Greece has almost 40 water-bombing aircraft, more than any other southern European country. But its forestry service and fire-brigade are under-staffed, ill-equipped and poorly trained.

The civil-defence department lacks a fire-prevention strategy, which could lessen the impact of future fires. In other places prone to burning people clear undergrowth from their local forests during the winter and bulldoze fire-breaks around villages. In summer round-the-clock fire-watches are maintained. The next government, whether led by Mr Karamanlis or George Papandreou, leader of the main opposition Pan-Hellenic Socialist Movement, will have to take fire prevention seriously.

Magnum/AP

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“OUR pilots have been grounded for too long. They are happy to start a new life.” So said Vladimir Putin as he sent Russia's nuclear bombers back aloft on the world-spanning patrols they had suspended after the collapse of the Soviet Union. This comes hard on the heels of talk of reopening a Russian naval base in the Mediterranean, joint war games with China and the planting of the Russian flag in the polar seabed. The Soviet Union is dead and communism long buried. But Mr Putin wants you to know that the Russian bear is back—wearing a snarl with its designer sunglasses.

How has this situation come about? It is tempting to search for mistakes by Western governments, to look for the culprits who “lost Russia”. Yet as our briefing this week explains (see article), the role of outsiders has been secondary. The best way to understand both Mr Putin's ascent into the Kremlin and his rule since is to see them as the remarkable recovery of the culture, mentality and view of the world of the old KGB.

When Mr Putin was plucked from obscurity to become first Boris Yeltsin's prime minister and later his successor as Russia's president, few in the West had heard of this former KGB officer, who had briefly been head of the FSB, the KGB's post-Soviet successor. Just before he became president, Mr Putin told his colleagues that a group of FSB operatives, “dispatched under cover to work in the government of the Russian federation”, was successfully fulfilling its task. It was probably a joke. Yet during his two terms since then, men from the FSB and its sister outfits have indeed grabbed control of the government, economy and security forces. Three out of four senior Russian officials today were once affiliated to the KGB and other security and military organisations.

What motivates these so-called siloviki? In part, the wish for revenge on those who challenged them in the early 1990s, especially after the abortive KGB coup of August 1991. Greed may be the most powerful motive: some Kremlin insiders have hugely enriched themselves in the past decade, and corruption may be worse even than in the later Yeltsin years. But the new elite also has an ideology of sorts. They see the break-up of the Soviet Union as, in Mr Putin's words, the “greatest geopolitical catastrophe” of the 20th century. Capitalising on a widespread sense that Russia has been humiliated, they want to create as mighty a state as the Soviet Union once was. They see the West as a foe bent on stopping them.

In this, Russia's rulers have strong domestic support. It is hard to gauge Mr Putin's popularity in a country with such tightly controlled media, but his opinion-poll ratings are impressively high. That nobody doubts his ability to choose his own successor owes a lot to his suppression of all dissent, but it reflects also the fact that voters have little love for the tiny liberal opposition remaining. Thanks to GDP growth that has averaged almost 7% a year under Mr Putin, many Russians feel better off, even if a lot are still poor. And many share the desire to reassert Russia's greatness—and a deep-rooted belief that the West is Russia's natural enemy.

It is foolish for people in the West to deny that Russia is a great power and that, in some ways, its influence has increased. When Mr Putin became president, its GDP was the world's tenth-biggest and foreign reserves stood at $8.5 billion. Today Russia's economy is the world's eighth-largest, and the reserves are $407.5 billion. The Kremlin has played adeptly on Europe's dependence on Russian gas to enhance its influence. On issues such as Kosovo or Iran, Russia has used its seat on the UN Security Council to force the West to pay it attention.

Yet the siloviki's ambitions remain misguided. That is not because there is anything illegitimate about wanting a strong Russia. What is wrong is how they define that strength—in the Soviet terms of awe and anxiety—and how they pursue it. The economy, for a start, is heavily dependent on high prices for oil, gas and other commodities that may not last. Russia is weak in manufacturing, services and high-tech industries. Putting spies in charge of big firms is a recipe for failure: they know how to grab assets and jail foes, but not how to run real businesses. Foreign investors may still covet Russia's natural-resource sector, but a climate in which assets can be arbitrarily taken back by state officials and then redistributed to cronies is not welcoming. Both foreign and, more strikingly, domestic investment are very low compared with China.

Nor is it sensible to revive Russia's old anti-Western, zero-sum strategic thinking. The West tried to be a friend in the Yeltsin years, but has since been put off by Russian belligerence. A resurgent Russia can throw its weight around the neighbourhood and intimidate ex-Soviet republics such as Georgia, Ukraine and the Baltics; but by alienating its neighbours Moscow harms its own interests too. By dint of size and military strength, Russia is a power in the world. Yet today even the “soft power” that the Soviet Union once wielded through communism has mostly gone. In its place is only fear.

The biggest misreading of all is over Russia's own political future. The siloviki have shown they can squash opposition, suborn the courts and stay in charge. But, as in all autocracies, they are acutely nervous about the future. Mr Putin's popularity will not easily transfer even to a hand-picked successor. More generally, as ordinary Russians get richer, they may grow dissatisfied with their present masters, especially when they see them stealing and mismanaging the economy. Russia has huge problems: crime, poor infrastructure, secessionism and chaos in the north Caucasus, appalling human-rights abuses and a looming demographic catastrophe. To counterbalance these woes, the new elite may resort to even wilder forms of nationalism; and that nationalism could turn into a monster that even its creators cannot control.

In truth, the biggest threats to Russia's future stem not from its “enemies” but from internal weaknesses, some of them self-inflicted. For a Russian ruler, or ruling class, to accept that truth would take real courage—and real patriotism.