EsadeGeo Daily Digest, 25/03/2020

The Washington Post – Erica Werner et al. / Senate, White House reach $2 trillion stimulus deal to blunt coronavirus fallout

  • Senate leaders and the Trump administration reached agreement early Wednesday on a $2 trillion stimulus package to rescue the economy from the coronavirus assault, setting the stage for swift passage of the massive legislation through both chambers of Congress.
  • The Senate bill would direct payments of $1,200 to most American adults and $500 to most children, create a $500 billion lending program for companies, states and cities, and extend an additional $367 billion to help small companies deal with payroll problems. It would bolster the unemployment insurance system and pump $150 billion into U.S. hospitals. The bill more than doubled in size in just a few days.
  • This pertains to the $500 billion loan and loan guarantee program that the Treasury Department would be tasked with administering for companies, states and cities. Of that amount, $425 billion is supposed to go to businesses, cities and states. An additional $50 billion would go to passenger airlines, as well as $8 billion for cargo airlines, and $17 billion for firms that are deemed important to national security.
  • Other provisions include a massive boost to unemployment insurance, expanding eligibility and offering workers an additional $600 a week for four months, on top of what state unemployment programs pay, $150 billion for state and local stimulus funds and $130 billion for hospitals. The stock market rose sharply Tuesday in anticipation of the deal, with the Dow Jones industrial average surging more than 2,100 points, or 11.4 percent.
  • The New York Times – Emily Cochrane and Nicholas Fandos / Congress and White House strike deal for $2 trillion stimulus package

Euractiv – Jorge Valero / Eurogroup nearing agreement to use bailout fund against pandemic

  • Countries of the euro area are close to an agreement to use the European Stability Mechanism to provide credit lines of up to 2% of their GDP to tackle the consequences of the coronavirus COVID-19. The Eurogroup discussed on Tuesday (24 March) what instruments Europe could deploy to release the fiscal stimulus and restart the economy, as the bloc is expected to suffer a severe recession.
  • The package will be presented to the leaders on Thursday and they will decide the shape and size of the European fiscal response, on top of the national packages already adopted. To date, euro member states adopted stimuli totalling around 2% of the region’s GDP, around €240 billion, doubling the size of the efforts made up until last week against the pandemic.
  • The Eurogroup teleconference focused on how to use the European Stability Mechanism, the EU’s bailout fund to offer loans to eurozone countries. “We are committed to exploring all possibilities necessary to help our economies get through these difficult times,” Eurogroup president Mario Centeno said after the teleconference.
  • ESM chief Klaus Regling explained that the credit lines would be available for all euro members, but it would be up to each of them, or a group of them if they requested it. Each member state will be able to request a credit of up to 2% of its GDP, but it could be even higher for serious situations, said Regling. Northern countries, notably Germany and the Netherlands, have been staunch opponents of the eurobonds.
  • Financial Times – Martin Wolf / This pandemic is an ethical challenge

Foreign Policy – Nathalie Rothschild / Sweden is open for business during its coronavirus outbreak

  • Almost all countries in the West dealing with the coronavirus pandemic have by now arrived at the same lockdown strategy, with some local variations. Only one major exception stands out. Sweden, while facing an undisputed high-risk outbreak of the virus, has committed to going its own way in combating it.
  • Stockholm’s coronavirus efforts stand out as markedly measured—or, as some would have it, dangerously tame. The Swedish government appears to be betting that its national culture is distinctive enough to pull off public health policies other countries can’t. Whether it will regret doing so remains to be seen.
  • Primary schools remain open, borders are only partially closed, there are no compulsory quarantines or shutdowns of restaurants, bars, or public spaces. While there is a ban on public gatherings, the 500-person limit is more generous than in other countries. As of Tuesday, a total of 36 Swedes have died after contracting the novel coronavirus.
  • The explanation, some analysts say, lies in Sweden’s combination of politically independent public agencies—including the Public Health Agency, which is front and center of the current crisis management—and the high level of public trust in them. The agencies are guaranteed freedom from so-called ministerial rule, which means politicians do not have the power to intervene directly in a public agency’s day-to-day operations.
  • Politico – Eline Schaart and Hanne Cokelaere / Belgian towns turn coronavirus anger on the Dutch

The Economist / It’s official: coronavirus puts off the Tokyo Olympics

  • The Japanese authorities and the IOC kept insisting, long after everyone else stopped believing them, that all was going to plan. On March 17th the IOC said there was “no need for any drastic decisions at this stage”, and that it was “fully committed” to holding the Olympics in July, even as betting markets gave that outcome a 15% probability.
  • On March 20th the Olympic flame duly arrived in Japan from Greece. But after that things unravelled quickly. Three days later Australia and Canada announced they would not send teams to an Olympics held in Tokyo in July and August. Britain, France and America urged the IOC to reach a decision quickly.
  • On March 24th Japan and the IOC bowed to the inevitable. Abe Shinzo, Japan’s prime minister, told reporters that he and Thomas Bach, the IOC’s president, were in “100% agreement” about postponing the games. Another reason for delay came with a recent spike in covid-19 infections in Tokyo.
  • A joint statement from the IOC and the Tokyo organising committee said they would be rescheduled to next year, but not later than the summer, in order “to safeguard the health of the athletes, everybody involved in the Olympic games and the international community”. For Mr Abe, postponement of the games is a personal embarrassment, in light of his long refusal to countenance a delay to what has become a legacy project for him.
  • Bloomberg – Isabel Reynolds / Japan suffers setback with Olympics delay. Abe may still benefit

Today’s perspective:

The selected pieces do not necessarily reflect the views of Javier Solana and EsadeGeo. The summaries above may include word-for-word excerpts from their respective pieces.

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