EsadeGeo Daily Digest, 03/04/2020

The Economist / Covid-19 presents stark choices between life, death and the economy

  • Imagine having two critically ill patients but just one ventilator. That is the choice which could confront hospital staff in New York, Paris and London in the coming weeks, just as it has in Lombardy and Madrid. Triage demands agonising decisions. Medics have to say who will be treated and who must go without: who might live and who will probably die.
  • Just now the effort to fight the virus seems all-consuming. Each country is striking a different trade-off—and not all of them make sense. In India the Modi government decided that its priority was speed. In Russia, Putin is more concerned with minimising political damage and suppressing information than leading his country out of a crisis.
  • How should you think about these trade-offs? The first principle is to be systematic. A second principle is to help those on the losing side of sensible trade-offs. A third principle is that countries must adapt. The balance of costs and benefits will change as the pandemic unfolds. 
  • By the summer, economies will have suffered double-digit drops in quarterly GDP. People will have endured months indoors, hurting both social cohesion and their mental health. The capacity of the economy would wither as innovation stalled and skills decayed. Eventually, even if many people are dying, the cost of distancing could outweigh the benefits. That is a side to the trade-offs that nobody is yet ready to admit. 
  • Politico – Barbara Moens / The cure for the coronavirus crisis: more trade or less?
  • Euractiv – Beatriz Ríos / Von der Leyen: EU Budget should be the Marshall plan we lay out together

Financial Times – Peter Millett / Foreign powers are blatantly flouting Libya’s arms embargo

  • While the world has been distracted by the coronavirus pandemic, Khalifa Haftar, a renegade Libyan general, has chosen to step up his year-long assault on Tripoli. With his military stockpile boosted by planeloads of munitions and equipment flown in from the United Arab Emirates, Gen Haftar’s forces have shelled neighbourhoods of the Libyan capital with renewed severity in recent days.
  • The offensive threatens to trigger a new phase of conflict just as Libyans are bracing for their own coronavirus outbreak. The north African state reported its first confirmed cases of Covid-19 last week, and its weak health system has limited ability to detect and treat the disease.
  • Military commanders from the Libyan parties met and agreed on a ceasefire. That led to a short period of calm, but both sides used it to receive large supplies of military equipment: the UN-backed government from Turkey and Gen Haftar’s forces from the UAE. The fighting has since escalated.
  • This war started as a Libyan conflict, driven by one man’s ambition. It is now a conflict fuelled by outside sponsors. The Emiratis, Egyptians and Turks have signed up to international statements calling for a ceasefire and respect for the arms embargo, yet have simultaneously ramped up support to their clients. This blatant flouting of the arms embargo is a scandal. Violations are well known, but have not been named and shamed.
  • EUobserver – Tarek Megerisi / EU’s ‘Irini’ Libya mission : Europe’s Operation Cassandra

Foreign Policy – Colm Quinn / The tourism industry is in trouble. These countries will suffer the most.

  • According to the nonprofit World Travel and Tourism Council, which represents the international tourism industry, travel and tourism contributed $8.8 trillion to the global economy in 2018 and was responsible for 10.4 percent of all economic activity. The council estimates that travel and tourism are responsible for 319 million jobs around the world.
  • Thailand and the Philippines rely on tourism for more than a fifth of their GDP. Two of the worst-hit countries in the coronavirus outbreak, Spain and Italy, also depend heavily on this sector. The country that relies on tourism the least—South Korea—is also handling its outbreak the best.
  • The most severe economic devastation, however, will likely be seen in the small island nations that have staked their entire economies on overseas travelers taking in their beaches and resorts. Of the top 20 countries most dependent on travel and tourism as a source of GDP, 15 are small island nations.
  • Iceland, whose economy suffered a deep decline during the 2008 financial crisis, stands to lose again, as more than a third of its GDP comes from travel and tourism. Andrew Fahie, the premier of the British Virgin Islands, has remained upbeat despite the expected downturn. “Our tourism industry has faced many crises before (…) and we have always come out strong on the other side,” he said.
  • Financial Times – Mamta Badkar et al. / Global lay-offs surge as 6.6m Americans file jobless claims

Foreign Affairs – Daniel Yergin / The oil collapse

  • The global oil market has never in history collapsed as precipitously as it has right now. The oil and gas industry, which provides almost 60 percent of the world’s energy, is engulfed in a double crisis that would have been dismissed as unthinkable at the start of this year.
  • A price war, with producing nations battling for market share, has become lodged in the larger crisis of the novel coronavirus pandemic and what will likely be the worst recession since World War II. The resulting collapse in demand will be bigger than any recorded since oil became a global commodity.
  • The nature and sheer scale of the current collapse and the geopolitical wrangling it has prompted present unique challenges for the United States and its energy sector—challenges that will have significant consequences for the U.S. economy and U.S. foreign policy in an already perilous moment.
  • Ending the battle for market share would reduce the surplus flowing into the market, take some pressure off storage, and have a positive impact on market psychology, which is one of the factors that shapes prices. With much of the global economy at a standstill, the oil crisis is going to get worse in the weeks ahead, and the damage will be felt well beyond the oil industry itself. 
  • The Guardian – Jillian Ambrose / Oil price rebounds on hopes Saudi Arabia and Russia will reach deal
  • Foreign Affairs – Amy Myers Jaffe / Emerging-market petrostates are about to melt down

Further reading for the weekend:

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.

Política Internacional |