EsadeGeo Daily Digest, 28/05/2020

The New York Times – Keith Bradsher / China approves plan to rein in Hong Kong, defying worldwide outcry

  • China officially has the broad power to quash unrest in Hong Kong, as the country’s legislature on Thursday nearly unanimously approved a plan to suppress subversion, secession, terrorism and seemingly any acts that might threaten national security in the semiautonomous city.
  • Early signals from Chinese authorities point to a crackdown once the law takes effect, which is expected by September. Activist groups could be banned. Courts could impose long jail sentences for national security violations. China’s feared security agencies could operate openly in the city.
  • Even Hong Kong’s chief executive this week appeared to hint that certain civil liberties might not be an enduring feature of Hong Kong life. “We are a very free society, so for the time being, people have the freedom to say whatever they want to say,” said the chief executive, Carrie Lam, noting, “Rights and freedoms are not absolute.”
  • The Trump administration signaled Wednesday that it was likely to end some or all of the U.S. government’s special trade and economic relations with Hong Kong because of China’s move. The State Department no longer considers Hong Kong to have significant autonomy, Secretary of State Mike Pompeo said, a condition for maintaining the trade status.
  • The Guardian – Lily Kuo / Chinese parliament approves controversial Hong Kong security law

Financial Times – Sam Fleming, Jim Brunsden and Michael Peel / EU recovery fund faces prodigious hurdles to reach consensus

  • Brussels faces a critical few weeks for corralling member states to fall in behind an unprecedented boost to EU spending, betting that its proposal for € 750bn of borrowing will unblock talks on the bloc’s next budget. But while a number of capitals indicated that they saw the commission proposal as a workable basis for negotiations, there is a widespread recognition that prodigious hurdles remain in the way of a consensus.
  • Ms von der Leyen’s plan fuses the recovery fund with the EU’s next seven-year budget, which she has said should total € 1.1tn. National leaders have been trying and failing to agree on the spending pot for two years, but Brussels has argued that it is the only sound and available way to pump money into crisis-hit regions. The budget, or multiannual financial framework (MFF), needs to be ready for the end of this year, when the EU’s existing spending plans expire.
  • Among the traps lying in wait for governments as they resume negotiations are the size of the recovery fund, the share of money set to be distributed in the form of grants as opposed to loans, the conditions attached to handouts for member states, the formulas governing how the money is allocated between countries, and the vexed question of how the EU will repay its debts.
  • Even if they do compromise on some mixture of grants and loans, northern states will want to see tougher reform conditions imposed on states that receive EU funding than those proposed by the commission. Countries that do not receive a budget rebate will fight richer countries’ attempts to preserve the refunds. 
  • Politico – David M. Herszenhorn and Lili Bayer / Ursula von der Leyen’s big gamble with borrowed money

The Economist / Eastern Europe’s covid-19 recession could match its post-communist one

  • Europe has  so far been hit the hardest of any continent by covid-19. Gaps between neighbours can be striking: Spain’s excess mortality per person is more than triple that in Portugal, and France’s quadruple that in Germany. Economically, too, the impact is uneven. As forecasts of the pandemic’s economic damage emerge, central and eastern Europe look especially precarious.
  • Eastern Europeans did well in part because they knew they were vulnerable: fearing that the pandemic could quickly overwhelm their creaky health-care systems, they locked down hard and fast and contained the virus quickly.
  • Yet the economic pain may be worse in much of the east than in the west. Eastern European countries are vulnerable for three reasons. First, their economies are export-dependent, leaving them at the mercy of demand in other countries.
  • A second reason is that eastern European governments have less capacity to finance rescue packages. They cannot run large deficits because investors are wary of lending to them. Finally, many countries in the east rely heavily on one of the industries hardest hit by the pandemic: tourism. In Croatia, for example, it generates 25% of GDP.
  • The Atlantic – Nina Jankowicz / Estonia already lives online–Why can’t the United States?

Bloomberg – Laura Millán Lombraña and Ewa Krukowska / Here’s how Europe plans to fix the climate and the economy

  • The European Union proposed making its climate-neutrality strategy a key pillar of a 750 billion-euro ($824 billion) recovery plan in a bid to boost economic growth and create new jobs.
  • The unprecedented stimulus program – along with a revised budget for the next seven years – aims to accelerate the transition to clean transport, increase energy savings and boost the production of renewable energy. The blueprint also promises more funds to help the regions most affected by the environmental clean-up.
  • The package, the world’s greenest stimulus plan to mitigate the economic effects of the coronavirus crisis, needs to be approved by the bloc’s 27 member states in difficult negotiations that may take months. 
  • Recovery efforts by individual European governments have so far had a mixed record when it comes to climate. Among the few financial details unveiled on Wednesday was a 30 billion-euro boost for the Just Transition Fund, which will now have 40 billion euros at its disposal to help the most affected regions alleviate the impact of transitioning toward eliminating emissions. 
  • Project Syndicate – Henrik Poulsen, Mads Nipper and Lars Fruergaard Jørgensen / Climate targets and industry participation in the recovery

Today’s food for thought:

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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