GP Team

The World This Week # 62, 11 April 2020, Vol 2 No 15

By Sourina Bej, Harini Madhusudan, Lakshmi V Menon, Sukanya Bali and Rashmi Ramesh

Europe: Amid North-South Divide, EU declares €500bn as rescue package to fight the COVID-19 

What happened? 

The European Union Finance Ministers on 10 April agreed on a €500bn rescue package for the severely affected European economies in the pandemic. The deal was announced after the resolution of an impasse between the southern countries of Italy, Spain, France and the northern countries of the Netherlands, Austria, and Finland within the EU. The deadlock was over the demand for 'Coronabonds' by the southern countries who insisted that the bonds funded by all EU countries will help in recovering any debts in a country. The other group rejected this idea of the collective burden of common debt and finally agreed on a rescue deal.  

The main component of the rescue plan is the European Stability Mechanism through the EU's bailout fund, which will make Euro 240bn available to guarantee spending by indebted countries under pressure. The EU ministers also agreed on other measures including Euro 200bn in guarantees from the European Investment Bank. 

What is the background? 
The breakthrough deal has made it clear that bitter divisions within the EU over the longer-term task of rebuilding the European economy are deep-rooted. The north-south division within the EU has its roots in the austerity measures that the bloc imposes to bail out the debt-ridden countries in the region. The euro crisis of 2009 and the crisis in Greece in 2018 have taught the harsh lesson to the bloc that austerity measure is a solution to restore a debt economy and also salvage a single integrated market. With many southern countries riddled in debt, stringent economic measures imposed on them has led to lingering resentment among the people that wealthier northern neighbours have forced tough measures while they are still facing the brunt of a financial crisis. This divide widened when countries like Greece, Cyprus, Italy, Spain and Portugal increasingly struggled to balance their policies between debt payment and public opinion. The northern states often look at these countries' economies as a result of few faulty, corrupt policies which will now impact the whole market clusters. 

What does it mean? 
The rescue deal does not indicate that the north-south divide within Europe has gaped. On the contrary, it has put in retrospect the ability of the EU to answer tough questions at a tough time. 

First, with an economic downturn and a crisis impact expected to be in trillions, a rescue package of 500 billion Euros for all European countries seems to be a little short in outlook. Instead, the deal indicates a symbolic gesture by the block in collective spirit and stands together in spite of differences than facing the crisis alone.

Second, the scars within the bloc are likely to remain and might deepen as public opinion are increasingly shaped by populist leaders like Matteo Salvini, Italy's former Deputy Prime Minister, who has found his Eurosceptic base emboldened by the crisis. Besides, the southern countries like Italy have taken on Germany's past to remind it that it was never made to pay back its debts after the Second World War 

Third, the finance ministers have a punt on the critical issue on economic recovery as the peak of the pandemic plummets. The EU will face a leadership question on who will lead the economic restructuring. How the EU today will have a significant implication for the future of the bloc. It is handling of the crisis in Greece has been defiant but unpopular. It remains to be seen whether common bonds in the Eurozone address the structural fragility that the euro crisis has exposed.
 

China: After four months, Beijing ends the lockdown in Wuhan 

What happened?
For the first time since late January 2020, Wuhan, the city where the pandemic was believed to have begun, lifted its lockdown on 8 April. While many countries across the world have begun to impose restrictions on the movements of the people, the city with up to 11 million people, return to normalcy.

In the past weeks, when the rise in the number of coronavirus cases began to slow down, China followed partial ease in the restrictions allowing people to move out of their homes slowly. With the formal removal of the lockdown, highway tolls, trains, flights, and local transport services reopened in Wuhan. 
 
What is the background?
The outbreak is believed to have begun in November 2019, linked to a sea-food market in the Wuhan city of Hubei province in China. Since then, more than 81,740 people have been confirmed as affected and over 3,300 people have died in China, the majority of them from the Hubei province. To contain the spread of the virus, unprecedented restrictions on the movements of the people were imposed. The Wuhan city was on complete lockdown, with some areas reporting crucial deaths and spike in cases under a total shutdown. This included shutting down of businesses, transport services, and educational institutions. 
 
In March 2020, when no new infections were reported for a week, shopping malls were reopened for the first time but permission to leave home for two hours was given to only those in the 'epidemic-free' residential areas. From 8 April, residents cleared for good health were allowed to use public transport after showing their QR code that is linked to their health status. Industries that are linked to national and global supply chains were reopened. Limited air service was provided to 10,000 passengers after being tested to be in good health. Among the passengers who departed Wuhan on 8 April, many were those who were stranded in the city for the past four months. 
 
What does it mean?
After setting precedents for lockdowns across the world, Wuhan seems to be setting a new precedent on what to expect when lockdowns are lifted. The pressure on the administration has increased after the lockdown is lifted. 

In two days, people were seen protesting against rent payment in Wuhan, and the issues relating to cremation have posed a challenge to the governance in the city. It is needless to expect that Wuhan will not witness more such issues in the coming weeks. The socio-economic challenges faced in Wuhan may be true for the realities of other regions as well in the coming months. 

Though the movement in the city has resumed, there is a ban on gatherings at cemeteries and crematoriums for another month. With the likeliness of COVID-19 'reactivation,' the outcomes would be disastrous. As it remains unclear whether the virus would re-emerge or mutate, sufficient precautions are imperative in the city that now reopens.  

Yemen: Saudi Arabia-UAE coalition declares ceasefire while Houthis balk

What happened?
On 9 April, the Saudi Arabia-UAE coalition fighting the Houthi rebels in Yemen declared a two-week unilateral suspension of hostilities. The commencement of the ceasefire was announced by the coalition's spokesperson Colonel Turki al-Malki. Armed rebels allege the move is partly in response to the UN truce calls owing to the novel coronavirus pandemic. Houthis accused the coalition of continuing use of airpower during the ceasefire, refused to observe the ceasefire unless the coalition lifts the years-long siege, and vowed to continue attacks on industrial sites and military installations.

Meanwhile, on 10 April, Yemen confirmed its first coronavirus infection in its southern province of Hadramout and is bracing for an outbreak.

What is the background?
In 2014, ever since the Houthis toppled Yemen's government from power in Sanaa, the country has been mired in conflict. The ongoing Yemen war, widely recognised as a costly and unpopular proxy war between Iran and Saudi Arabia, has killed over 100,000 people, pushed over 15 million people to starvation and famine, forced thousands into displacement camps, led to recurrent outbreaks of deadly diseases such as cholera and caused the worst humanitarian disaster according to the UN. Import restrictions imposed by the Saudi-led coalition and military deadlock has worsened the dire situation. In 2019, UAE withdrew its troops, scaling down their presence in Yemen significantly. Riyadh stepped in to fill the void.

During the first week of April 2020, UN special envoy Martin Griffiths had sent a nationwide ceasefire proposal, calling for halting ground, naval and air fighting, to Yemen's internationally-recognised government, the supporting Saudi-UAE coalition and the Houthis. Presently, the later controls Sanaa and the northern parts of Yemen. Prior to the recent ceasefire, the Houthis had sent a comprehensive plan, detailing foundations for a transitional period and political dialogue, to the UN.

What does it mean?
The suspension of hostilities serves three purposes: first, it prevents the outbreak of the pandemic in Yemen; second, it de-escalates the conflict; and third, it gives Houthis an opportunity to partake in the UN-sponsored negotiation/settlement talks. The pandemic situation is being utilised by the UN and Western allies to bring the armed groups to the negotiation table.

Nevertheless, as the war has devastated the country's healthcare system Yemen's first coronavirus case rings a catastrophic alarm.

Malnutrition and diseases are rampant in Hadramout, a province wherein the coastal towns are controlled by the Saudi-UAE coalition and the remaining by al-Qaeda fighters. It is only a matter of time before a highly proliferous coronavirus outbreak with a spiralling death toll devastates Yemen.


The US accuses the WHO of being China-centric

What happened?      
This week there has been a different and a series of interrelated developments between the US and the World Health Organisation. On 7 April, the US President Donald Trump announced a cut in aid to the WHO: "We're going to put a hold on money spent to the WHO, we're going to put a very powerful hold on it and we're going to see." In response, on 8 April, the WHO regional director Dr Hans Kluge said, "the acute phase of pandemic is not the right time to cut funding."

This was followed by Trump's criticism of the WHO on 9 April where he said in his daily briefing, "The organisation receives a vast amount from the US and pointed out that their work has been China-centric."

What is the background?
The US President's criticism of the WHO came after the organisation criticised Trump's policy to restrict and quarantine those who have come from China. On 7 February US decided to restrict the entry of nationals and foreigners with a recent travel history to China and WHO issued a sharp remark that, "restricting the movement of people and goods during public health emergencies is ineffective in most situations and may divert resources from other intervention." The New York Times has reported that there have been around 4,30,000 people who had arrived from China even after the travel restriction. The US, who is witnessing the highest number of deaths from the pandemic, has called for desperate measures. In this the differences with WHO has led the country to cut its contribution from  USD 122 million to 58 million in its recent budget proposal for 2021. 

The US Republican Senator Lindsey Graham vowed off 'no funding for the WHO'. On a similar line, Republican Senator Marco Rubio called for the resignation of the WHO director saying, "He allowed Beijing to use WHO in misleading the global community". The US has been the largest contributor, with USD 400 million, whereas China has contributed only USD 44 million last year.

On 8 April, the Director-General Dr Tedros Adhanom Ghebreyesus in a press meeting called on all the leaders to not 'politicise' the situation and highlighted the global cases that have crossed 1.4 million with 83,000 deaths.

What does it mean?
First, the ban on the US aid to WHO may adversely affect, the economic condition of the developing countries who are dependent on the WHO funds to combat the pandemic. Further, these cuts on international organisations might affect the functioning of the organisation. Second, The Trump-WHO argument, is again indicative of Trump administration disapproval towards an international organisation that doesn't benefit the US. During his tenure, he has withdrawn from various international organisations such as UNESCO and UN Human Rights. Third, aid cut is also one of the ways in deviating attention from COVID-19 when the great powers fail to control the crisis.

ALSO IN THE NEWS

Afghanistan government releases 100 Taliban prisoners
The Afghanistan government released 100 Taliban prisoners on 8 April, aimed at taking the peace talks forward. This comes in the wake of fall out of prisoner swap talks between the Taliban and the Afghan officials. It seems that the government is under great pressure from both the Taliban and the United States. The peace talk is dependent on the release of the prisoners, and this is extremely precarious for the Afghan government. The US is pressurising Afghanistan to solve the dispute over the presidential elections and also to take forward the peace talks with the Taliban.

Bernie Sanders quits Presidential race
Bernie Sanders suspended his campaign for the Presidential nominations, making way for Joe Biden, to be the Democratic Presidential nominee for the 2020 elections. Though Sanders had the lead over Biden initially, the latter overpowered him in states like Florida and Illinois. The election campaign was also trailing in Michigan and Missouri before the Democratic primary season was suspended following the outbreak of the coronavirus pandemic shuttering the campaigns and forcing states to postpone their primaries. This affected the momentum of Sanders' campaign and with his loses in crucial counties; Sander's quits the Presidential race. 

SAARC virtual meet on COVID-19 and regional trade
On 8 April, the senior trade officials of SAARC held a virtual meeting and discussed the impact of COVID-19 on the economy and regional trade. This comes after the heads of states of the SAARC countries discussed the regional efforts to combat the pandemic. Pakistan skipped the meeting, stating that it was India's unilateral decision and did not involve the SAARC Secretariat. The focus of the meet was innovating and finding new ways to trade until normalcy limped back post COVID-19. Issues such as the use of a digitally signed certificate of origin and digital documents for clearance of customs were discussed. 

Japan declares an emergency, as COVID-19 cases surge in Tokyo and Osaka
Japan's Prime Minister Shinzo Abe declared an emergency for a period of one month, beginning from this week. The measure is taken, as there is a sudden surge in the number of cases of COVID-19 in the urban areas of the country. The emergency would last till 6 May 2020 and would apply to Tokyo, Osaka, Chiba, Kanagawa, Saitama, Hyogo and Fukuoka. Japan is taking these measures to limit the spread to the urban centres, as the large older population lives in rural areas. While announcing the state of emergency, Abe also announced a huge stimulus plan to help the economy steer through the crisis. 

Iraq President designates a new Prime Minister
President of Iraq Barham Saleh named Mustafa al-Kadhimi as the Prime Minister-designate. Chief of Iraq's National Intelligence Service, Kadhimi is the third Prime Minister-designate in a row, as previous nominees Mohammed Allawi and Adnan al-Zurfi failed to muster the political clout. If successful in getting approval from the Parliament for his cabinet, he would be the Prime Minister but will have to face steep challenges such as combating the pandemic and fulfilling the aspirations of the people who protested in large numbers until the dawn of COVID-19.

Russia battles surge in COVID-19 cases
Russia is witnessing spiralling COVID-19 cases, with 13,584 cases and 106 deaths as on 11 April 2020. Moscow is the hotspot, with 8,852 cases. The clinics and hospitals in Moscow are likely to reach their maximum capacity. This has prompted Mayor Sergei Sobyanin to announce stricter measures, to control the further spread. 

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