GP Team

The World This Week # 66, 09 May 2020, Vol 2 No 19

Harini Madhusudan, Rashmi B R, Lakshmi V Menon, A Padmashree and Aarathi Srinivasan

Trade Talks: Amid tariff threats, the US-China officials discuss Phase One deal 

What happened? 

On 8 May the Chinese Vice-Premier Liu He, the US trade representative Robert Lighthizer and the US Treasury Secretary Steven Mnuchin discussed the future of the phase one trade deal for the first time since the deal was concluded between the US and China in January this year. 

The officials from the US and China "vowed to create favourable conditions to implement the phase one trade deal" and "despite the global health emergency, both countries expect to meet their obligations in a timely manner" while promising to keep meeting regularly, they mentioned the need to cooperate on public health.

What is the background?

Both China and the US had been unable to fulfil the terms of the deal due to the outbreak of the pandemic and agreed to use the slow reopening of their respective economies to create the infrastructure needed to fulfil the terms of the deal. The trade data in the first quarter of 2020 showed that China has not been able to meet the import targets due to this disruption in supply chains and had imported only 414 billion dollar worth of the US goods.

At the core of the US-China Phase One deal is the agreement that China will buy 200 billion dollar worth of the US goods and services, and in return, the US would suspend some of the tariffs that the US President Donald Trump had announced in January 2020. The announcement of the phase one deal in mid-January, 2020 marked a thaw in the tariff war between the two economies and easing of the trade tensions. At the same time, when the COVID-19 pandemic began to spread across China, strong restrictions on movement and trade had to be put in place. 

However, in April, Trump threatened to place more tariffs on China if the latter fails to hold their end of the bargain. This was followed by several unsubstantiated statements from the US President and the Secretary of the State that the virus was confirmed to have originated from the virology lab in Wuhan. 

What does it mean?

The discussion on phase one deal has come when a new wave of the trade dispute between the US and China seems to be emerging as countries continue to deal with the effects of the spread of the virus. The mistrust between the two parties amid the virus outbreak has made the phase one deal a liability. 

The negotiators seem determined to keep the politics of the pandemic and the commercial interests with which the phase one deal was signed, separated as long as possible to ensure that the tensions do not reach the tipping point.

Keeping in mind the damage on the global economy in the past months from the pandemic, it is important for both to ensure that the phase one deal does not fall apart with new tariffs. However, with the US elections in November 2020 and all campaign strategies scattered, it remains to be seen whether this trade dispute will join the domestic election narrative.

Threatening Food Security: Locust attacks across East Africa, Iran and Pakistan
What happened?
On 7 May, Dawn, one of the leading dailies of Pakistan quoted an official involved in inter-agency cooperation to address locust control in the country, that the situation is "far worse than anticipated" and informed that Pakistan is "pressing countries that are having or are expected to suffer from it to take action, improve coordination, share data, and exchange information on the control measures taken so far." In March, Pakistan had proposed a high-level technical committee in South West Asia to address the threat.

Also during the week, Iran's Ambassador to Pakistan, Syed Mohammad Ali Hussaini called for enhancing cooperation among the countries worst hit by the locusts. Tehran and Ankara have offered complete cooperation and technical expertise in controlling the pests.

The Food and Agriculture Organization (FAO), has warned the countries of "a potentially serious food security crisis" due to the persisting locust attacks across East Africa, parts of West Asia and South Asia. Kenya, Ethiopia, Somalia, South Sudan, Tanzania, Uganda, Iran, and Pakistan are among the worst affected countries.

What is the background?
The disastrous locust attack traces its genesis to 2018 when Luban and Mekunu cyclones made landfall in Yemen and Oman respectively and created lakes and puddles in desert areas. These became a breeding ground for the locusts. The swarms then moved to East Africa, where they further got favourable conditions for breeding because of the prolonged wet season and unseasonal rainfall and flooding.

The locust invasion of 2020, which is the continuation of the 2019 outbreak, is the worst in at least 25 years. There is a grave threat from the ongoing second wave of locust infestation now seen in East Africa, Iran and Pakistan predominantly. Reports point that a swarm of a third of a square mile has the capacity to consume the same amount of food as around 35000 people in a day. The situation is alarming, as the new swarms in Uganda, Kenya and Somalia comprise mostly of adult locusts. Food supply and dwindling livelihoods will be a significant challenge, especially when the world is grappling with the outbreak of COVID-19.

The locusts have evolved to be immune to the toxicity of the pesticides. The attack persists even though pesticides are being sprayed. The poor quality of the pesticides also adds to the problem. Turkey has now promised Pakistan to export pesticides for tackling the issue.

Third, it seems like climate change is directly or indirectly linked to the locust invasion as well. Scientists at FAO have noted the changes in the breeding season of these pests. Unseasonal rainfall and "Indian Ocean Dipole" (sea warming phenomenon) resulting in unusual cyclones are the reason behind the changing breeding season and the unusual breeding grounds in deserts.

What does it mean?
First, the ability of the individual countries to deal with it. Pakistan is already in the midst of a serious economic crisis and is waging a two-front war against COVID-19 and the locusts. In such a scenario, it is a daunting task for the government to mitigate the impact of the latter. The provinces, particularly Sindh, has accused the centre of not doing enough to deal with the situation. Due to the gravity of the issue, Pakistan called for international cooperation to combat the infestation.

Second, there is a need to work on a regional framework that would bring the affected countries, their resources and expertise together. The geographic continuity of the locust problem (from east Africa to India) mandates the need for such regional cooperation.

Third, FAO and the regional/national level organizations provide warnings about the incoming locust invasion. However, apart from early warning, there must be enough focus on solutions and capacity building in these countries. A combination of early warning and capacity building would enable better preparedness to fight the swarms.

Iraq: Mustafa al-Kadhimi is the New Prime Minister
What happened?
On 6 May, after six months of political deadlock, Iraq's Parliament has a new PM and also a new cabinet led by Prime Minister Mustafa al-Kadhimi. In forming the cabinet, there were rejections of several candidates and parties squabbling over cabinet seats in private deals. Of the proposed 22-seat cabinet, 15 ministers were approved; seven ministries including the key foreign affairs and oil portfolios, remain empty.

Al-Kadhimi, a former journalist and Iraq's intelligence chief, is considered a pragmatic with good relations across the Iraqi political spectrum. Asserting that his government would be "solution-based" and "not a crisis government", al-Khamidi promised early elections and scorned the use of Iraq as a battleground by foreign nations and pledged to solve the economic crisis through oil-export negotiations and expense rationalization. 

What is the background?
In October 2019, strong anti-government protests had swept across Iraq. Widespread frustration due to unemployment, corruption, political sclerosis, political cronyism, bad fiscal management and poor public services were the rallying issues in the protest movement that sought an overturn of the elite government in power. 

The government then led by Prime Minister Adel Abdul Mahdi responded by coming down heavily upon the protestors and killing hundreds that ultimately culminated in his forced resignation. However, until Allawi's appointment in February 2020, Mahdi maintained a caretaker government. 

Amidst this protracted political wrangling and turmoil, the twin crises of the pandemic and plummeting oil prices have worsened Iraq's economy and society. Currently, Iraq is facing a declining economy with no quick fixes or easy patches to dwindle the widening schism between Iraq's financing needs, shrinking oil revenues and mass youth unemployment issues. 

What does it mean?
The task before the new government led by al-Khadimi's government is substantial. 

First, the new prime minister will have to negotiate and achieve an agreement upon all portfolios. To secure a vote of confidence, Khadimi traded 90 per cent of his freedom to choose his cabinet; the main political parties picked his cabinet ministers in an informal power-sharing system of apportionment. 

Second, al-Khadimi will have to manoeuvre the dangerous criticism, which only allows Shia parties to pick ministers. Third, the country faces a budget gap with a high fiscal deficit. World Bank says Iraq could experience a financing gap of 54 billion dollars in 2020. The new government will have to present a balanced budget addressing this fiscal deficit. In addition, the plunging oil prices have further devastated Iraq's economy. A minimum oil price of 58 US dollar /barrel is required for Iraq to meet its domestic pension and wage obligations alone. 

Finally, the protests led by the unemployed youth, that dethroned Mahdi and brought the government to its knees, endures as figurative aspic. The pandemic may have put the large gatherings by demonstrators on hold but the protests will revive if the demands of the people remain unresolved. 

Israel: Supreme Court approves ruling coalition deal despite Netanyahu's indictments
What happened?
On 6 May, Israel's Supreme Court upheld the ruling coalition deal between Prime Minister Benjamin Netanyahu and the Blue and White party leader Benny Ganz. The court's approval came despite the allegations of bribery, fraud, breach of trust, and corruption charges against Netanyahu. Maintaining an ambiguous stand on Netanyahu's accusations, the Supreme Court maintained that it could not intervene and found no legal basis to prevent the Knesset member Netanyahu from forming the government. 

While the decision has sparked anger amongst the opposition parties, it clears the way for Netanyahu to retain his position. He will still face the indictment trial on 24 May, which will have another impact on the coalition deal.

What is the background? 
There was a political tussle between the two leaders and their parties. Finally, the three-year coalition deal signed on 20 April between Netanyahu and Benny Gantz. Both have agreed on a power-sharing for the initial 18 months with Netanyahu as the Prime Minister and Gantz as the Deputy Minister. 

In the next 18 months, Benny Gantz will take the position of Prime Minister. The power-sharing deal between both the parties came after they failed thrice to get enough seats to assemble a government. While the Likud party faced criticisms of favouring its party members over public good during the pandemic, the Blue and White party lacked the political reputation and numbers in spite of having a high possibility and public favouritism of winning the election. In dismay, Gantz signed the deal with Netanyahu to gain the power to prove his leadership. 

Netanyahu used this deal as an opportune moment to remain in power while his position could be cut short through the corruption accusations. He has tactfully used the COVID-19 pandemic to influence the public and stitch a convincing arrangement to shift the opposition leader in alliance and most significantly the court's approval to keep him in power. 

What does it mean?
The main obstacle between Netanyahu and the leadership has been settled now and will have three implications. First, the stability of the coalition government remains uncertain. The partnership of both governments has benefited Netanyahu. But within the members of the Likud party, there is a dilemma whether to support the leader who is facing a trial that may or may not be in favour of the party's political image. While in the Blue and White party, Benny Gantz seemed to have broken the trust among his followers by signing the deal with Netanyahu. This has led the supporting parties to misinterpret Gantz's loyalty in the party. 

Second, the coalition has agreed to bring legislation from 1 July for the annexation of the West Bank. The approval of power to Netanyahu and his strong relations with the US President Donald Trump will be more than enough for the leader to carry out the annexation.

Third, it is a clear opportunity for Netanyahu to rehab the charges alleged against him. The indictment trial is expected to continue for two years. While the tenure of the Prime Minister is for 18 months, it is predictable that the position of Prime Minister will not be affected. This can lead to the further scuttling of the corruption charges by Netanyahu in order to keep him in power in future. 
 

Also, in the news

Beijing seeks evidence from Pompeo for blaming China for the coronavirus outbreak
On 6 May China challenged the US Secretary of State Mike Pompeo to provide evidence in support of his recent claim that the new coronavirus had originated and spread from a Chinese laboratory in Wuhan. The comment by the Chinese Foreign Ministry spokesperson Hua Chuanying is the first official rebuttal by the Chinese administration to Pompeo's statement and an effort to counter the narrative established by the Trump administration that Beijing needs to be blamed for the coronavirus pandemic that has infected more than 4 million people worldwide. 

The US attempts to get Taiwan onboard for the WHO meeting
The US diplomats have been creating an alliance with the European countries and other democratic states, to jointly push the WHO towards publicly encouraging China to allow Taiwan to join the conference as an observer. Taiwan has been successful in containing the coronavirus pandemic by closing its borders to China at a very early stage. The WHO has declined to take a public stance on the issue. 

Hong Kong lawmakers tussle amid a dispute over Chinese-Anthem bill
Tension erupted at Hong Kong lawmakers' meeting in a dispute over a bill that would criminalize disrespecting China's national anthem. The bill is likely to allow anyone convicted of insulting China's national anthem to be sentenced to up to three years in jail. The opposition groups criticized that the bill is another sign of Beijing squeezing Hong Kong's freedom of expression. 

The NAM Summit on COVID-19
On 4 May, over 30 heads of state and governments, including India, participated virtually in the NAM Summit which was chaired by Azerbaijan's President Ilham Aliyev. The theme of the summit was "United Against COVID-19". During the summit, the NAM leaders assessed the impact of COVID-19, identified needs and requirements for possible remedies and urged action-oriented follow-up measures.

EU-led global summit of leaders to tackle COVID-19 pandemic
An online global summit was hosted by the European Union on 4 May to raise funds for coronavirus vaccine. This global alliance, through pledges by different private donors and countries, raised an initial amount of 8.2 billion dollars for vaccine research and equitably distribute vaccines to tackle coronavirus pandemic. There was a call for cooperation and the countries also gave their backing to the WHO, which was criticized for its handling of the outbreak.

Modi attends NAM meeting but not EU meeting
Prime Minister Narendra Modi was seen attending the NAM summit while virtually being absent for the EU summit. The pandemic has forced India to strategically position itself, propagating global cooperation. The NAM summit was one such opportunity, where Modi showcased India's efforts to tackle the pandemic. While the reason for skipping the global summit is unknown, India's presence would have shown solidarity with the noble cause of the equitable distribution of the vaccine to tackle the pandemic.

Anti-democratic protests in Brazil
On 3 May, Brazilian President Bolsonaro joined a large demonstration who aired their frustrations with social distancing rules imposed to stem the coronavirus pandemic. The President attacked the Congress and the Court in a speech, explicitly advocating for the overthrow of the democratic institutions and condemning any future interference from the same. Protestors displayed the US and Israeli flags, along with Brazilian flags.

About the authors
Harini Madhusudan and Rashmi B R are PhD Scholars with the Science Diplomacy Programme at the School of Conflict and Security Studies, NIAS. Lakshmi Menon is a Research Consultant at NIAS. A Padmashree and Aarthi Srinivasan are Research Interns at NIAS. 

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