The Lebanese government has succumbed to the pressure of the people: Prime Minister Hassan Diab and his cabinet resigned on Monday. Protesters in the streets of Beirut are demanding further far-reaching reforms.

Diab’s Lack of Self-Awareness

The Lebanese government resigned on Monday in the aftermath of last week’s devastating explosion and the subsequent mass protests in the capital, Beirut. In a televised address, Diab blamed the widespread corruption in his country for the massive detonation and said that corruption was bigger in the country than the state of Lebanon itself.

The political class was the real tragedy of the Lebanese people. They had fought against the new government with all means to prevent changes, Diab said – and thus he excluded any personal responsibility. According to Diab’s victim narrative, his government had “endured a lot of false accusations”, that left him no choice but to “take a step back” in order to comply with the Lebanese desire for a “state of law, justice and transparency”.

Violence Continues to Spread

During his speech on Monday evening, clashes between demonstrators and security forces in central Beirut had erupted again, similar to those that occurred over the weekend, when demonstrators tried to enter parliament and fought with the security forces. They blamed the corruption and negligence of the government for the disaster. According to official information, one police officer was killed, and more than 200 people were injured.

Several ministers resigned from their posts afterwards. Most recently, Justice Minister Marie-Claude Nadschm and Finance Minister Ghasi Wasni on Monday. The previous week, during a visit to the site of the disaster, Nadschm had already been verbally attacked by protesters. Prior to Najschm and Wasni, Information Minister Manal Abdel Samad and Environment Minister Kattar Demianos had already resigned.

According to government circles, Hassan Diab had desperately tried to keep his cabinet together. He even sought to propose new elections to his cabinet on Monday in order to calm down the precarious situation, even though the next regular election in Lebanon would not have taken place until 2022.

Diab’s government has only been in office since January and after months of uncertainty. He succeeded Saad Hariri, who resigned after mass protests at the end of October, which were primarily due to tax levies.

Hezbollah’s Role and the Status Quo

Diab’s government was supported, inter alia, by Hezbollah, which is loyal to Iran and remains highly influential and powerful in Lebanon. Due to a severe economic crisis and the corona pandemic, large parts of the Lebanese population slipped into poverty during his tenure.

The leading political blocs in parliament must now agree on a successor. It is unclear how long this will take. Hezbollah plays a central role. Hardly any government can be formed against the organisation, which is considered a terrorist group by many foreign states. However, it is questionable whether a mere substitution of personnel can be sufficient to calm the situation, as the demonstrators are demanding far-reaching political reforms.

The International Community Gets Involved

Corresponding demands can also be heard from abroad. The International Monetary Fund seeks to help Lebanon with a rescue package but is demanding political agreement on comprehensive reforms. UN Secretary-General António Guterres also called for political changes. At the same time, he promised long-term support, saying “the United Nations system will continue to help Lebanon in this emergency in every possible way.”

The disaster on August 4, killed around 160 people and injured almost 6,000 in the port of Beirut. Large parts of the Lebanese capital have been devastated. The cause of the disaster is reportedly a fire that detonated 2,750 tons of ammonium nitrate. The cargo with the extremely flammable chemical had been stored in a hall at the port for years. Investigations are still underway, however.

L'articolo Lebanon’s Government Resigns in the Wake of Last Week’s Deadly Blast proviene da InsideOver.

The coronavirus has shifted European leaders’ attention away from the ongoing Brexit process, but the UK’s withdrawal from the EU continues thanks to negotiations currently taking place to draft a final trade deal.

However, both the UK and the EU have failed to make any progress during the Brexit negotiations so far. The key issue that both sides cannot agree on is fishing. The Guardian reports that the UK’s chief negotiator David Frost believes that his EU counterpart Michel Barnier recognizes the need to budge on this issue. Nonetheless, France, Spain and the Netherlands have imposed a tough line on this matter. They insist that these nations must continue to have access to British waters post-Brexit.

The Deadline to Conclude a Brexit Deal is Approaching

The deadline for a deal is fast approaching. The British Government has always insisted that if they cannot negotiate a successful trade deal with their EU neighbors, then they will quit the bloc with no deal.

Over the last few years, the EU has been ravaged by a whole host of issues: Brexit, Trump’s trade war, the automotive industry’s decline in the face of the bloc’s own CO2 emissions, and now the coronavirus. The latter has been particularly devastating for Europe’s economy as most of the bloc has gone into lockdown, with EU leaders struggling to agree upon a rescue package to mitigate the economic effects being caused by COVID-19. That is why the EU is the most vulnerable party in the midst of its trade talks with Britain and they cannot afford a no-deal Brexit.

According to the IMF, Ireland would suffer an output loss of four percent in the event of a no-deal Brexit. German car imports could be levied by a 10 percent tax under World Trade Organization (WTO) rules, and consultants Oliver Wyman have estimated that France would be the third most affected country by a hard Brexit costing French companies €4 billion a year.

Fishing is the Key to Ending this Deadlock

That is why Whitehall is drafting a legal text, or draft treaty, that will lay bare the stark differences between the two sides on key areas, including the maintenance of the British car industry and its supply chains.

To access EU markets, it would have to be shown that at least 50 percent of a British car’s components were British-manufactured.

Barnier’s team has rejected Britain’s suggestion to reduce the administrative burden of sanitary and physiosanitary checks at borders to protect plant, human and animal life. The legal text is expected to explain how an equivalence between British and EU rules can work.

A Deal is on the Horizon

Therefore, this draft treaty has the potential to avoid a hard Brexit, but it cannot work until both parties can compromise on the key issue of fishing. It would be unacceptable for the British to continue to participate in the EU’s Common Fisheries Policy, which sets quotas to conserve fish stocks. Quota hopping within the EU enables big commercial fisheries from nations like Spain and Denmark to grab British stock to meet their own targets.

Equally, the British fishing industry sells fish to other EU countries. In 2014-15 France, Spain and Ireland bought over 140,000 tons of British fish. That is why both the UK and the EU should clarify how British fish can be sold in the latter’s single market post-Brexit.

The Daily Mail suggests that European diplomats are beginning to get “realistic” about their position on fishing. This is probably what is happening behind closed doors.

Barnier refused to budge on the Withdrawal Agreement up until the end of last year. This proves that EU politicians are notorious for agreeing upon a deal at the last minute. But the situation is worse this time as the EU faces even more external threats than it did last year.

A deal is on the horizon and the draft treaty can make it happen, but it is time for the EU to shift its position on fishing.

L'articolo Will a Draft Treaty Prevent a No-Deal Brexit? proviene da InsideOver.

The economic fallout from the coronavirus pandemic will be unprecedented. Even if the American and global economy manages to achieve some stabilization post-COVID-19 through central bank stimulus packages and countermeasures, many small and medium-sized businesses will not survive. In addition to the millions of lost jobs in the United States alone, thousands of family-owned and medium-sized corporations and businesses are going under.

What Comes Next?

What comes next is exactly what everyone thinks: consolidation and big companies getting bigger. Larger businesses like Amazon, Microsoft, Wal-Mart, airlines, government contractors, massive grocery chains and all manner of other giant corporations will continue to scoop up any smaller fish in the pond as they grow to grotesque proportions. The end result post-COVID-19 will be a world in which large, tax-loophole-exploiting corporate behemoths who thrive under corporate socialism and government bailouts will be the only place to get a job.

Starting a business will be an impossibility for those struggling out from mountains of COVID-19 economic damage, not to mention even getting the financial liquidity to go up against market-dominating players who have actually been boosted as a result of the pandemic.

Profits Over People

The harsh and obvious truth is that governments care much more about their donors and economic partners than they do about their citizens. The US government got warmed up in 2008 and 2009 with its bank bailouts, and this time it’s the same approach on a larger scale and not focused on financial institutions — although large banks have made tens of billions in processing fees paying out emergency government loans to small businesses who are trying to stay afloat. Even when the government offers some help the middlemen manage to turn it to their advantage. It’s a win-win for the giant banks and corporations and a lose-lose for working people.

As Nassim Taleb put it of the last big bailout: “That was a blatant case of corporate socialism and a reward to an industry whose managers are stopped out by the taxpayer. The asymmetry (moral hazard) and what we call optionality for the bankers can be expressed as follows: heads and the bankers win, tails and the taxpayer loses. Furthermore, this does not count the policy of quantitative easing that went to inflate asset values and increased inequality by benefiting the super rich. Remember that bailouts come with printed money, which effectively deflate the wages of the middle class in relation to asset values such as ultra-luxury apartments in New York City.”

COVID-19 Has Been Great for Billionaires

While ordinary people including the upper-middle class and many who might be termed conventionally “rich” are suffering immensely during the pandemic, the ultra-rich and managerial “superclass” (as David Rothkopf coined them) are doing swimmingly. These are the folks who call the shots at a fairly senior level and work to shift entire economies and industries and they number around 6,000 worldwide. The pandemic hasn’t hurt billionaires like this for the most part. In fact, billionaire wealth has boomed significantly during this crisis. The panic and isolation of those in lockdown is only an opportunity for individuals like Jeff Bezos of Amazon, who has made over $25 billion just since March, to increase their profits.

Unsurprisingly, the head of Zoom Eric Yuan also saw a big jump in his earnings and is now worth around $3 billion and Bill Gates spent a recent interview with Fareed Zakaria chuckling as they talked about how unprepared the United States had been for COVID-19 and smirking and admitting Microsoft could do pretty well in the coming digital work gold rush while Zakaria talked about the economic suffering people will experience. Supposed free market global capitalism has slowly morphed into a worrying fusion of big government and big business that is starting to look vaguely similar to authoritarian movements of the past century and modern-day China which fused the military, government and corporate power into fascistic and communistic juggernauts of centralized surveillance and control.

Corporate Socialism

The reality of many “free market” economies is that they function as a sort of feeding trough for large, connected corporations to monopolize, risk capital within and then collect lifesaving funds if they fail. This essentially means bailouts, tax breaks and special rules for the largest corporations and industry leaders and an up-by-the-bootstraps rhetoric of tough luck and homeless shelters for working families employed by many of those large corporations and small or medium companies who go under during tough times or find the bottom-of-the-barrel wages they are offered insufficient. It is not as if workers haven’t noticed that their mega corporations are profiting off their backs while offering them peanuts, with a mass strike of Amazon, Wal-Mart, Whole Foods and Instacart workers planned for May 1.

While the occasional $1,200 stimulus check may indeed help out struggling individuals during these hard times, it is nothing compared to the yearly subsidies and tax breaks of giant corporations or for the scope of their market dominance. Regular businesses work to innovate products, services and reputation as they expand and branch out: mega-corporations seek to become the actual market itself and force merchants to do business on their terms and under their supply chains. Are you a small business that sells household items online? Well you can pump money into advertising and get a trickle of customers or you can join Big Daddy Bezos’ Fun Farm and give him the commissions he demands in return for a steady stream of purchases and product exposure.

Survival of the Biggest

Many wars, revolutions, crises and social shifts in history have been accompanied by, and even partly caused by, enormous economic change and changing economic needs of industry leaders and the ruling class. The Protestant Reformation, the American Revolution, World War One and Two, the end of apartheid in South Africa, the list goes on. Think of a social, military or political upheaval and you will find a significant economic aspect. However, it would be naive to imagine that money or profit is the primary factor driving economic concerns at the upper level, even if it drives them on the lower level. For the very wealthiest and most connected, particularly those linked to the actual creation of money by central banks, money is merely a means to an end. That end is, generally speaking, stability, control and a specific social and political vision. If one thinks back to even several decades ago, there seemed to be numerous different brands of soft drinks, for example, headquartered in different areas if you read the fine print and with different prices and styles. Now almost every can or bottle you pick up despite its surface brand is owned by Coca-Cola or Pepsi. Consolidation and control is the name of the game: in governance and sociopolitical engineering just as in the food industry.

Join or Die

The post-COVID-19 world will be different and it will have even less illusion of choice than the Google-run techtropolis that preceded it. There is no time for “future shock” because the future is already here. Whether it is the government or its affiliated mega-corporations the reality will be simple, especially for those who have fallen on particularly hard times as a result of the pandemic with their health, insurance costs and lost work. The message of the emerging technocracy will be simple: work at our companies, eat our food, take our vaccines, believe our news, live in our plural cities where the jobs are all located, or else face the consequences of being banned. Make sure you don’t fall prey to the siren song of that ultimate evil of populism: you wouldn’t want to lose your government check or be forced to stay out in no man’s land where the new, worse viruses and looters are, right? Like a twisted shadow version of Benjamin Franklin’s Revolutionary War cartoon, the writing of the consolidated corona-nomics economic future will be on the wall for all to see. Join or die. 

L'articolo Corona-nomics proviene da InsideOver.

Numerous countries have imposed lockdowns to tackle the spread of the New Coronavirus (Covid-19) that has killed more than 35,000 people globally. A lockdown is defined as the restriction of access to enter or leave a neighborhood, region or nation.

Covid-19 reportedly originated in a wet market in Wuhan, China, and subsequently spread quickly across the globe. The symptoms, which include a high fever, coughing, and breathing difficulties, sometimes overlap with those of the flu or other respiratory diseases such as SARS and pneumonia.

Lockdowns can be the most effective solution to curb the infection. However, implementing a lockdown is not an easy decision, nor is it simple given several considerations must be taken into account including the massive economic consequences.

Airline and Tourism Sectors Worst-Hit By Lockdowns

The coronavirus outbreak and resulting self-quarantining and lockdowns have particularly hurt several business sectors, namely the airline, tourism, and retail industries. According to the IATA (International Air Transport Association), the global airline sector is predicted to suffer a revenue loss worth $252 billion due to the pandemic which has infected 201 countries so far.

The tourism industry is one of the hardest hit by the outbreak as most countries have issued a travel ban to contain the virus. The World Travel and Tourism Council (WTTC) estimated that 50 million workers will lose their jobs in the tourism sector, as Reuters reported.

The tourism industry in Europe has lost $1.11 billion a month due to the pandemic, as the European Union (E.U) Internal Market Commissioner Thierry Berton said. Ten percent of the continent’s GDP comes from the tourism industry, as the European Travel Commission confirmed.

Italy’s hotel cancellation rate reached 90 percent, and 13 percent of the Italian economy consists of tourism. Italy has the highest Covid-19 death toll. As of March 30, the virus has killed over 11,590 people in the country so far.

Lockdowns Put Pressure on the Global Economy

Morgan Stanley predicts that the global economy would grow by 0.3 percent throughout 2020, but there will still be a -2.3 percent contraction.

“As the underlying drivers of the global recovery remain intact, growth should recover once the effects of the disruption fade,” the bank stated in a Reuters report.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said the outbreak would affect the lender’s 189 member countries, predicting that global growth in 2020 would stand at below 2.9 percent, and its revised outlook will be released in the coming weeks.

The Lockdown Dilemma

Lockdowns can be a dilemma for governments across the globe. They may suppress Covid-19’s death toll, but they can also trigger social unrest that can lead to panic buying. Also, low-income workers can be the most vulnerable to such measures.

India’s decision to impose a lockdown triggered panic buying. As many factories and offices there closed, thousands of migrant workers have vacated the country’s main cities, such as the capital Delhi, to return to their hometowns on foot.

According to Indonesian economist Rus’an Nurdin, lockdowns can minimize the impact of a recession caused by the pandemic. He suggested the Indonesian government can apply these three policies at a national level; the government must identify the group hardest hit by the crisis, they must reallocate the budget and then prepare for inflation.

Lockdowns Cause GDP to Plummet Sharply But They Can Speed Up Recovery As Well

Indonesia’s public policy expert Harryadin Mahardika echoed Nurdin’s statement, saying that lockdowns can cause GDP to plummet sharply, but they can speed up recovery rates as well. Whether or not governments isolate their regions is up to them. However, when a country is ready for a lockdown, it must protect the most vulnerable from both the virus and the impact of a lockdown.

L'articolo The Economic Impact of Lockdowns proviene da InsideOver.

The Chinese economy is a beast that’s not easily tamed. Through the most tumultuous of times — bloodshed at Tiananmen Square, the global financial crisis, Trump’s trade war — it has continued to grow. But now, in the face of Covid-19, it seems the world’s second largest economy has met its match. 

China’s Economic Outlook is Gloomy

Figures published this week paint a bleak picture. As the virus tore through China in early 2020, every sector went into decline. The result, analysts believe, could be the first contraction of the Chinese economy since the death of Mao Zedong in 1976.   

In January and February, retail sales plunged 20.5%, industrial output was down 13.5%, and investment dropped by nearly a quarter. A fall was expected in each of the categories, but the extent of the damage has shocked experts. 

“There is nothing in the history of this data to compare to this set of abysmal figures,” said Iris Pang, a Hong Kong-based economist at ING.

Economic Calamity as a Result of Beijing’s Draconian Containment Methods

The current economic calamity is a consequence of Beijing’s draconian approach to containment. As the virus spread, officials moved aggressively to lock down China. Whole cities were cut off, businesses shut, and the movement of people and goods prohibited.    

It was a painful process, but one necessary to stem the spread. Now, as the number of new infections starts to tail off, efforts to reboot the economy are underway. 

The government is vigorously encouraging companies to return to work. Almost 95% of large businesses outside the disease’s epicenter in Hubei province have reopened, with around 60% of small to medium-sized outfits up and running again. But with millions of migrant workers still under quarantine or trapped in their hometowns, many factories and manufacturing centers lie dormant.  

A gradual easing of social isolation measures should correct this, ministers say, but more direct financial stimulus is needed. To this end, Beijing has announced a raft of new policy measures: interest rate cuts, liquidity injections, and a relaxation of taxes.

Halting the Chinese Economy Was Hard, Restarting it Will Be Harder

Beyond restoring domestic economic stability, the Chinese government has a clear incentive to get on the right footing. While the world succumbs to Covid-19, China — having survived the worst of the virus — is in a strong position to take advantage of foreign frailties and surge to a dominant position.

A recent report by Horizon Advisory, a consultancy that tracks Chinese government and economic activity, suggests that Beijing is preparing to seek out more foreign direct investment, seize market share in critical industries, and flood the market with Chinese-made goods while the West is in lock-down.    

The pandemic’s global nature may prove a poisoned chalice for China, however. With more cases of Covid-19 now reported outside of the country, international demand for Chinese products is going to plummet. As sales drop, supply chains linking China’s industrial centers to the world will fragment. Already there is evidence of multinational companies acting to reduce their reliance on the country, shifting manufacturing bases and sourcing new suppliers in different locations.       

Imports, too, will be affected. Chinese factories are dependent on fuel, iron and other key components from all over the world: Angola, Sierra Leone, Chile, Brazil and Australia. Chinese consumers also have a taste for American coffee chains and fast food, and love to drive German cars. If these markets dry up, experts say a global recession is in the offing. 

And there’s more bad news: the economic data for March could be significantly worse than that of January and February, analysts warn. Unemployment rates are soaring too: as many as 5 million people have become jobless since late last year — and consumer confidence remains at rock bottom.

Halting the Chinese economy was hard; restarting it will be harder. That’s bad news for all of us.

L'articolo China’s Economic Recovery Far From Certain Amid Global Recession Fears proviene da InsideOver.

As the coronavirus continues to impact upon the global economy, the President of the European Central Bank (ECB) Christine Lagarde has launched an emergency €750 billion package to ease the impact of the pandemic. It will buy government and company debt across the eurozone, including the troubled member states of Italy and Greece.

Details of the ECB Package

However, it will only be a short-term asset-purchasing scheme and it will end once the ECB determines that the Covid-19 crisis phase is over. Furthermore, the US Federal Reserve stated it would cooperate with other central banks to boost the availability of dollars for commercial banks. This is an important tool that was used to preserve stability during the 2008-09 financial crisis.

What Motivated the ECB’s Decision?

The ECB President’s actions have been motivated purely by politics. Lagarde said herself that “there are no limits to her commitment to the Euro.” The ECB is restricted to purchasing up to 33 percent of a member state’s debts, which shows that the central bank is willing to smash its own fiscal rules in order to preserve the single currency.

Before Covid-19 spread throughout the globe, many journalists were anticipating that Italy would crash out of the Eurozone at some point. The ECB President’s latest move shows that she will not let a global pandemic destroy the Euro by buying not only Italy’s debts, but Greece’s, too.

Even the Daily Telegraph’s Jeremy Warner writes that many EU member states have spent so much political capital on the European Monetary Union (EMU) that policymakers are determined to prevent the coronavirus from destroying the eurozone, even if that means the single currency has to stagger on.

The reality is that the EU is doing everything it can to minimize the impact a recession is going to have on the European economy. The Organization for Economic Cooperation and Development (OECD) slashed the Eurozone’s growth rate to 0.8 per cent from 1.2 per cent earlier this month.

European Commission President Ursula von der Leyen has promised “maximum flexibility” in the implementation of state rules and the Stability and Growth Pact. In addition, member states are holding on to €8 billion of unspent funds that would be redirected to urgent needs related to the pandemic, which could potentially unleash €37 billion.

No Guarantees That the Eurzone Will Survive Post-Coronavirus

But this stimulus will not solve the eurozone’s problems in the future. As Doug Holtz-Eakin, the President of the American Action Forum and a former top economic adviser to George W. Bush and John McCain, told NY Mag when discussing the same situation in America, there is no evidence that supply shocks can be fixed through fiscal stimulus. Demand is likely to rise sharply once the number of Covid-19 cases drops over time, and that will boost economic activity. Fiscal measures only increase debt in the longer term, which will not help any European states when this is over.

Many EU members know that the financial consequences of tearing apart the Eurozone will be catastrophic. Martin Wolf of the Irish Times stated that the single currency can survive through the creation of cross-border finance and it must be easier for Eurozone states to restructure debt. Banking and capital unions are vital to ensure the single currency survives. Of course, all single currency members would need to agree with each other that this needs to happen, and the current climate might persuade many nations to adopt measures that can preserve the Euro’s existence.

Nonetheless, the Eurozone’s survival beyond the coronavirus is not guaranteed. It will require a tremendous amount of political will to persuade all Eurozone states to strengthen the mechanisms necessary to secure the single currency’s future. It remains yet to be seen whether that will happen or not.

L'articolo Will Lagarde’s ECB Stimulus Ease the Coronavirus’s Economic Impact? proviene da InsideOver.

The World Health Organization (WHO) confirmed 168,019 cases of the novel coronavirus, with 6,610 confirmed deaths in 148 countries and territories worldwide as of March 16.

Nations in Lockdown

Italy, Spain, China, France and the United States are all in lockdown. Countries in Africa and Latin America, meanwhile, where the outbreak is still relatively small, have closed their borders to foreigners, as schools, universities and businesses shut down worldwide.

As the crisis shifts westward, China has begun to relax its tight quarantine restrictions. On Friday, March 13, China reported only 8 new cases of Covid-19, three of which were reportedly imported by foreigners. With governments worldwide struggling to contain the spread of the virus, the China-US imperialist war rages on, as both governments blame the other for the introduction of the virus to the world.

Global Health: a New Battlefield in the US-China Showdown

US media, such as the Washington Times and the New York Times, have published pieces discrediting Chinese-boosted claims that the virus originated from US laboratories. The World Health Organization – often another battlefield between the US and China – also refuted China’s claims last week.

“We have neither seen the allegation nor any evidence to support it,” WHO spokesman Christian Lindmeier told the Washington Times.

On the other side of the trenches, China’s spokesperson and deputy director general of the Foreign Ministry Information Department blamed the US. In a post on Twitter, he wrote: “What are the names of the hospitals? It might be U.S. Army who brought the epidemic to Wuhan. Be transparent! Make public your data! U.S. owe us an explanation!”

The Inevitable US Recession

On March 12, the S&P 500 and the Dow Jones Industrial Average registered the biggest one-day percentage drop since the October 19, 1987 crash, amid fears of the coronavirus, and the crude oil price war between Saudi Arabia and Russia.

Michael Wilson, Morgan Stanley’s chief US equity strategist, has predicted a US recession because of the coronavirus. Goldman Sachs’ economists had originally stated at the start of 2020 that the US economy was recession-proof. Their prediction had not taken into account a global pandemic.

US experts have warned that many workers are not adequately prepared for economic emergencies. Businesses have begun to layoff workers in a country where an estimated 53% of people live paycheck to paycheck. Abating the situation, US federal laws dictate that American companies are not required to pay severance during layoffs.

Millions of Americans are in Danger of Imminent Job Loss While China Starts Up Again

Millions of Americans now face losing their jobs, and small business owners are beginning to report limited to no supply, and lost sales. The effect of a pandemic in the plutocratic United States, where free universal healthcare is not offered, could prove to be further disastrous for the country’s potential slide into recession.

Further problems arise with an unpredictable upcoming national election, and President Trump’s widely criticized response of downplaying the pandemic.

China today is the world’s biggest engine of global economic growth. The World Bank estimates that China totaled 35% of global GDP growth (in nominal terms) between 2017 and 2019. China’s factory closures under the lockdown last month have seen problems arise in global supply chains.

Factory production has re-started in China, and shops have begun to re-open, all under tight control measures. Zhang Kejian, Deputy Minister of Industry and Information Technology, told state media last month that over 43% of small and midsize enterprises in China’s manufacturing sector had resumed production.

As the US struggles to handle the pandemic, China has been praised for the way it has managed the coronavirus. Its authoritarian-socialist state was able to implement a complete lockdown, and test and hospitalize citizens at a cost to the state, not the individual.

Since the re-opening of its factories, China’s stock market has rebounded healthily. Investors expect that, similar to the post-SARS outbreak in 2003, the Chinese government will launch a big effort stimulus spending to compensate for the financial loss that the lockdown propagated. The Chinese government, however, is in no financial condition to do so. It plans to extend loans, subsidize rents for struggling retailers and offer tax cuts to affected businesses.

‘No Choice but to Defeat it Together’

“To cope with Covid-19, every country is left with no choice but to defeat it together,” Professor Ali Mohammed Zaki, who discovered the MERS coronavirus said.

US-China relations are presently strained. Without a friendly partnership, the US is likely to succumb to recession, while China’s economy is large enough to withstand its bout with the virus.

“In nominal terms, China’s GDP in 2018 is about two-thirds that of the US, and the gap is closing year by year due to higher growth rate in China than in the US,” said Dr Zheng Wang, Associate Professor of Economics at De Montfort University in January, in an interview given before the impact of the coronavirus become well-known.

“However, the total GDP figures mask the fact that China has a population four times that of the US. In terms of GDP per capita instead, the US is still much richer, six times that of China in nominal terms and 3.5 times in PPP.

“It looks it will probably take at least many more decades—if not centuries—for China to be as rich as the US in terms of wealth per person, and this is based on the assumption that China’s relatively high growth rate can be sustained which itself is highly debatable as in terms of the primary driver of long-term growth —original innovation and creativity in new technology—China is not even close to the US.”

How Can the West Weather the Storm?

The economic circumstances surrounding both countries have changed drastically in ways that experts could not have predicted.

Earlier in March, the Global Times tabloid newspaper (run by the Communist Party of China) wrote an article calling for a “fresh China-EU coordination mechanism”. Although the article stated that without global cooperation and coordination more economic harm would occur to nations globally, this global cooperation coincidentally exempted the US.

China is eyeing an accelerated rise to power as it deflects blame for the virus to its rival, the US. Nations around the world can only defeat the coronavirus through using the same kind of economic cohesion that is granting China greater world power.

L'articolo Will America’s Coronavirus Recession Accelerate China’s Rise to Power? proviene da InsideOver.

American President Donald Trump welcomed Brazilian leader Jair Bolsonaro Saturday, March 7 to his Mar-a-lago estate in Florida where the two reportedly talked about Venezuela and closer cooperation between Brasilia and Washington, particularly on trade.

What Did Trump and Bolsonaro Agree On?

In addition to discussing the crisis in Venezuela and the US-Brazil perspective on it, the focus of the meeting was economic. Specifically, Brazil and the United States are hoping to pass a large bilateral trade deal this year. Trump is also throwing his considerable weight behind Brazil joining the ranks of the Organization for Economic Cooperation and Development (OECD), which would be a big step up for the economically important nation.

Brazil is the ninth-biggest economy on the planet and the United States is Brazil’s second-biggest trade partner after China. Brazil and the US did a whopping $103.9 billion in two-way trade in goods and services in 2018 alone, for example. Brazil is also the eighth-biggest source of visitors to the United States and the two governments cooperate in many respects including on technology, space exploration and medical research. Trump and Bolsonaro further agreed last March that they will be hosting further talks in the future about bringing American and Brazilian energy and investment closer together.

Trump and Bolsonaro: Peas in a Pod

The two also ironically spoke about a project called the Trillion Trees Initiative to stop deforestation and save one trillion trees by 2050. Trump has systematically and significantly slashed environmental regulations and funding to the Environmental Protection Agency in the United States, while Bolsonaro drew widespread opposition for his lackluster response and initial denial of massive forest fires that burnt down 20,000 hectares of the Amazon jungle. Both leaders rode to victory on a populist wave including angry denunciations of China and global trade only to soften and backpedal their approach once in office. Both have also relentlessly stoked cultural and political anger to increase enthusiasm for their movements and promise to be safeguards against any attempts at resurgence by the left.

Further similarities include the close involvement of the Trump and Bolsonaro families in their patriarch’s affairs, also known as nepotism. Bolsonaro tried to install his son Eduardo as ambassador to the United States, despite the fact that Eduardo barely speaks English and Bolsonaro’s eldest son Senator Flavio Bolsonaro has been accused of extensive corruption and had his former office raided last December in response to 24 related warrants. On the Trump side, numerous credible accusations of corruption in the Trump family including easy acquisition of coveted Chinese patents by Ivanka Trump have long been on the radar of investigative journalists.

More Similarities on the Domestic Front

Trump and Bolsonaro are both strongly supported and opposed in their own countries. In Brazil, the left calls Bolsonaro supporters “Bozominions” and it is common to see the term used in a derogatory way toward those on the right. In contrast, right-leaning Brazilians consider the left to be incompetent moochers who spent years milking Brazil’s economy dry and are not worthy of a seat at the table. Speaking to Inside Over on March 2, Uber driver Manasses said that Brazil’s socialist left had enough years in power and that now it is Bolsonaro’s turn and — even though he does not regard the leader as perfect by any means — he is doing a good job of helping the economy and keeping the country in order. A member of Brazil’s PSOL (Socialism and Liberty Party), meanwhile, who preferred to remain unnamed, said that Bolsonaro is a dictator and thug who does not deserve to be in office.

The US-Brazil Approach to Venezuela

Venezuela is currently suffering under tightening US sanctions and an embargo, plunging millions into food insecurity and extreme instability. Unsuccessful coup attempts by recent State of the Union guest Juan Guaido have done little to ease the iron grip of leader Nicolas Maduro who holds onto power from Caracas. There is no question the US wants Maduro out: the question is how far Washington and its allies are willing to go and how many civilians they are willing to see suffer and die in the process.

Last spring Brazil backed a “negotiated exit” for Maduro, which was clearly unsuccessful. Bolsonaro has also stated support for Guaido and urged allies to follow suit, decrying that the Venezuelan people are “enslaved by a dictator” on Twitter. However, Brazil has not taken the step of deploying members of the Brazilian military to intervene in Venezuela. In February of 2019 — just over one year ago — Trump said US military deployment in Venezuela was “an option.”

Venezuelan Refugee Crisis

In January of this year Washington supported a plan to resettle Venezuelan refugees in Brazil, contributing significant funding and resources via USAID. The program is called Economic Integration of Vulnerable Nationals from Venezuela in Brazil. So far an estimated 4.6 million Venezuelans have run away from the poverty and violence in the country with nearly one million escaping to Brazil. Hundreds are still entering each day, particularly in Brazil’s border states like Roraima, where violence has also broken out with a devastating impact. Most Venezuelans continue on to Spanish-speaking nations elsewhere on the continent, but almost 300,000 have applied to stay in Brazil permanently.

The Trumponaro Show: Double-Talk Deluxe

As in so many other conflicts around the globe, it is odd to see nations such as the United States aping humanitarian responses to conflicts which they helped to significantly worsen and enable. Taking the United States and Brazil at their word on environmental action, refugee aid and collaboration on Venezuela for reasons of human rights is difficult to do when Washington’s decades of Latin American policy and undermining of governments and national economies contributed so much to the situation today — not to mention the obvious and ongoing relevance of Venezuela’s oil industry to America and Brazil’s interest in Caracas’ crisis. Nonetheless, the fact remains that for millions of Venezuelans and Brazilian and American workers — particularly those whose jobs may not be overly environmentally-friendly — Trump and Bolsonaro may be the best friends they’ve currently got.

L'articolo Trump and Brazilian Leader Bolsonaro Meet to Talk Trade, Venezuela proviene da InsideOver.

Russia broke from OPEC on Friday, refusing calls to decrease oil production. President Vladimir Putin ordered his energy minister, Alexander Novak, to inform Saudi Prince Abdulaziz bin Salman of the decision, a message delivered early Friday morning at OPEC headquarters in Vienna, according to Bloomberg.

Impact of Russia’s Refusal to Decrease Production

Effects from the decision immediately rippled through the Middle East energy market. Saudi Arabia was the first to respond by preparing to increase its own production to make up revenue lost by sunken prices. Brent crude is down nearly 33% since the beginning of the year, thanks to the Covid-19 coronavirus. Upon news that Russia would not slowdown its production, oil prices slid a further 10% as markets grappled with the possibility of Russia and OPEC both producing a supply that far exceeds the global demand.

Although the Saudi minister did not announce firm plans to ramp up production, but OPEC did not move to restrict its members from doing so. 

“I will keep you wondering,” Abdulaziz told reporters. The rationale for such a reaction is that the kingdom must continue supplying the world with oil, otherwise the United States and Russia, both of which have produced without restraint, will encroach further on Saudi territory.

Shares of Saudi Aramco, 1.5% of which recently went public, dipped below the original IPO price to $8.24, CNBC reported. Tadawul, the Saudi stock market, echoed the oil industry woes, falling 7.7%.

Stock markets of Abu Dhabi, Dubai, and Kuwait all followed suit, dropping 5.%, 7.47%, and 10%, respectively. 

Russia’s decision appears to have been a result of failed negotiations, not the original intention, although it is conceivable Moscow purposefully made its terms onerous. US shale production has ran like gangbusters since President Donald Trump assumed office and cut restrictions on the industry.

Putin’s Perspective

To Putin, OPEC offered little that could offset the risk of letting America run rampant. Conversely, Moscow benefits by letting oil prices bottom out because US producers spend more on operations costs than their Middle East or Russian counterparts.

OPEC ministers reportedly stunned when five hours of discussion resulted in Russia walking away, Bloomberg reported. A source at the meeting said they were speechless, and rightfully so. 

Meanwhile in the Gulf …

Aside from the Emirates, OPEC nations derive a majority of their income from oil. The biggest slap might have come to Saudi Arabia in particular as it is in the midst of a multi-billion dollar Vision 2030 program. Jim Krane, Persian Gulf analyst at Rice University’s Baker Institute, suggested the kingdom might need to resort to financing its government spending, perhaps leading to a pause in Crown Prince Mohammed bin Salman’s (MbS) 2030 ambitions.

Worse, if the markets continue to fall or even remain as low, MbS’ decision to press for the Saudi Aramco IPO could be called into question. Several members of the royal family were recently arrested, reportedly because they were plotting a coup. While the truth is not yet known, it is plausible that MbS is taking preemptive measures to prevent anyone remaining in the higher ranks from question his economic policies.

For the past three years, Russia was a member of OPEC+, the plus being Moscow, but the group failed to counter a rise in American energy production. The Trump administration has also used political maneuvers to target the Russian oil industry. US sanctions have halted the Nord Stream 2 pipeline between Siberia and Germany and America has also leveraged itself against Rosneft business in Venezuela. 

Kremlin Goal: ‘Stop U.S. Shale Producers and Punish the U.S. for Messing with Nord Stream 2’

“The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2,” said Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank. “Of course, to upset Saudi Arabia could be a risky thing, but this is Russia’s strategy at the moment – flexible geometry of interests.”

The temporary fallout of OPEC+ is a gift for Rosneft, which has increasingly felt encumbered by its production controls. 

“If you always give in to partners, you are no longer partners. It’s called something else,” Rosneft Spokesman Mikhail Leontiev told Bloomberg. “Let’s see how American shale exploration feels under these conditions.”

Rosneft can break even at $42 per barrel and has cash reserves to sustain itself for a considerable amount of time at lower prices. Hurting American companies will take a while, as they too have plenty of cash reserves to weather the storm. 

Long-term, Russia is damaging Saudi Arabia far more than the US. Although Riyadh and Moscow are both pursuing unrestrained production, they have yet to answer the question of finding buyers. Demand in China, the largest importer of Russian and Saudi oil, has nose-dived by four million bpd at the height of the Covid-19 outbreak and has yet to completely rebound, according to the Financial Times.

Similar lockdowns in America and Europe will most certainly reduce the demand, possibly leaving Russia and Saudi Arabia sitting on a large amount of unsold reserves.

L'articolo Russia Refuses OPEC+ Deal to Cut Oil Production proviene da InsideOver.

The US Senate Finance Committee has voted 25 to 3 to support a draft of the new North American trade deal known as the US-Mexico-Canada Agreement or USMCA. The House of Representative already approved the draft deal in December 2018 after adding in sections that protected workers more.

USMCA: Best Deal Ever?

According to US President Donald Trump, the USMCA is going to be “the best and most important trade deal” in American history. On the campaign trail in 2015 and 2016, Trump repeatedly slammed the North American Free Trade Deal (NAFTA) as a destroyer of US jobs and the worst trade deal ever made. Trump also referred to the Trans Pacific Partnership which he withdrew from by executive order in 2017 as a “rape” of America and a “job killer.” Democratic House Speaker Nancy Pelosi also said the new deal is “much better than NAFTA.”

This can be properly understood as mainly political rhetoric. The USMCA is basically just an updated version of NAFTA with a few more protections for American interests. It is unlikely to significantly boost US job numbers or fundamentally change the way trade works in North America.

How Is The USMCA Different Than NAFTA?

There are some areas where the USMCA breaks new ground. One is on auto parts. The new deal stipulates that three-quarters of an automobile’s parts have to be made in the US, Canada or Mexico in order to be tariff-free when shipped. Workers also have to get paid over $16 USD per hour, which will mean Mexican companies paying workers low amounts will be overtaken by higher-paying US firms in some cases. The Trump Administration is betting this will have major payoffs in the auto industry and optimistically predicts over 76,000 new auto jobs in the United States by 2025.

Other updates include in the dairy industry, where US dairy, chicken and egg farmers will get access to Canada’s heavily-subsidized dairy industry with their exports. For its part, Canada’s farmers and nut and sugar industry will get better access to the massive US market.

On the tech side, the USMCA protects the ability of US tech companies to store their data on American servers and shields them from being prosecuted for many issues that could occur with their content in Mexico or Canada. It frees up and empowers American tech companies and could set a precedent for deals later on with China and other bigger players.  Additionally, the new USMCA deal helps protect the environment somewhat with $600 million for dealing with environmental issues, although environmentalists say it is just a token and the deal basically does nothing to help the environment.

Politicians Weigh In On USMCA

Some American politicians are worried it doesn’t look after American workers and companies enough, especially Democratic presidential candidate Bernie Sanders of Vermont who said he will vote against the final bill. On the Republican side, Senator Pat Toomey of Pennsylvania is concerned for the opposite reason, saying the USMCA is “designed to restrict trade and investment” and would cut back on free trade growth, especially in the automobile sector where the USMCA puts tariffs on parts whose workers weren’t paid up to standards to stop one country from flooding the market and tariffs on origin companies whose products don’t meet certain standardized benchmarks. Others on the committee like Republican Senator Bill Cassidy of Lousiana and Democratic Senator Sheldon Whitehouse of Rhode Island expressed concern that businesses won’t have adequate ability to dispute deals and unfair treatment under the deal: therefore they voted no.

Senator Rob Portman called the deal a “big improvement” despite admitting it isn’t perfect, while Democratic Senator Sherrod Brown of Ohio, for example, particularly emphasized the deal’s enforcement of better work standards and wage protection for Mexican workers. If Mexico pays workers more and has to produce better products it will help slow down outsourcing and protect American jobs.

The USMCA faces the full US Senate vote for ratification next week, but this could be rescheduled depending on the timing of US President Donald Trump’s impeachment trial. It has a 16-year sunset clause meaning the deal will have to be renegotiated at that time. While some of the improvements and changes made in the new USMCA will undoubtedly help American workers and can also give various benefits to Mexican and Canadian companies and workers, the slow progress of the deal and its largely underwhelming advantages show just how slow trade negotiation and progress is in the real world once you cut through the political rhetoric.

L'articolo New North American USMCA Trade Deal One Step Closer To Passing proviene da InsideOver.