COVID-19 International Developments: Daily Scan, April 10, 2020
Prerna Gandhi, Associate Fellow, VIF
Despite COVID-19, U.S. Military Remains Ready to Fight

"To those who wish us harm, make no mistake: even with the challenges that this disease has brought to our shores, the Department of Defense stands ready to meet any threat and defend our nation," Deputy Defense Secretary David L. Norquist said during a news conference at the Pentagon on April 9. Norquist said DOD support of state and local authorities in the fight against the coronavirus means that DOD people might end up with a higher rate of infection from the virus than other populations. But at the same time, he said, the youthful demographic of the U.S. military means that fewer of those who contract the virus will suffer severe consequences. According to Defense Department statistics, of the 1,898 current coronavirus cases among active duty service members, only 64 required hospitalization. While there are "pockets" of degraded readiness across the force, such as the aircraft carrier USS Theodore Roosevelt staying in port in Guam longer than it normally would, the aggregate readiness is unaffected, he said. What may eventually affect readiness is a prolonged reduction in numbers of new recruits entering basic training for military service.

UN chief warns COVID-19 threatens global peace and security

Secretary-General Antonio Guterres warned the UN Security Council on April 9 that the coronavirus pandemic is threatening international peace and security -- "potentially leading to an increase in social unrest and violence that would greatly undermine our ability to fight the disease." In addition to a call for cease-fire for all global conflicts, Guterres cited other pressing risks to global security from the pandemic: terrorists seeing an opportunity to strike, groups seeing how a biological terrorist attack might unfold, the erosion of trust in public institutions, economic instability, political tensions from postponing elections or referenda, uncertainty sparking further division and turmoil in some countries, and COVID-19 "triggering or exacerbating various human rights challenges." The UN Security Council issued its first brief press statement after the closed meeting on April 9. It expressed "support for all efforts of the secretary-general concerning the potential impact of the COVID-19 pandemic to conflict-affected countries and recalled the need for unity and solidarity with all those affected."

UN chief calls for solidarity among discordant Security Council over coronavirus crisis

UN Secretary General Antonio Guterres urged the Security Council on April 9 to display unity as it met to discuss what he called the "fight of a generation" -- the global coronavirus pandemic."A signal of unity and resolve from the Council would count for a lot at this anxious time," Guterres told the divided body holding its first meeting about the crisis. Security Council members gathered after weeks of disagreement -- especially between the United States and China, where the coronavirus outbreak began in December. Led by Germany, the meeting was requested last week by nine of the council's 10 non-permanent members who were fed up with the body's inaction over the unprecedented global crisis.Though the council meeting was closed-door, several ambassadors taking part released extracts of their remarks on Twitter or to reporters. While Germany described the pandemic as an "international peace and security issue," several other countries, notably Russia, China and South Africa, said health matters were not part of the Security Council's brief. France, meanwhile, confirmed that it would provide 1.2 billion euros ($1.3 billion) to fight the virus in Africa.

Khamenei: Mass Ramadan events in Iran may stop over virus

Iran's supreme leader suggested on April 9 that mass gatherings in the Islamic Republic may be barred through the holy Muslim fasting month Ramadan amid the coronavirus pandemic.Supreme Leader Ayatollah Ali Khamenei made the comment in a televised address as Iran prepares to restart its economic activity while suffering one of the world's worst outbreaks. He is also the highest-ranking official in the Muslim world to acknowledge the holy month of prayer and reflection will be disrupted by the virus and the COVID-19 illness it causes."We are going to be deprived of public gatherings of the month of Ramadan," Khamenei said during a speech marking the birth of Imam Mahdi. "Those gatherings are meetings for praying to God or listening to speeches which are really valuable. In the absence of these meetings, remember to heed your prayers and devotions in your lonesomeness."Ramadan is set to begin in late April and last through most of May.

Europe is looking at several more weeks of lockdowns

Italy and Spain are preparing for several more weeks under lockdown as volatile coronavirus infection rates prevent Europe's governments from easing curbs on public life. Italy is leaning towards an extension to early May, with few concessions to business demands to allow more companies to operate normally. Spain prolonged a state of emergency until April 25 and Britain also is likely to extend restrictions. German Chancellor Angela Merkel joined Spain and Italy on April 9 in upholding restrictions on people's movement and face-to-face contacts, saying progress in defeating the pandemic is "fragile" and it's too early to relent. The Swiss government has extended the anti-coronavirus restrictions in place for another week until April 26. But it said it plans to examine an easing of measures at the end of the month. As the pandemic maintains its grip on Europe, policy makers are caught between the urgent need to restart battered economies and calls by health officials to maintain lockdowns.

Asia struggles to find coronavirus exit strategies

For months Singapore, Hong Kong, Taiwan and South Korea were lauded for their deft handling of the coronavirus. Death tolls were low and economically-crippling lockdowns avoided, in stark contrast to China, Europe and the US, which were accused of responding too slowly. The region’s mix of responses — mass testing, high-tech contact tracing, early border closures, social distancing and mask wearing — became the international standard in containment.Over recent weeks, however, the threat posed by new waves of infections has prompted a series of policy U-turns with lockdowns, border restrictions and extended isolation campaigns. The moves have dashed hopes for quick returns to normalcy for the public and economic recoveries. They have also raised questions over the countries’ exit strategies until a vaccine, treatment or prophylactic for Covid-19 is available.

South Korean COVID-19 patients vote as parliamentary election kicks off

Early voting in South Korea's parliamentary election kicked off on April 10, with COVID-19 patients casting ballots at designated stations. The National Election Commission (NEC) set up eight polling stations to be used by more than 3,000 coronavirus patients receiving treatment as well as 900 medical staff at treatment centres in hard-hit areas, including the capital Seoul and Daegu city. The election itself is on April 15, but officials are hoping that people will take advantage of early voting options to reduce the number of voters crowding polling locations on that day. Polling stations were disinfected on April 9 ahead of opening, and all voters are required to wear a mask, use sanitizers and wear gloves. Officials conducted temperature checks at the entrance and anyone showing a temperature higher than 37.5 degrees C was directed to special booths. South Korean President Moon Jae-in cast his ballot on Friday at a polling station near the presidential office Blue House. The government is still debating plans to allow about 46,500 people who have not tested positive but are in self-quarantine to vote. Experts said the government is looking to allow the quarantined people to vote after the polls close at 6pm on Apr 15.

Indonesia struggling with COVID-19

Health experts say Indonesia faces a surge in cases after a slow government response masked the scale of the outbreak in Southeast Asia's biggest country. Indonesia has brought in "large-scale social restrictions", but President Joko Widodo has resisted bringing in the type of tough lockdowns imposed by neighbours and only moved to allow areas like Jakarta, where there has been a spike in cases, more powers to tackle the crisis. Indonesia with more than 260 million people has one the lowest testing rates in the world. It also has a significant deficit in hospital beds, medical staff and intensive care facilities as health experts warn that it is primed to become a new epicentre of the coronavirus pandemic. There are also growing fears that the outbreak could spread across the archipelago during the annual exodus to home villages for the Muslim Ramadan holiday.

Coronavirus gives China an edge as it expands sway in the Pacific

Of the 18 countries the virus is yet to reach, the majority are islands in the Pacific. But the very same isolation that has provided a barrier to the disease is also likely to intensify the effects of global economic contagion. Foreign policy hawks in the U.S. and Australia believe China is seeking to establish a second international military foothold to match its construction of a naval outpost in Djibouti, in 2016. And now that cash infusions are desperately needed by Pacific economies, the balance of power could shift even further. Government debts to China already make up a sizable portion of many nations' total external borrowing. According to the latest government financial statements available, loans from China make up 62% of Tonga's of total foreign borrowing; for Vanuatu it is 43%, and for Samoa 39%. Many of these debts were brokered in times of crisis, such as when there was rioting in the streets of Tonga's capital, Nuku'alofa, in 2006. Vanuatu's external debts doubled in the three years following 2015's Cyclone Pam, according to a 2019 International Monetary Fund study.

IMF head sees worst economic downturn since Great Depression

The coronavirus pandemic will push the global economy into the deepest recession since the Great Depression, with the world's poorest countries suffering the most, IMF Managing Director Kristalina Georgieva said on April 9 in remarks previewing next week's virtual meetings of the 189-nation IMF and its sister lending organization, the World Bank. She said that the IMF will release an updated world economic forecast on April 14. Just three months ago, the IMF was forecasting that 160 nations would enjoy positive income growth on a per capita basis. Now the expectation is that over 170 nations will have negative per capita income growth this year. Capital outflows from emerging-market countries have totalled more than $100 billion over the last two months, more than three times larger than the same period at the start of the global financial crisis, Georgieva noted. She said if the pandemic fades in the second half of the year, allowing the gradual lifting of containment measures and the reopening of the global economy, the IMF is forecasting a partial recovery in 2021.

Saudis, Russians Bury Differences, but Mexico Threatens Oil Deal

Saudi Arabia and Russia agreed in principle on April 9 to lead a 23-nation coalition in massive oil-production cuts after a monthlong feud, and a drop in demand due to the coronavirus crisis devastated oil prices. But following more than 11 hours of negotiations, Mexico abruptly exited the talks, jeopardizing a final pact. The oil producers agreed a production cut of 10m b/d — by far the biggest supply deal in history and equivalent to roughly 10 per cent of pre-crisis demand — following pressure from US President Donald Trump. The cuts would diminish over time, ending in April 2022, according to the plan. Saudi Arabia and Russia, the two biggest producers in the deal, agreed between them to cut about 5m b/d. Other OPEC+ producers agreed to remove an additional 5m b/d. The cartel called on the US and Canada, among other countries, to cut another 5m b/d. Delegates said the talks would continue at a Group of 20 meeting of energy ministers set for April 10.

EU ministers make breakthrough on coronavirus economic response

After hours of talks on April 9, representatives of 19 Eurozone countries agreed to make €500 billion ($547 billion) available "immediately" to stimulate the EU economy as it struggles with the economic fallout of the on-going pandemic. The EU countries had been at odds on whether or not the loans should be conditioned on financial reforms. The EU states were also at loggerheads on how to finance the fund itself, with Italy, Spain, France and other, mostly southern EU countries, wanting a joint "coronabonds" borrowing scheme that Germany, the Netherlands, Finland and Austria opposed. The ministers had been unable to come up with a solution at the marathon-length talks earlier on April 8, reportedly due to the Netherlands wanting tougher conditions for member states to take cheap loans. Pressure was on the Dutch government to accept the compromise solution presented by Berlin and Paris. The European Investment Bank will now support EU companies with €200 billion in loans, according to Eurogroup chairman Mario Centeno. The EU leaders would try to have ESM crisis support operational in two weeks, he added.

China’s US$1 trillion consumer loan bubble is bursting as army of borrowers flinch under pandemic strain

China’s consumer loans are shrinking at an unprecedented pace after a decade of tenfold expansion, a blow to the government’s strategy of relying on spending as a growth engine amid the worst public health crisis in a generation. The net balance of consumer loans – made up of short-term and credit card loans from banks and online lenders – plunged by a quarter in the first two months of this year to 7.4 trillion yuan (US$1 trillion), according to data published by the People’s Bank of China. Some micro lenders are staring at 20 cents on a dollar in bad loans.The nation’s much-vaunted army of consumers are flinching as the coronavirus outbreak closes shops and causes job losses, hurting demand for new credit and ability to service older ones. A wave of delinquencies will test the resilience of Chinese lenders this year, with the economy expected to be at its weakest since the 1976 Cultural Revolution.

U.S. banks prepare to seize energy assets as shale boom goes bust

JPMorgan Chase & Co, Wells Fargo & Co, Bank of America Corp and Citigroup Inc are each in the process of setting up independent companies to own oil and gas assets, said three people who were not authorized to discuss the matter publicly. The banks are also looking to hire executives with relevant expertise to manage them, the sources said. Although oil prices may gain support from a potential agreement between Saudi Arabia and Russia to cut production, few believe the curtailment can offset a 30% drop in global fuel demand, as the coronavirus has grounded aircraft, reduced vehicle use and curbed economic activity more broadly.The industry is estimated to owe more than $200 billion to lenders through loans backed by oil and gas reserves. As revenue has plummeted and assets have declined in value, some companies are saying they may be unable to repay. Whiting Petroleum Corp became the first producer to file for Chapter 11 bankruptcy on April 1. Others, including Chesapeake Energy Corp, Denbury Resources Inc and Callon Petroleum Co, have also hired debt advisers.

Vietnam challenges China's monopoly on virus diplomacy

Vietnam is challenging China’s dominance of coronavirus diplomacy with the donation of medical supplies to Europe and Southeast Asia and even winning plaudits from U.S. President Donald Trump for a shipment of protective suits. China is looking to burnish its credentials as a responsible power by sharing expertise and donating masks and other protective equipment to countries seeing a surge in cases and to repair an image dented by the disease that originated there late last year. Vietnam, despite its lack of resources compared with its giant neighbour, has donated 550,000 face masks to France, Germany, Italy, Spain and Britain, and 390,000 to neighbouring Cambodia and 340,000 to another neighbour, Laos. Helped by a mass quarantine and aggressive contact-tracing, Vietnam’s health ministry has recorded 255 cases of the novel coronavirus and no deaths. There are now 40 firms producing 7 million fabric masks a day in Vietnam, the government said on April 9. An additional 5.72 million surgical masks can be produced daily, it said.

China unveils guideline on improving market-based allocation of production factors

China has issued guidelines on improving the market-based allocation mechanism of production factors in a bid to further facilitate the free and orderly flow of factors and stimulate market vitality. Efforts will be made to further deepen reform and opening-up and remove institutional barriers that hinder the free flow of factors to lay a solid foundation for high-quality development, according to the document issued by the Communist Party of China (CPC) Central Committee and the State Council. China will promote market-based allocation of factors of production, including land, labour and capital while accelerating the development of the market of technology and data factors, it said.

Luxury brands bid adieu to Hong Kong amid coronavirus and unrest

A lack of import tariffs made Hong Kong a haven for luxury brands from around the world. But as pro-democracy protests and the novel coronavirus pandemic have driven tourists away from a city whose economy relies on them, many companies are deciding that waiting out these crises is no longer worth the cost. Reports in January of Louis Vuitton's plans to shutter its flagship Times Square store seemed to touch off an avalanche of closings. Prada moved up its planned shutdown of a nearby store to February from June. Swatch Group brands Omega and Longines closed multiple Hong Kong locations by the end of March. This week, Italian fashion brand Valentino shut a flagship location at the Harbor City mall in Tsim Sha Tsui -- its largest location in Hong Kong -- after choosing not to renew its lease. Emily Lee, an analyst at Nomura International, attributed the trend mainly to a dramatic decline in tourism from China, caused by the protests and the coronavirus outbreak.Hong Kong saw about 51 million mainland Chinese visitors in 2018, an average of about 140,000 a day. But tourism began declining year on year last July as the protests gained steam, and plunged 58% in November amid a major escalation.

Haywire Immune Response Eyed in Coronavirus Deaths, Treatment

An immune system gone haywire may be doing more damage than the coronavirus itself in patients with the severest forms of Covid-19, doctors and scientists say, in a growing theory that could point the way to potential treatments. Much remains unknown about the path the virus takes in the sickest patients, but an increasing number of experts believe a hyperactive immune response, rather than the virus, is what ultimately kills many Covid-19 patients. The out-of-control immune response eventually causes the patients’ lungs to stop delivering oxygen to the rest of organs, leading to respiratory failure and in some cases death, the experts say. The malfunctioning immune system may be driving the rapid decline in lung function experienced by some patients, including younger and relatively healthy ones, after the initial onset of symptoms. Researchers are looking at treatments to suppress ‘cytokine storm,’ increasingly linked to the most severe Covid-19 cases.

East Japan venture develops copper fibre sheet that hastens virus particle inactivation

A thin sheet of copper fibre developed by innovators in Gunma Prefecture, eastern Japan, has a visible light-responsive photo catalyst applied to its copper surface. Whenever the sheet is exposed to light, it activates substances with high oxidizing power that break down virus particles and bacteria. An experiment using E. coli found that a copper fibre sheet is 1,000 times more effective in fighting bacteria than copper alone is. The sheet has a semi-permanent sterilization effect which causes virus particles to become inactive, meaning they lose their ability to cause infections, and is at the same time harmless to the human body. According to studies conducted in the United States, the coronavirus can live and remain active on a copper surface for four hours. Research shows this is considerably shorter than the 48 to 72 hours the virus can live on plastic or stainless steel surfaces for. The company is also searching for manufacturers that can incorporate the sheet into products such as masks and gloves.

Swiss group says machines can conduct 30m virus antibody tests

A Swiss medical diagnostics company has said it is ready to ship high-capacity machines capable of more than 30m clinically accurate coronavirus antibody tests this year. They will be available from next week. Each machine can conduct 3,000 tests a day. Experts say antibody testing will be a critical part of easing lockdowns around the world as countries seek to restart economies ravaged by the pandemic. Two US companies have also said they have developed antibody tests for coronavirus, but have given no firm date as to when they will be available for use. Chief Executive Franz Walt said Quotient will sell its testing machines, called MosaiQ, at cost from next week. Each test for the novel coronavirus will then cost between $15 and $25 to conduct. The machines are mainly designed to conduct multiple simultaneous screenings, said Mr Walt. Mr Walt said he was in discussions with health authorities in the US, the UK, Spain and Switzerland.

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