Strategic

US blasts China at Southeast Asian meeting on coronavirus

US Secretary of State Mike Pompeo told his Southeast Asian counterparts on April 23 that China is taking advantage of the world's preoccupation with the coronavirus pandemic to push its territorial ambitions in the South China Sea. Pompeo made the accusation in a meeting via video to discuss the outbreak with the foreign ministers of the 10-member Association of Southeast Asian Nations. "Beijing has moved to take advantage of the distraction, from China's new unilateral announcement of administrative districts over disputed islands and maritime areas in the South China Sea, its sinking of a Vietnamese fishing vessel earlier this month, and its 'research stations' on Fiery Cross Reef and Subi Reef," Pompeo said. He also accused China of deploying militarized ships to intimidate other claimant countries from developing offshore gas and oil projects. Pompeo also said the U.S was concerned by a recent scientific report "showing that Beijing's upstream dam operations have unilaterally altered flows of the Mekong," endangering the livelihoods of tens of millions of people living downstream in Laos, Thailand, Cambodia and Vietnam.

Beijing clamps down on Hong Kong under cover of coronavirus

On April 17, Beijing’s highest representative body in the territory, the Liaison Office, insisted it was not subject to Article 22 (that no department of the central government shall interfere in the territory’s internal affairs)clause in Hong Kong’s constitution. The Hong Kong government at first challenged the Liaison Office’s interpretation. But after a series of contradictory statements, the city’s government backed down, worrying legal scholars. On April 18, the 81-year-old lawyer, Martin Lee, who helped to write the legal framework and founder of Hong Kong’s opposition Democratic Party, was arrested along with 14 other pro-democracy activists.With the world distracted by the coronavirus pandemic, Beijing’s representatives in the city have ramped up pressure on the city’s pro-democracy movement ahead of parliamentary elections in September. Aside from the arrests, China has moved to curb the territory’s treasured special autonomy and is suspected to be behind a reshuffle of the city’s government.

Economic woes undermine Putin’s pledge pandemic is ‘under control’

Putin maintains the situation is “totally under control”, but the reality of Russia’s economic predicament is rapidly becoming clear as coronavirus cases continue to tick up. Though Russia has a $165bn cushion of savings built from its oil and gas wealth, the Kremlin has been reluctant to spend it during a collapsing oil market that has turned its most important revenue stream to a trickle. The IMF has forecast that Russia’s economy could contract by 5.5 per cent this year. Much of the Russian public criticism has focused on the limited Rbs2tn ($26bn) government support package, which pales in comparison to those rolled out by other European countries.Russia now has almost 60,000 cases of the virus and a death toll of over 500 people, while the national lockdown instituted on March 28 has pushed small businesses to the point of collapse. Moscow’s unemployment rate has risen sharply in the past three weeks. Instead of Kremlin, oligarchs and big businesses have been providing cash donations and purchases of medical equipment to support communities where their industrial assets are located.

Financial Aid to Struggling US States Is Next Big Congressional Battle

“Many states are already reporting precipitous declines in revenues that fund state services in health care, education, public safety, transportation and other vital programs,” members of the National Governors Association wrote to congressional leaders this week. “States and local governments need robust support from the federal government as we navigate the response to this pandemic and to help foster the economic recovery that is ahead.” Senator Mitch McConnell, Republican leader, prompted a sharp backlash, including from Gov. Andrew M. Cuomo of New York, when he said states, which shared $150 billion allocated in previous pandemic legislation, should consider filing for bankruptcy. “That’s how you’re going to bring this national economy back?” asked an incredulous Mr. Cuomo, who called Mr. McConnell irresponsible and reckless. “You want to see that market fall through the cellar? Let New York State declare bankruptcy.”

Oil prices up 10% with rising Asia demand

Oil prices were up around 10% on April 23 as some Asian countries start purchasing crude oil, which created a slight increase in global oil demand. The price of the international benchmark Brent crude was trading at $22.22 per barrel at 0611 GMT for a 9.6% increase after closing on April 22 at $20.27 a barrel. American benchmark West Texas Intermediate (WTI) was trading at $15.37 a barrel at the same time for an 11.5% increase after ending at $13.78 per barrel on April 22. Some refineries in China, India, Japan and South Korea have begun purchasing crude oil to take advantage of low prices, which in turn has revived oil demand in Asia and caused some increase in prices. However, U.S.' crude oil inventories showing another strong increase continues to keep pressure on prices.

Saudi-led ceasefire in Yemen expires, no permanent truce in view

A two-week ceasefire in Yemen, which had been declared by a Saudi-led military coalition, expired on April 23 without having led to a permanent truce. The latest peace-push follows UN Secretary-General Antonio Guterres’ call last month for a global ceasefire so the world can focus on fighting Covid-19. The Houthi group battling the coalition did not accept the coalition’s ceasefire announcement, and violence has continued in several provinces including Marib, the last stronghold of the Saudi-backed government. Sources familiar with the matter had expected an extension of the ceasefire for at least another two weeks if not until the end of the holy fasting month of Ramadan, expected to begin this week, Reuters said.Special UN envoy Martin Griffiths told the UN Security Council on April 23 that he expects the combatants to formally adopt, “in the immediate future,” agreements on a nationwide ceasefire, economic and humanitarian measures and a resumption of political talks. However, the Houthis’ spokesman Mohammed Abdulsalam said the UN proposals ignore important issues, including a blockade.

Public health emergency declared at US military base in Horn of Africa over Covid-19

A public health emergency is in effect at the US military base in the East African nation of Djibouti over coronavirus concerns. The 30-day health emergency concerns US personnel, whether contracted civilians or soldiers, working at the Camp Lemonnier Djibouti, Chabelley Airfield and the Port of Djibouti. US Army Maj. Gen. Michael D. Turello, commander of the Combined Joint Task Force-Horn of Africa, said combating Covid-19 is a “top priority” in a statement, adding the order will keep “our forces, and those of our host national partner, as healthy and safe as possible.” The Combined Joint Task Force-Horn of Africa, established in 2002, has the official goal of “countering violent extremist organizations in East Africa.” The emergency declaration will be reviewed in 30 days to determine whether it should be extended.

Vietnam says accusations it hacked China centre for Wuhan virus info ‘baseless’

A report that said Vietnamese government-linked hackers had attempted to break into Chinese state organizations at the centre of Beijing’s effort to contain the coronavirus outbreak is “baseless,” the Foreign Ministry in Hanoi said on April 23.US cyber security firm FireEye said the previous day that the hackers had tried to compromise the personal and professional email accounts of staff at China’s Ministry of Emergency Management and the government of Wuhan, the Chinese city at the centre of the pandemic. “The accusation is baseless,” Foreign Ministry spokesman Ngo Toan Thang told reporters. “Vietnam forbids all cyber-attacks, which should be denounced and strictly dealt with by law.” Hanoi is willing to co-operate with international partners to combat cyber-attacks, Reuters quoted Thang as saying.

WHO reports five-fold increase in cyber-attacks, including fake charity fund

The World Health Organization is reporting a five-fold increase in cyber-attacks against it compared to a year earlier. It cites a rise in scams aiming to draw donations into a fake fund that is wrongly billed as a way to help the COVID-19 response.The U.N. health agency also cited a "dramatic increase" in cyber-attacks against its staff, saying 450 active WHO e-mail accounts and passwords were leaked online this week. WHO says the leaked credentials did not jeopardize its computer systems because the data was not recent, though the incident did affect an older system. The agency says it's working to establish stronger internal systems and improve security, and urged the public to be on the lookout against fraudulent e-mails.

Pompeo says U.S. may never restore WHO funds after cut off over pandemic

U.S. Secretary of State Mike Pompeo said the COVID-19 pandemic shows the need to overhaul the World Health Organization, warning that Washington may never restore WHO funding and could even work to set up an alternative to the U.N. body instead. The United States has been the biggest overall donor to the WHO, contributing over $400 million in 2019, roughly 15% of its budget. The acting head of the U.S. Agency for International Development said on April 22, the United States would assess if the WHO was being run properly and look for alternative partners outside the body. Any threat to definitively end U.S. funding of the global body would likely hinge on Trump succeeding in his bid for re-election in the November presidential vote against the presumptive Democratic nominee Joe Biden. The U.S. Congress controls federal spending, and could pass legislation to guarantee funding for the WHO. However, to become law it would need to garner enough support, including from Trump’s Republicans, not just to pass but to override a likely veto.

UN, EU warn Israel against West Bank annexation

The UN's special Middle East envoy Nickolay Mladenov on April 23 said such a move would be a "devastating blow" to the internationally-backed two-state solution to the Israeli-Palestinian conflict, as the EU said annexing Palestinian territory "would constitute a serious violation of international law". Earlier this week, Israeli Prime Minister Benjamin Netanyahu and his main rival Benny Gantz signed a coalition agreement that includes a clause to advance plans to annex parts of the West Bank, including Israeli settlements, starting on July 1. The Netanyahu-Gantz deal stipulates that any Israeli action would need US backing, and must take into account Israel’s peace treaties with neighbouring Jordan and Egypt.Separately on April 23, the EU's foreign policy chief, Josep Borrell, said the bloc of 27 member countries does not recognise Israeli sovereignty over the Palestinian territory and that it will "continue to closely monitor the situation and its broader implications, and will act accordingly".

Japan to ask virus carriers with mild or no symptoms to use medical-equipped lodgings

The government on April 23 unveiled a basic plan for novel coronavirus carriers with mild or no symptoms of COVID-19 to stay at hotels or other medical-equipped facilities, following cases in which people resting at home have suddenly taken a turn for the worse or infected family members.Under a policy outlined by the Ministry of Health, Labour and Welfare on April 2, people with mild cases of the coronavirus were asked to either stay at home or at other lodgings so that hospitals could prioritize treatment of those with severe symptoms, though it made exceptions for the elderly and pregnant women. Under the new plan, such individuals will be asked to stay at medically equipped lodgings so they can receive treatment if their condition gets worse. Health minister Katsunobu Kato told reporters at an April 23 news conference, "Except for people who absolutely need to stay at home, such as parents who have children, we ask that people basically consider using a lodging facility."

Economic

US issues new guidance for small business loans, pressures public companies to return funds

The Small Business Administration issued new guidance on April 23 that makes it “unlikely” that big publicly traded companies can access the next round of funding for the U.S. government’s small business relief program. Companies applying for coronavirus relief funds must certify that the loans are necessary and that they cannot tap other sources of funding, the SBA said. By definition, public companies have access to the capital markets. For instance, Shake Shack returned the $10 million it got through the PPP after it sold $150 million in new shares. “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” the SBA said. In a key detail, the SBA indicated that large public companies who tapped the PPP before the rule change can avoid scrutiny by returning the relief loans in two weeks.

European countries exclude companies registered in offshore tax havens from coronavirus stimulus

Three European countries have moved to restrict companies that keep large sums of money overseas in tax havens from accessing stimulus funds.Business Insider reported on April 23 that France's top finance minister said on a radio show that his goal was to prevent such companies from being eligible to receive any government stimulus. "It goes without saying that if a company has its tax headquarters or subsidiaries in a tax haven, I want to say with great force, it will not be able to benefit from state financial aid," said Bruno Le Maire." If your head office is located in a tax haven, it is obvious that you cannot benefit from public support," he added. His announcement follows similar declarations from officials in Denmark and Poland.

Germany throws weight behind EU recovery fund

In a relatively brief leaders’ videoconference summit on April 23, the German chancellor said the EU needed to prevent an asymmetric economic recovery once lockdowns ease. Her country was ready, she said, to join in a huge common effort worth around €1tn. Leaders agreed to ask the commission to establish a recovery fund, although they failed to find common ground on its size and, crucially, on whether it should hand out grants or loans. In their fourth videoconference summit, the EU leaders moved forward with the aim of signing off a €540bn package of emergency measures and opening the door to an overhaul of draft plans for the EU’s upcoming multiannual financial framework (MFF). The commission will now accelerate its work on rewriting the MFF. France, Italy and Spain led demands for grants to stricken economies, whereas Ms Merkel insisted that any funding borrowed on the markets must ultimately be paid back. There were “limits” on what kind of aid could be offered, she told leaders, adding that grants “do not belong in the category of what I can agree”.

Coronavirus pandemic triggers record losses for Swiss National Bank

The Swiss National Bank reported a record quarterly loss of 38.2 billion Swiss francs ($39.34 billion) on April 23 as the coronavirus crisis pummelled the value of its foreign currency holdings and shares. The central bank's holdings of equities lost 31.9 billion francs in value as the economic impact of the virus sent markets into a tailspin while it also suffered exchange rate-related losses of 17.1 billion francs as the appreciation in the franc reduced the value of its foreign stocks and bonds.The loss is the biggest quarterly fall suffered by the SNB since it was founded in 1907. Economists at UBS had forecast a loss of 30 billion francs.

Abu Dhabi and Dubai prepare to reopen malls, announcing guidelines for easing some lockdown measures as Ramadan begins

Abu Dhabi and Dubai have announced preparations to reopen malls and shopping centers, issuing guidelines on April 23 for business owners and shoppers on the eve of the Muslim holy month of Ramadan. United Arab Emirates has reported more than 8,200 coronavirus cases. The guidelines, issued separately by Abu Dhabi’s Department of Economic Development and the Government of Dubai, mandate limits on operating hours as well as limits on staff and customer capacity. The malls in Abu Dhabi will only be open to the public between 2 p.m. and 9 p.m., and in Dubai, malls will be open for no more than 10 hours per day. In Dubai, entry will also be barred for children between the ages of 2 and 13. Wearing masks will be mandatory for all visitors and staff, and malls will be required to have isolation rooms on site to isolate potential positive cases. In Abu Dhabi, gloves will also be provided for visitors. There will be entrance temperature checks, provision of masks and hand sanitizer, and physical distancing requirements of two meters between people at all times, with the exception of family members visiting together.

Pakistan set to request debt repayment standstill

Pakistan is set to become the first large developing country to apply for a debt repayment standstill under an initiative of the G20 group of wealthy nations, the country’s finance ministry said on April 22 Islamabad hopes to defer repayments due to bilateral lenders this year of about $1.8bn and use the savings to address the coronavirus crisis, the ministry told the Financial Times.Pakistan’s central bank expects the economy to contract by 1.5 per cent this year as a result of the crisis, after growing 3.3 per cent in 2019. Last week, the IMF approved a $1.4bn zero-interest loan to Pakistan to help it address the economic impact of the pandemic. Imran Khan, Pakistan’s prime minister, called Donald Trump on April 22 and thanked the US president for his support for the country at the IMF. Pakistan has supported US efforts to bring its war in Afghanistan to a close as it seeks to withdraw its troops following a deal brokered between the US and the Taliban earlier this year. The fragile truce will depend on support from Islamabad and Kabul if it is to be successful. A senior US official told the Financial Times that Trump had helped to secure the G20 debt deferral.

Medical

Gilead disputes report that remdesivir flopped in coronavirus trial

A closely-watched Gilead Sciences Inc. experimental antiviral drug failed to help patients with severe COVID-19 in a clinical trial conducted in China, but the drug maker said the findings were inconclusive because the study was terminated early. Interest in Gilead's remdesivir has been high as there are currently no approved treatments or preventive vaccines for COVID-19 and doctors are desperate for anything that might alter the course of the disease that attacks the lungs and can shut down other organs in extremely severe cases. In the Chinese trial remdesivir, given by intravenous infusion, failed to improve patients' condition or reduce the pathogen's presence in the bloodstream, according to draft documents published accidentally by the World Health Organization (WHO).But details were thin and suggested limitations in interpreting the data that has not yet been fully reviewed.

For Further Reading:

1. Mainichi: US blasts China at Southeast Asian meeting on coronavirus, https://mainichi.jp/english/articles/20200424/p2g/00m/0in/008000c
2. Financial Times: Beijing clamps down on Hong Kong under cover of coronavirus, https://www.ft.com/content/bf08a177-9631-48e5-b542-18bf5b15faf4
3. Financial Times: Economic woes undermine Putin’s pledge pandemic is ‘under control’, https://www.ft.com/content/63ea4134-ce5c-48dc-a0e0-0fde43948d86
4. New York Times: Financial Aid to Struggling States Is Next Big Congressional Battle, https://www.nytimes.com/2020/04/23/us/politics/congress-state-aid-coronavirus.html?action=click&module=Spotlight&pgtype=Homepage
5. Anadolu Agency: Oil prices up 10% with rising Asia demand, https://www.aa.com.tr/en/economy/oil-prices-up-10-with-rising-asia-demand/1815819
6. RT: Saudi-led ceasefire in Yemen expires, no permanent truce in view, https://www.rt.com/newsline/486650-yemen-saudi-ceasefire-expires/
7. RT: Public health emergency declared at US military base in Horn of Africa over Covid-19, https://www.rt.com/newsline/486719-djibouti-military-base-health-emergency/
8. RT: Vietnam says accusations it hacked China center for Wuhan virus info ‘baseless’, https://www.rt.com/newsline/486626-vietnam-hackers-china-wuhan/
9. Mainichi: WHO reports five-fold increase in cyberattacks, including fake charity fund, https://mainichi.jp/english/articles/20200424/p2g/00m/0in/050000c
10. Reuters: Pompeo says U.S. may never restore WHO funds after cutoff over pandemic, https://in.reuters.com/article/health-coronavirus-who-pompeo/pompeo-says-us-may-never-restore-who-funds-after-cutoff-over-pandemic-idINKCN2252HD
11. Al Jazeera: UN, EU warn Israel against West Bank annexation, https://www.aljazeera.com/news/2020/04/eu-warn-israel-west-bank-annexation-200423170401941.html
12. Mainichi: Japan to ask virus carriers with mild or no symptoms to use medical-equipped lodgings, https://mainichi.jp/english/articles/20200424/p2a/00m/0na/007000c
13. CNBC: US issues new guidance for small business loans, pressures public companies to return funds,https://www.cnbc.com/2020/04/23/us-issues-new-guidance-for-small-business-loans-to-make-it-harder-for-public-companies-to-get-funds.html
14. The Hill: European countries exclude companies registered in offshore tax havens from coronavirus stimulus, https://thehill.com/policy/finance/494297-european-countries-exclude-companies-registered-in-offshore-tax-havens-from
15. Financial Times: Germany throws weight behind EU recovery fund, https://www.ft.com/content/cee2c14a-fa59-4684-a335-27cef1260fa6
16. Money Control: Coronavirus pandemic triggers record losses for Swiss central bank, https://www.moneycontrol.com/news/business/coronavirus-pandemic-triggers-record-losses-for-swiss-central-bank-5181071.html
17. Financial Times: Pakistan set to request debt repayment standstill,https://www.ft.com/content/d3fecf74-9256-435e-aaa4-08cb1f9761a3
18. CNBC: Abu Dhabi and Dubai prepare to reopen malls, announcing guidelines for easing some lockdown measures as Ramadan begins, https://www.cnbc.com/2020/04/23/coronavirus-lockdown-dubai-abu-dhabi-prepare-to-reopen-malls-ahead-of-ramadan.html
19. Nikkei Asian Review: Gilead disputes report that remdesivir flopped in coronavirus trial, https://asia.nikkei.com/Business/Pharmaceuticals/Gilead-disputes-report-that-remdesivir-flopped-in-coronavirus-trial