Global Developments and Analysis: Weekly Monitor, 28 September - 04 October 2020

Economic

Rich nations tighten firehose of aid as virus outlasts early efforts

If Round One of the coronavirus relief effort was the economic equivalent of “shock and awe,” new plans being developed by the world’s biggest economies for more assistance to businesses and consumers are taking a narrower and more tactical approach. Governments around the world went in big, hard and fast in their initial efforts to blunt the economic hit from the global pandemic, drumming up roughly $10 trillion in spending plans through June, according to International Monetary Fund estimates. Central banks levered that up further with rate cuts, bond purchases and a raft of other credit programs. But with President Donald Trump in quarantine after testing positive for COVID-19 and a resurgence in cases in Europe and the United States, there is an acknowledgment that the recovery is far from complete. Click here to read... [2]

A Huawei Turning Point

Chancellor Angela Merkel’s cabinet reportedly is preparing legislation that could phase out Huawei as a 5G supplier in Germany. While not an outright ban, the bill would create an approval process that likely would keep the Chinese firm out of German networks. “We are seeing things moving in the right direction in Germany,” Keith Krach, U.S. undersecretary of state for economic affairs, said Wednesday. “There is really no future with Huawei.” The European Commission warned in July that the Continent needed to move away from “dependency on high-risk suppliers,” a not-so-subtle reference to Huawei. The United Kingdom announced a ban the same month, and France enacted regulations to discourage telecom firms from using Huawei gear. A comprehensive European Union ban would be ideal, but others are likely to follow Germany anyway. The U.S.-led campaign isn’t about promoting American companies, as Sweden’s Ericsson and Finland’s Nokia will be the biggest winners of Huawei’s exclusion from Europe. Click here to read... [3]

U.S. to Investigate Vietnam for Currency Manipulation

The Office of the U.S. Trade Representative on Oct 02 said it would pursue an investigation into Vietnam’s “acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm to U.S. Commerce.” The USTR cited its authority under Section 301 of the Trade Act of 1974—the same legal justification that allowed the Trump administration to impose tariffs on around $370 billion a year of imports from China, the primary tool used in a U.S.-China trade face-off that has lasted more than two years. An investigation into currency practices potentially affects many items imported to the U.S. from Vietnam. Imports from Vietnam have grown rapidly in recent years, rising from $14.9 billion a decade ago to $66.6 billion last year, according to Commerce Department data. The country has been a popular destination for manufacturers looking to move out of China, either to avoid tariffs and other tensions between the U.S. and China or to seek lower labour costs. Click here to read... [4]

US awakens to rare earth mineral gap

A day prior to being airlifted to Walter Reed hospital, US President Donald Trump signed an executive order declaring a national emergency in the mining industry — an action aimed at boosting domestic production, Defense News online reported. Trump also ordered his Cabinet secretaries to study the matter, with an eye toward government grants for production equipment, as well as tariffs, quotas or other import restrictions against China. The order states that the county’s “undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States.” The Trump administration previously identified 35 minerals as both essential and whose supplies are vulnerable to disruption, the report said. Appearing before the Senate Armed Services Committee’s Readiness and Management Support Subcommittee, Ellen Lord, the top acquisition official at the Pentagon, called for congressional aid in creating a strategy for rare earth minerals, the report said. Click here to read... [5]

Boris Johnson and Ursula von der Leyen agree to ‘intensified’ trade talks

Boris Johnson and Ursula von der Leyen agreed on Oct 03 to work together to unlock an EU-UK trade deal, as negotiations moved into a new “intensified” phase and the mood around the talks improved. Britain’s prime minister and the European Commission president are now personally engaged in trying to unblock talks, notably on state aid, dispute resolution mechanisms and fisheries. It was the first time Mr Johnson and Ms von der Leyen have spoken since June, but the conversation left both sides convinced a deal was possible. EU leaders will take stock of progress at a summit on October 15-16. After a video meeting on Oct 03, both sides “agreed on the importance of finding an agreement, if at all possible, as a strong basis for a strategic EU-UK relationship in future”. The personal involvement of Mr Johnson and Ms von der Leyen is seen as the start of the end game of talks, as the lead actors get involved to attempt to engineer a political breakthrough. Click here to read... [6]

Judge partially blocks Trump's work visa ban

A U.S. judge on Oct 01 temporarily lifted a visa ban on a large number of work permits, undercutting a measure that the Trump administration says will protect American jobs in a pandemic-wracked economy. U.S. District Judge Jeffrey White said his ruling applied to members of organizations that sued the administration - the U.S. Chamber of Commerce, National Association of Manufacturers, National Retail Federation, TechNet, a technology industry group, and Intrax Inc., which sponsors cultural exchanges. The injunction, which lifts the ban while the case is being litigated, is at least a temporary setback for the administration's efforts to limit legal immigration during the coronavirus outbreak. The ban, which took effect in June and is scheduled to last until the end of this year, applies to H-1B visas, which are widely used by major American and Indian technology companies, H-2B visas for non-agricultural seasonal workers, J visas for cultural exchanges and L visas for managers and other key employees of multinational corporations. Click here to read... [7]

China's SMIC stockpiles chip equipment to counter US restrictions

China's top chipmaker Semiconductor Manufacturing International Co. is stocking up on production equipment and crucial replacement parts in a sign that it has been braced for months for the U.S. to tighten export restrictions. SMIC's purchases from American, European and Japanese suppliers exceed the company's needs for 2020, several industry sources familiar with the matter said. Purchases include machinery for key production processes such as etching, lithography, wafer cleaning, and testing, as well as more than a year's worth of consumable parts, which must be replaced on a regular basis to keep machines running and daily operations on track. SMIC is even working with other Chinese chipmakers to create a shared reserve of such parts, the sources said, adding that a central warehouse has been set up to store these items. U.S. pressure already delayed the shipment of an advanced extreme ultraviolet lithography (EUV) chip production tool from ASML, Europe's largest chip-making equipment maker, to SMIC late last year.Click here to read... [8]

Facebook, Twitter, Google CEOs will testify before U.S. Senate committee

The chief executives of Facebook, Twitter and Alphabet-owned Google have agreed to voluntarily testify at a hearing before the Senate Commerce Committee on Oct. 28 about a key law protecting internet companies.The CEOs are to appear virtually. In addition to discussions on reforming the law called Section 230 of the Communications Decency Act, which protects internet companies from liability over content posted by users, the hearing will bring up issues about consumer privacy and media consolidation. Republican President Donald Trump has made holding tech companies accountable for allegedly stifling conservative voices a theme of his administration. As a result, calls for a reform of Section 230 have been intensifying ahead of the Nov. 3 elections, but there is little chance of approval by Congress this year.The chief executives of Google, Facebook, Apple Inc and Amazon.com Inc recently testified before the House of Representatives Judiciary Committee’s antitrust panel. Click here to read... [9]

Russia Plans To Revamp Its Oil Tax Policy

Constrained by the OPEC+ production cuts and the necessity to balance its 2020 federal budget, Russia has started to play with one of the most dangerous policy instruments it has at hand – upstream taxation. For decades, Russian oil companies have been complaining that the constant tinkering with upstream terms is complicating their long-term strategic deliberations and unnerving potential foreign investors. This September, without the usual state media fanfare, the Russian parliament has approved the first reading of a Finance Ministry-masterminded bill that would seek to abolish tax breaks that Moscow deems superfluous, along with paving the way for the oft-promoted profit-based taxation system. The underlying rationale for this rather bold move (on the back of many years’ foot-dragging) lies in the Kremlin’s fear that the coronavirus-triggered economic slump will have a larger than expected impact on the nation, hence the need to create additional sources of income for the budget deficit not to surpass 4% of GDP this year. Click here to read... [10]

China’s first LEO satellite system for IoT to be completed in 2021

China's first low-earth orbit (LEO) satellite project that can provide data service for the Internet of Things (IoT) will be established at the end of next year by the privately owned Beijing Guodian High-tech Co, the company told the Global Times on Oct 04. The project will be made up of 38 LEO satellites, seven of which are already in orbit, and it can provide IoT-related data service, the company said. The project will be incorporated with the 5G system on land and the Beidou Satellite Navigation system to form an ecosystem of IoT satellites. Satellite internet systems have been developing fast globally in recent years. According to the Xinhua News Agency, the number of satellites in orbit will increase tenfold in the next decade, and most will be LEO telecommunications satellites. The US company SpaceX has an ambitious plan Starlink, which aims to launch nearly 12,000 satellites into low orbits for internet coverage. Click here to read... [11]

Strategic

The Pandemic Hits the White House

President Donald Trump and first lady Melania Trump are infected with the SARS-CoV-2 virus that causes the dangerous disease COVID-19. Some of the president’s staff and individuals he has met recently have also tested positive for the virus, and results on a long list of White House and campaign staff are pending. Trump was taken to Walter Reed Military Medical Center in the afternoon of Oct 02, where he will remain, White House officials say, for a few days. But what awaits him—and the country he still leads—as he deals with this virus? Despite his 74 years and overweight frame, Trump has always tried to portray himself as vigorous, healthy, and even athletic. While depicting his thinner 77-year-old opponent Joe Biden as doddering, slow, and senile, Trump has tried to give the impression that he is Biden’s junior by far, more than the three chronological years that separate them. Click here to read... [12]

UN nuclear watchdog inspects 2nd Iranian site, after standoff over access

The International Atomic Energy Agency (IAEA) has inspected the second of two suspected former secret atomic sites in Iran, the UN nuclear watchdog said on Sept 30. “As part of an agreement with Iran to resolve safeguards implementation issues specified by the IAEA, the agency this week conducted a complementary access at the second location in the country and took environmental samples," it said in a statement. Neither of the two sites were identified in the statement, but the agency said the suspected activities are thought to have taken place there back in 2003. Under the 2015 deal between Tehran and major powers, the IAEA monitors Iran’s nuclear activities. In early September, the watchdog said that the country’s stockpile of enriched uranium now stands at more than 10 times the limit agreed in the nuclear deal. Click here to read... [13]

Constantly referring to sanctions is ‘not constructive’: Ankara slams EU summit’s decisions on Eastern Mediterranean

The Turkish Foreign Ministry criticized EU leaders on Oct 02 for their continued references to possible sanctions against Ankara, as the conflict in the Eastern Mediterranean simmers on. “It is not constructive to continue to use the language of sanctions,” the Turkish Foreign Ministry said in a statement.Ankara is at loggerheads with both Greece and Cyprus over offshore energy rights and maritime borders in the Mediterranean region, with Ankara angering the EU allies by sending research ships with naval escorts to work in contested waters. At the summit, EU leaders assured Cyprus they will review Turkey’s behaviour in December, warning that sanctions will be imposed against Ankara if its “provocations” have not stopped, as the island country withdrew its opposition to sanctions on Belarus. Click here to read... [14]

Lebanon agrees ‘framework’ to negotiate on disputed maritime border with Israel – senior official

Lebanon is ready for US-mediated talks with Israel to resolve a long-standing maritime border dispute, the speaker of Lebanon’s parliament, Nabih Berri, said. The two nations are technically in a state of war. The talks will be held under the auspices of the United Nations, at a base near the UN-monitored boundary with Israel, known as the Blue Line, Berri told reporters on Oct 01. The Lebanese military will lead the rare direct negotiations between the two nations, which will be mediated by the US.Israel’s Energy Minister Yuval Steinitz said he will lead the Israeli team in the talks, which are set for October. He said the two sides are likely to speak via a video link due to the coronavirus outbreak. Lebanon and Israel each claim around 860 square kilometres (330 square miles) of the Mediterranean Sea as their exclusive economic zone. Both are eager to develop gas fields in the disputed area. Click here to read... [15]

France’s Emmanuel Macron Targets ‘Islamic Separatism’ With Proposed Law

French President Emmanuel Macron took aim at radical Islam on Oct 02, announcing plans to outlaw what he called “Islamic separatism” in communities where he said religious laws are taking precedence over civil ones. Mr. Macron said the law, if passed, would empower authorities to shut down associations and schools that he said indoctrinate children, and monitor foreign investment in religious organizations in France. It would also improve public services in poor suburbs, he said. The bill, which will go before Parliament early next year, risks escalating tensions between Muslim groups in France and authorities who enforce the country’s strict secularism. France began introducing bans on wearing Islamic dress such as face coverings in public areas years ago. Since then, the social and economic alienation of French Muslims has only deepened. Click here to read... [16]

Armenia-Azerbaijan Conflict: What’s Behind the Fighting in Nagorno-Karabakh

In 1988, tensions arose in the Nagorno-Karabakh mountainous enclave, which was then still part of Soviet Union. Armenians, who are the predominant ethnic group in the area that lies within Azerbaijan’s borders, rose up to demand unification with Armenia. Yerevan, the capital of Armenia, took over the region during a six-year war that claimed some 30,000 lives and displaced hundreds of thousands of people. The violence ended with a 1994 cease-fire that froze the conflict along a boundary, known as the line of contact, between the two sides. They never signed a peace agreement. Following the downfall of the Soviet Union, Azerbaijan sought to export its oil and gas without relying on the Russian pipeline network. It attracted Western investors, laying a series of oil and gas pipelines allowing it to transport its energy from the Caspian Sea to international markets. A gas pipeline completed last November runs close to the conflict front line and stretches across Turkey and is intended to help ease Europe’s reliance on Russian gas imports. Click here to read... [17]

China's Communist Party to hold key meeting in late October

China's ruling Communist Party will hold a key meeting of its top leaders from Oct. 26-29, state news agency Xinhua said on Oct 05. Formally called a plenum, the normally annual meeting gathers together the party's roughly 370-person Central Committee, the largest of its top decision-making bodies, to discuss important policy decisions. Xi is set to end his second term as the chief of the party's 90 million members at the next National Congress in autumn 2022. But few expect him to retire. Speculation is rife that he will create a post of "chairman of the party's Central Committee" and remain the paramount leader. Party chairman is the post Mao held for more than three decades until his death in 1976. Rumours suggest the study on the regulations is a step toward reviving the post of chairman. The draft of the regulations could be examined at the fifth plenary session of the party's 19th Central Committee, scheduled for Oct. 26 to Oct. 29. Click here to read... [18]

India on board with US-Maldives alliance to counter China

A defense agreement the U.S. government signed with the Maldives in September is a sign of shifting geopolitical tides in a strategic stretch of the Indian Ocean once dominated by India, South Asia's main power. Unlike a similar initiative seven years ago, the new framework for cooperation between the U.S. and Maldivian departments of defense went through without objection from India, a leading player in the latest version of the South Asian Great Game in which China, Japan and the U.S. are contesting for influence. In 2013, New Delhi succeeded in sinking U.S. plans for a status of forces agreement with the Maldives, an archipelago in the Indian Ocean best known for high-end tourist resorts. The agreement was meant to provide a framework for existing U.S.-Maldives defense activities and not to create a "new military presence," Washington said at the time. Click here to read... [19]

US preps for ‘Irregular Warfare’ with China, Russia

A newly published summary of an annex to the 2018 National Defense Strategy argues despite decades of asymmetric conflict — wars where enemies have exploited weaknesses in U.S. technology and tactics — the Pentagon is still underprepared for that kind of combat, the report said. The summary, released Oct. 2, points to China, Russia, and Iran as “willing practitioners of campaigns of disinformation, deception, sabotage, and economic coercion, as well as proxy, guerrilla, and covert operations.” Those types of fights don’t fit neatly into the physical “great power competition” the US expects to wage with complex new fighter jets, hypersonic weapons and other advanced, high-tech assets, the report said. “Our department’s shift towards great power competition does not signal an abandonment of the critical competencies we have developed to prosecute irregular warfare,” the summary said. “Instead, this shift gives us a vital opportunity to update our approach to irregular warfare.” Click here to read... [20]

Afghan President Ghani travels to Qatar amid peace talks

Afghanistan’s President Ashraf Ghani is travelling to Qatar for a bilateral meeting with Qatari leaders but will not hold a meeting with Taliban officials even as peace talks are underway in the country’s capital city Doha, officials said on Oct 05. Ghani and his team will be stopping first in Kuwait to attend the funeral ceremony of the late Emir of Kuwait Sheikh Sabah Al Ahmad Al Jaber Al Sabah before travelling to Qatar on Oct 05, a close aide to Ghani told Reuters. “Several meetings are planned to discuss efforts for deepening Afghanistan-Qatar ties and mutual cooperation in various areas,” said the official adding that Ghani will also meet the Afghan representatives who are holding talks with Taliban. “But it is clear that Ghani will not meet the Taliban officials as there has been no reduction of violence and they continue to kill innocent civilians,” said a senior western diplomat overseeing the ongoing peace process. Click here to read... [21]

State premier Laschet is frontrunner to succeed Merkel - party sources

Armin Laschet is fast emerging as the frontrunner in the race to be the ruling Christian Democrats' (CDU) candidate for chancellor in Germany's federal election next year after Angela Merkel stands down, two dozen party sources say. Laschet, the premier of Germany's most populous state, North Rhine-Westphalia, who presents himself as the Merkel continuity candidate, is slowly building a majority among the CDU's 1,001 voting delegates ahead of December's vote on the party leadership, the sources say. His main CDU rival, plain-speaking businessman Friedrich Merz, remains more popular among voters, but Laschet hopes his own credentials as a tried-and-trusted manager with centrist views will more than compensate for his lack of personal charisma and catapult him into Germany's top job. Laschet, 59, has also been energetically polishing his international profile in the past eight weeks, holding private meetings with French President Emmanuel Macron - his third this year - and Pope Francis, and visited a refugee camp in Greece. He has also visited Israel and met EU leaders in Brussels this year.Click here to read... [22]

Cambodia says it razed U.S.-built naval facility to move it

Cambodia razed a U.S.-built building on its largest naval base to allow for further expansion and will relocate the demolished facility, Cambodia's government said on Oct 04, denying reports of Chinese involvement in the redevelopment. Defence ministry spokesman Chhum Socheat said the facility was being moved to a new location at Koh Preap near the port of Sihanoukville to make way for an expansion of the naval base at Ream because "a lot of ships will need to dock". Nikkei Asia quoted a senior Cambodian naval official as saying China was helping with the expansion, but Chhum Socheat said China was not helping. Last year the Pentagon asked Cambodia to explain why it turned down an offer to repair the base, saying the decision had raised speculation of possible plans for hosting China's military. The Cambodian government has repeatedly denied reports that China had reached a secret deal with Cambodia to let it place forces at the base, saying that hosting foreign forces would be against Cambodia's constitution. Click here to read... [23]

Pompeo pledges US engagement on the Balkans

U.S. Secretary of State Mike Pompeo pledged on Oct 02 that Washington will remain engaged in the Balkans where China and Russia have been gaining political and economic influence. Pompeo spoke in the Croatian Adriatic Sea resort of Dubrovnik, the last leg of his European tour that also included stops in Greece, Italy and the Vatican." The United States no longer leads from behind,'' Pompeo told reporters at a news conference held on the terrace of a hotel overlooking the medieval walled city. "We will continue to engage in a serious way," he said, referring to the region that was torn by civil wars in the 1990s. "We are trying to leave these places in a way that they are connected to the West." As Washington mostly took its eyes off the Balkans after the wars ended, Moscow and Beijing both rapidly increased their footprint in the region. China did it through its multi-billion-dollar belt-and-road economic program while Russia does it with political pressure, mostly through its traditional Slavic ally Serbia. Click here to read... [24]

Sudan’s government, rebel groups sign landmark deal

Sudan’s transitional government and several rebel groups have signed a peace agreement aimed at resolving years of war in which hundreds of thousands of people died and millions displaced in different regions across the country.Cheers rang out as representatives from the government and a coalition of armed groups called the Sudanese Revolutionary Front (SRF) signed the deal on Oct 03, a year after the peace talks began, at a ceremony in Juba, the capital of neighbouring South Sudan.Guarantors of the deal from Chad, Qatar, Egypt, the African Union, European Union and United Nations also put their names to the agreement.However, two powerful rebel groups – the Darfur-based Sudan Liberation Movement (SLM) faction led by Abdelwahid Mohamed al-Nour and the Sudan People’s Liberation Movement-North (SPLM-N) led by Abdelaziz al-Hilu did not sign, reflecting the challenges still facing the peace process. Click here to read... [25]

Pentagon chief heads to Algeria to boost security ties

The United States secretary of defence, Mark Esper, headed to Algeria on Oct 01 to boost ties at a time when the North African country is trying to mediate two long-running conflicts in neighbouring Libya and Mali. Esper, the first defence secretary to visit Algiers in almost 15 years, hopes “to deepen cooperation with Algeria on key regional security issues, such as the threat posed by extremist groups,” a senior US military official said.Esper, due in the country as part of a North Africa tour, will arrive in Algiers after talks in neighbouring Tunisia, before heading to Morocco.“Algeria is a committed counterterrorism partner,” General Stephen Townsend, head of the US Africa Command, said on a recent visit to Algiers. US military officials frequently visit Tunisia and Morocco, where defence cooperation with Washington is well established. But Esper will be the first defence secretary to visit Algeria, an ally of Russia and China, since Donald Rumsfeld in 2006. Click here to read... [26]

Medical

EU regulator starts safety review of coronavirus drug

The European Medicines Agency says it has started a safety review after some patients taking the coronavirus drug remdesivir reported serious kidney problems. In a statement on Oct 02, the EU regulator said it isn't clear whether remdesivir was causing the "acute kidney injury," but that the issue "warrants further investigation." Remdesivir was given a conditional marketing authorization by the EMA on July 3 and can be used to treat people older than age 12 with severe COVID-19 and pneumonia who require oxygen treatment. The approval for the drug was fast-tracked with the understanding that more evidence would be submitted after a license was granted. "The benefits to these severely ill patients outweigh the risks of making the medicine available despite having less complete data than normally expected," the EMA said. Remdesivir is one of the few licensed treatments for the coronavirus, in addition to the generic steroid dexamethasone. In July, health experts criticized the United States for buying up a significant portion of the drug, made by Gilead Sciences. Click here to read... [27]

Cardiac disease outweighs obesity in death rates of COVID-19 patients: Japanese study

Obese patients and those with hyperlipidemia and other lifestyle-related illnesses are highly likely to develop severe COVID-19 symptoms after being hospitalized with the virus, but are less likely to die from it than those with cardiac disease and other such ailments, a study has found. The National Centre for Global Health and Medicine (NCGM) released the finding in a study on around 2,600 patients in Japan hospitalized with COVID-19. The study indicates it is possible there is a difference between the seriousness of the condition and the risk factors associated with death. When it came to fatalities, those with cardiac disease, chronic lung conditions, cerebrovascular disease and renal dysfunction who had severe COVID-19 symptoms at the time of their hospitalization were found to have a high death rate of 30% to 40%. But the death rate for those who were obese or had other lifestyle-related disorders tended to be lower, ranging between 10% and 16%.Click here to read... [28]