The World This Week

Our editors give us a breakdown of this week’s biggest news stories

United Kingdom: Ross Alexander Hutton 

In the biggest political gamble of his leadership of the official opposition, Sir Keir Starmer called for a ‘circuit breaker’ lasting two to three weeks, in response to the publication of SAGE’s (Scientific Advisory Group for Emergencies) reports recommending such action be taken when cases began to surge in September. Nevertheless, Number 10 rejected this option in favour of a ‘three-tiered’ approach of restrictions based on the prevalence of the virus in local areas across the country. Whilst Boris Johnson claims his approach is about finding a balance between health and the economy, there appears to be some conflict between the national government’s agenda and that of local government, with the Mayor of Greater Manchester, Andy Burnham, resisting the Prime Minister’s pressure to agree to the highest level of restrictions. Whether the government’s approach will be enough to stem the resurgence of the virus remains to be seen but Starmer’s roll of the dice shows an alternative is possible. 

Fears of a surge in unemployment are being realised as the U.K.’s unemployment rate reached its highest level in three years and redundancies rose to their highest level since 2009. Previously shielded by the Treasury’s response earlier in the year, the rise in unemployment comes at a time of local lockdowns and a far less generous wage support package, fuelling concerns of further increases in unemployment in the months ahead. Addressing these concerns at the House of Lords’ Economic Affairs committee,  the governor of the Bank of England, Andrew Bailey, admitted “it’s very hard at the moment, I have to be honest with you, to put an estimate on how much scarring there will be” as more business go bust and changes in consumer behaviour are cemented. Notably, the Bank of England sent letters to U.K. banks to gauge their readiness for and ability to cope with zero or negative rates, alongside other tools should they be required in the future. 

Running concurrently to the economic impact of the pandemic is the volatile Brexit process which reached new levels of rhetoric this week. In response to the Brexit discussions at the European Council meeting in Brussels, Boris Johnson declared the trade “talks are over” unless the E.U. is prepared to adopt “a fundamental change of approach”. For those who have not followed the twists and turns of the Brexit process, their first reaction to Johnson’s ultimatum would likely be that the U.K. is heading for no-deal come January 2021. Yet, this brinkmanship is characteristic of the negotiations: make threats and apply pressure, then concede and reach an agreement. Neither side has walked away, the channels of communication are still open – thus, a deal is still feasible if there is political will behind it. 

Europe: Peter Hourston

A French schoolteacher was beheaded by an ISIS-linked terrorist in Conflans-Sainte-Honorine, a town on the outskirts of Paris on Friday. The killing came after the teacher, Samuel Paty, had shown his class cartoons of the prophet Muhammad in a lesson about liberty. A social media campaign against the teacher was waged by a parent of one of Paty’s pupils, who accused him of Islamophobia. It is understood that the attacker who was shot-dead by police, had seen social media posts, despite living in Normandy, 100km away from the school, and had no local connections to the school. The French anti-terrorist prosecutor confirmed that nine people were being held by the authorities in connection with the attack. 

French President Emmanuel Macron claimed that the EU still held the upper hand in post-Brexit trade negotiations with the UK, with the British being “much more dependent on us than we are on them.” Brussels decided to intensify talks with London this week following UK Prime Minister Boris Johnson’s threat to halt discussions and go for a non-deal unless the EU had a “fundamental” rethink of their stance. Macron has been one of the most hawkish EU leaders on the issue of fishing rights, due to pressure from the fishing industry in Northern France. He claimed that “no-deal is better than a bad deal” for French fishermen. However, other capitals have been more concilary towards Britain, with Dutch Prime Minister Mark Rutte acknowledging that the European side needed to “speed up, together” and most notably German Chancellor Angela Merkel, who has reportedly warned her EU partners, particularly Macron, that an economic agreement was needed to limit the fall-out from Covid-19. “We have seen some light in the last few days of negotiations, but also shadow,” Merkel commented on Friday.

The EU agreed this week to impose sanctions on six individuals in the Russian defence ministry, domestic intelligence agency, and the Kremlin the in the wake of the attempted assassination of opposition leader Alexi Navalny. Although the EU declined to offer evidence that the six had any direct involvement in the Novichok attack, it was “reasonable to conclude” the poisoning “was only possible with the consent” of the Kremlin and the security services. The EU imposed similar measures in response to the attack on the Skripals in Salisbury and further weakens Moscow’s relations with the West.

Asia Pacific: Satyajit Mohanan 

Thailand declares a state of emergency amid the widespread crackdown on demonstrators. Bangkok was filled with scenes of police and soldiers dispersing protestors of a student-led movement demanding limits on the king’s power. The government justified the crackdown as endangered the lives of the royal family and posed a threat towards the nation’s national security and economic stability. Human Rights Watch said that at least 27 people including protest leaders were in policy custody. Many allege that they were being detained without access to lawyers and could now be held without charge for up to 30 days as per the provision of Thailand’s emergency law.

Jacinda Arden’s Labour Party wins landslide re-election in New Zealand. Ms Ardern’s victory of a second term in office is seen as a reward by voters for her government’s decisive response to Covid-19. This massive mandate has paved the way for the first single-party government in decades. Political commentator Bryce Edwards of Victoria University in Wellington describes the vote as one of the biggest swings in New Zealand’s electoral history in 80 years.

India’s per capita GDP is set to slip below Bangladesh in 2020. According to the IMF’s World Economic Outlook (WEO), Bangladesh’s per capita GDP in dollar terms is expected to grow 4 per cent in 2020 to $1,888. India’s per capita GDP, on the other hand, is expected to decline 10.5 per cent to $1,877 – the lowest in the last four years. This makes India the third poorest country in South Asia, with only Pakistan and Nepal reporting lower per capita GDP, while Bangladesh, Bhutan, Sri Lanka, and Maldives would be ahead of India.  According to economists, Bangladesh’s economic growth has been underpinned by its fast-growing export sector and a steady rise in rate of savings and investment in the country. In contrast, India’s exports have stagnated in recent years, while savings and investment have declined.

North America: Amelia Brown 

Pfizer, one of several companies making a coronavirus vaccine, announced on Friday a new timeline for their vaccine, which is in late-stage trials. Although the company had been touting October as the month their vaccine would be ready, they now say “we may know whether or not our vaccine is effective by the end of October,” and expect not to know whether the vaccine is both safe and effective until the end of November. The more accurate timeline comes just as the FDA, who is responsible for approving the vaccines, has been in a standstill with the Trump administration over their new, stricter guidelines for giving emergency authorization

Amidst growing virus numbers, Canada is looking to protect people and the environment. The federal government set two business challenges, posing the task for small and medium sized companies to produce compostable masks and innovative ways to recycle single use PPE. The Innovation, Science and Economic Development program is offering up between $300,000 to $1 million to fund companies for anything from proof-of-concepts to working prototypes. A study from the Environmental, Science & Technology journal estimates that 129 billion face masks and 65 billion gloves per month globally end up as waste and is resulting in widespread contamination. 

Mexican farmers are worried about meeting the demand for white corn, as subsidies for larger farmers were almost entirely cut from the recent agriculture budget. President Lopez Obrador is focused on prioritizing the country’s most vulnerable and has distributed resources more to farmers in poor rural regions. Almost $1 billion in subsidies and equipment help was cut for the 2021 budget. One forecast says that production of white corn will go down 3.4% before recovering in 2021, but farmers are worried of a deeper problem that will lead to more and more importing of yellow and white corn. “Corn is no longer good business because it is cheaper to import,” the head of the National Confederation of Corn Farmers said, adding that the government is “disincentivizing national production.” 

South America: Annie Smith 

Today, Bolivia is re-running its chaotic October 2019 election, which led to the resignation and exile of left-wing president Evo Morales. Bolivians will be choosing a president, vice-president, and 166 members of Congress on Sunday 16 October. The election could see the return from exile of Morales, while the presidential election itself is between former President Carlos Mesa, the centrist candidate, and Luis Arce, the Movement Toward Socialism party’s presidential pick. The election was postponed twice due to coronavirus, and it is the first presidential election since 2002 where Morales, who was barred by electoral authorities from standing as a senator and has been formally charged with sedition and terrorism, is not on the ballot.

Researchers have warned that as farms expand into the Amazon rainforest, felled trees and expanding pastures may lead to new pandemic diseases. These changes in the Amazon are driving displaced animal species, including bats, monkeys, and mosquitoes, into new areas, while opening the region to arrivals of savanna-adapted species like rodents. Adalberto Luis Val, a researcher at the National Institute for Research in the Amazon (INPA), has claimed that these shifts, combined with greater human interactions with animals as people move deeper into the forest, are increasing the chances of a virulent virus, bacteria, or fungus jumping between species; and climate change, which is driving temperature and rainfall changes, is also adding to the risks.

Peru’s Machu Picchu opened this week to a single tourist, Jesse Katayama, after he became stranded in the town of Aguas Calientes, near Machu Picchu, in mid-March due to coronavirus travel restrictions. He was granted access by Culture Minister Alejandro Neyra who said, “He had come to Peru with the dream of being able to enter,” and allowed him sole access “so he can do this before returning to his country.” Machu Picchu is expected to re-open at reduced capacity next month.

Science & Technology: Paula Plechschmidt 

Once again, the fight against tech giants continues. This time, France and the Netherlands joined their forces to call upon the EU’s competition authorities to prepare legislation to curb big tech’s market power. This fight against big tech has been a prominent issue all throughout 2020, with many regulators arguing that their anti-competitive behavior has been detrimental to smaller businesses and that their sheer size has allowed them to gain power of a scale that companies should not be allowed to hold. Traditionally, Paris and The Hague have had very different approaches to the regulation of the tech industry, with the Netherlands favoring a more liberal approach whereas France has always been at the forefront of pushing more stringent regulation regarding big tech. This makes this joint call even more significant, signaling the urgency of the problem and the need to put up a joint front against a common enemy.

On Tuesday Apple announced their new 5G iPhones. These are going to retail at $829, $130 higher than the price of an iPhone 11. In addition, they are also releasing an iPhone 12 mini which Apple is claiming is the smallest, thinnest and lightest 5G phone in the world. Interestingly, the iPhone 12 will return to flat edges, reminiscent of the iPhone 4 and 5, as well as having a new ceramic shield glass cover which is meant to make the screen more durable.  

An application of AI that is being used increasingly is generating images of fake people. These fake images are used to give an identity to online personas which can then be used in bot campaigns across social media. These have been identified in campaigns in both China and Russia being used by rightwing media outlets and businesses. This is a rising issue, especially in light of the US election, as technology firms have to understand how to combat the misinformation that has been enabled by this mass production of “fake faces”.

Business: Tom Woods 

UK pub chain JD Wetherspoon has reported a its first pre-tax loss since 1984 as it is still reeling from the impact of COVID-19. The losses amounted to £105.4 million and have resulted in up to 450 redundancies at their airport locations and 108 at their head office. The revelation has led to further questions over the government’s coronavirus policy, with UK Hospitality recently warning that a failure to provide extra financial support to businesses could result in 250,000 people losing their jobs in the sector. Tim Martin, CEO of the firm, has attempted to pressurise the government to change the rules, warning that unless the government adopts a “Swedish-style” approach, further job losses will be inevitable.

The government has also come under fire from firms this week for its Brexit policy, as over 70 British business groups representing more than 7 million workers have come together in a last-ditch attempt to push for a trade deal with the EU. On Friday, Boris Johnson ended talks with the EU in an attempt to force concessions from the EU’s trade negotiator Michel Barnier. Despite this, it remains uncertain whether Barnier will give Johnson what he wants, and Johnson has refused to rule out the possibility of a no-deal outcome. This is what British business fears, as Cabinet Office Minister Michael Gove admitted this week that heavy tariffs and duties up to 100% would likely emerge from this scenario.

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