Our editors give us a breakdown of this week’s current affairs
Europe: Cameron Fulton
Norway went to the polls this week in parliamentary elections. The vote has been centred on key points of oil usage and the climate crisis. Opinion polls believe a coalition-led victory for the Labour party and Jonas Gahr Store the likeliest outcome, ending an 8-year tenure for the Conservatives. Victory will mean that for the first time since 1959, all 5 Scandinavian nations will have left-leaning prime-ministers concurrently. The nature of the election was shifted earlier this summer by the UN’s ‘code red’ plea over climate fears. Norway’s economy is contradictory climate-wise, with it being the largest petroleum producer in Europe, but simultaneously a huge propellant of the electrical car push.
The Bank of Russia raised interest rates for the 5th consecutive meet this week, bolstering the key rate by 25 basis points up to 6.75%. Inflation in the country is at a 5-year high, 6.74%, and is well above the target rate of 4%. The move follows the rhetoric of the Bank’s chief minister, Elvira Nabiullina, as she attempts to bring down the pandemic-induced bubble in food and energy prices. The Bank predict the move will slow inflation back to its expected 4% rate in the 4th quarter but has not ruled out another hike to stimulate this.
Christine Langarde, ECB President, announced this week the slowing of the central bank’s pandemic emergency purchasing programme (PEPP). After a 2-day council meeting, ‘a moderately lower pace’ was decided compared to its €80bn monthly injections since March. This follows a rebound in European growth, but also inflation, that could spiral without removal of central bank stimulation. Market reaction was limited, with the 10-year German bond yield, a benchmark for the EU, fell only 0.04% to -0.37%.
Asia Pacific: Sophie Evans
Japan and Vietnam have signed a defence transfer deal in the face of increased worries over China. The agreement will allow Japan to give defence equipment and technology to Vietnam, as the two nations have stepped up their military cooperation due to China’s growing military influence. Japan’s Defence Minister Nobou Kishi stated that the deal marks a move to deepen Japan-Vietnam defence ties through multinational joint exercises and other methods. Chinese Foreign Minister Wang Yi also visited Hanoi at the same time as Kishi, where he promised to donate 3 million doses of its Sinovac vaccine to Vietnam. As such, during his talks with the Vietnamese Defence Minister, Kishi stated Japan’s opposition to “any unilateral attempts to change the status quo by coercion or any activities that escalate tensions’ ‘ in reference to China’s assertive activity in the East and South China Sea. This follows US Vice President Kamala Harris’ recent visit to Vietnam, where she stressed countries must stand up against “bullying ” by China in the South China Sea.
Sydney is in the process of planning an easing of its 3-month lockdown, which began in July following a Delta variant outbreak. The state government’s “roadmap to freedom”, released on Friday, is subject to a vaccination threshold of 70% double vaccinated adult population before freedoms will be allowed. NSW saw its highest number of daily new infections on Thursday, with 1400 cases. However, Premier Gladys Berejiklian has emphasised that citizens must get accustomed to the virus being prevalent in the community after the majority of society is vaccinated. The NSW proposal for reopening follows a national plan for all the country to reopen at 70-80% vaccination levels – as over half of Australia’s 25 million population remain under lockdown. However, tensions have arisen with Covid-free states like Queensland and Western Australia, who disagree with plans to “live with the virus” and argue that vaccination thresholds should be higher.
India: Rudra Sen
Prime Minister Narendra Modi, for the second time in his tenure, chaired this year’s BRICS summit. The theme for the summit was ‘Intra-BRICS cooperation for continuity, consolidation and consensus’. The BRICS represent five of the largest developing countries and 41% of the global population. The bloc had meetings on all major issues like climate change, security, COVID-19 and reforms required in the United Nations Security Council. PM Modi informed that the group adopted the BRICS Counter-Terrorism Action Plan to highlight its approach and strategy towards combatting terror. While Modi did not mention the situation in Afghanistan in his opening remarks, the issue was comprehensively discussed later on in the meeting.
The state of Kerala has ramped up its efforts to contain a potential outbreak of the rare Nipah virus after a 12-year-old boy died recently. The state government has quarantined two health workers after they showed symptoms and have identified 158 people in close contact with the boy. The Nipah virus is a communicable disease that was first discovered in Malaysia in 1998 and can cause severe illness in both humans and animals. The WHO estimates that the fatality of this deadly disease can range from 40 to 75%. Kerala has to now control the spread of the Nipah virus at a time when it has the highest number of coronavirus cases in India.
India and Australia held 2+2 talks incorporating the External Affairs Jaishankar and Defence Minister Singh and their Australian counterparts Payne and Dutton. The objective of this inaugural bilateral dialogue on foreign affairs and defence at a ministerial-level was to boost strategic ties. The discussion covered areas such as strategic ties and interests of the two parties to counter China’s increasing presence in the Indo-Pacific region. India also urged Australia to ease travel restrictions for thousands of students who have been unable to study in person since the pandemic started in 2020.
China: Tommy Pigatto
With Sino-American relations souring in recent months over disagreements in climate policy, China’s human rights record, and China’s regional relations, Chinese President Xi Jinping and U.S. President Joe Biden spoke on the phone this Friday for the first time in seven months. With this being only the second direct call between the two world leaders since Biden took office, both leaders discussed their mutual interest in “the responsibility of both nations to ensure competition does not veer into conflict”. Chinese media outlet CCTV described the 90-minute phone call as “candid”, with the two leaders discussing in broad strokes the future of the Sino-American relationship and where Chinese and American interests overlap and diverge, rather than controversial issues such as Xinjiang or the South China Sea. The two leaders reminisced over their times as Vice-President during the Hu-Obama years, with the two leaders agreeing that despite the many differences between China and the United States, it is absolutely essential for the “future and destiny of the world” that China and the US can properly handle their relations.
Tensions in the South China Sea continue to rise this week, with Chinese Foreign Minister Wang Yi warning Vietnamese officials against pursuing unilateral action in the South China Sea for fears that it could “complicate the situation and magnify disputes”. The South China Sea—a vital trade route claimed partially by 6 countries and entirely by China—has been the source of much conflict in recent years, as China continually disregards the United Nations Convention on the Law of the Sea (UNCLOS) by treating the whole region as their own and building artificial islands in the region to cement their illegal claim. With the status-quo more or less favoring China, the Chinese Foreign Minister encouraged Vietnam to “cherish” the “hard-won” peace and stability achieved in the South China Sea, donating millions of COVID-19 vaccines to sweeten the deal. This exchange between China and Vietnam occurred in the wake of U.S. Vice President Kamala Harris’ critical visit to Vietnam this summer, to which China’s recent stance towards Vietnam is likely a reaction to.
Africa: Laura da Silva
Guinea’s leader Alpha Conde has been overthrown in a military coup that occurred last Sunday. An elite Guinean Special Forces unit stormed the presidential palace and detained the country’s leader before Colonel Mamady Doumbouya assumed power on state Broadcaster Radio Television Guineenne. Although technically democratically elected, Mr. Conde’s legitimacy deteriorated last year after he amended the constitution to enable him to run for a third term. After winning the election the government then arrested 400 political opponents who were confined to Guinea’s squalid prisons where 4 have died, according to reports by Amnesty International. Shockingly, the group responsible for the military group that overthrew Alpha Conde was trained by the American Green Berets who have been in Guinea since mid-July to train about 100 soldiers. Although numerous American-trained officers have mounted coups in their countries, most notably Gen. Abdel Fattah el-Sisi of Egypt, this is the first time that a coup has taken place in the middle of an American military course. Bardha S. Azari, a spokesperson for the U.S. Africa Command, has said that “[they] do not have any information on how the apparent military seizure of power occurred and had no prior indication of these events”. However, on Friday U.S. officials said that they were investigating reports that Colonel Doumbouya and his fellow coup-makers had left from the American training base on Sunday to the presidential palace in the capital, where the coup took place.
The president of the Democratic Republic of the Congo (DRC), Felix Tshisekedi, has called for a review of extensive mining contracts signed with China in 2008. President Tshisekedi’s predecessor, Joseph Kabila, negotiated the highly contentious contract with the Chinese in 2008 originally valued at $9bn. This was then reduced to $6bn after pressure from the International Monetary Fund (IMF) who raised concerns about the severe effect the deal would have on the country’s finances. The “infrastructure-for-minerals” deal meant that Sinohydro and China Railway had agreed to build roads and hospitals in exchange for a 68% stake in the Sicomines copper and cobalt joint venture. However, critics of the deal have said that many of the promised infrastructure projects have yet to be realised, and have complained about a lack of transparency. President Tshisekedi announced the review on a visit to the mining town of Kolwezi, stating that, “It is not normal that those with whom the country has signed exploitation contracts are getting richer while our people remain poor”. He further emphasised that, “it is time for the country to readjust its contracts with the miners in order to seal win-win partnerships”. Currently, Chinese investors control about 70% of the DRC’s mining sector, after acquiring further lucrative projects from western companies in recent years.
Middle East: Dhruv Shah
After Qatar and Turkey managed to reach a deal with the Taliban, many stranded international citizens have been flown out of the country via an international flight from Kabul airport. The flight which was headed for Qatar, was confirmed to carry around 200 people on board, including a dozen of British nationals and 11 US citizens. For the Taliban, keeping flights running is an important step towards facilitating evacuation efforts and gaining international recognition from Western powers. The deal reached was security focused, with Qatar and Turkey promising to send security to Kabul airport against any potential threats from ISIS-K. Qatar hosts a Taliban political office in Doha and has become the main facilitator between the Taliban led Afghanistan and Western powers.
Following the deadlock of Lebanon’s government for 13 months, Lebanon has agreed to a new government led by billionaire prime minister Najib Mikati. This comes after the previous government resigned following the devastating port explosion in the capital last year. The move provides the country with newfound optimism as it raises the possibility of talks with the IMF over a bailout to rescue an economy which has been all but destroyed.
Moroccan’s Islamist Party has faced a crushing defeat in recent parliamentary polls as it loses to a party with close links to the monarchy and backed by wealthy oil importers. After a decade in parliament, the Islamist Justice and Development Party (PJD) has dropped from 125 seats to a mere 12 seats. Many locals blame the party for high unemployment and rampantant corruption.
North America: Amelia Brown
Although the U.S. has seen 75% of the adult population at least partially vaccinated this week, the delta variant continues to sprawl across the country and hospitals continue to be overwhelmed. In light of this, President Biden has called on the Occupational Health and Safety Administration to draw up regulations that mandate companies with over 100 employees to have them all vaccinated or tested twice weekly for covid. This would affect over 65% of U.S. workers, as Biden is getting frustrated with the vaccine hesitancy and stalled pandemic recovery because of it. Federal workers, who were already mandated to get vaccinated or show twice weekly negative tests, can no longer opt for the testing. Republican governors, who Biden called, “cavalier with the health of their communities” are planning to sue over the administration’s orders.
With the delta variant causing over 1,000 U.S. deaths a day, many big companies, despite their own vaccine mandates already, have pushed back-to-office dates even further into the fall, or into 2022. Microsoft this week joined the likes of Facebook, Amazon, and Uber in delaying re-opening plans. These delays in returning to normal have also impacted consumer confidence in the economy, as a slowdown in recovery speed has also been seen this week.
Canada’s Leylah Fernandez played her first Grand Slam final at the US Open against Britain’s Emma Raducanu on Saturday. Fernandez, who just turned 19 years old and was ranked 73rd in the world going in, lost 6-4, 6-3 in the final. She still made it further than Canada’s Felix Auger-Aliassime, who lost in the men’s semifinal on Friday.
Latin America: Leo Le Borgne
The chief public prosecutor of Haiti has requested Prime Minister Ariel Henry to attend a hearing regarding the assassination of former President Jovenel Moise. Prosecutors seek to determine why Henry communicated with one of the suspects central to the orchestration of the president’s assassination. These investigations are carried on as the small Caribbean nation is rocked by the subsequent political crisis, and an earthquake that claimed more than a thousand lives, in addition to overwhelming the country’s hospital system. To worsen matters, the country has been plagued by a surge in organised crime, often resorting to extreme violence such as kidnapping and murder. The nation has found itself at rock bottom, and will need to go to great lengths to rebuild its crippled political, economic, and welfare infrastructures.
Founder of Sendero Luminoso Abimael Guzman has passed away at the age of 86 in Peru. The Sendero Luminoso organisation (known as Shining Path in English) was a group of Maoist rebels led early on by Guzman that claimed approximately 69,000 lives from the 1980’s onwards. Terrorist attacks were carried out frequently by the Shining Path towards disadvantaged communities within Peru’s inner regions.
Business: Aoife Doyle
As the last Covid restrictions were lifted in England the UK economy grew by just 0.1% in July. The UK economy is still 2.1% below its pre-pandemic peak despite six consecutive months of growth. The economy saw 1% growth the previous month as the opening of arts, entertainment and recreational activities helped the rise. However, many firms suffered from a lack of staff during July as workers were forced to self-isolate at home after notifications from the NHS Test and Trace app and the Scottish Protect-Scot app. The bounce-back in the economy stalling makes it clear that recovery cannot be taken for granted and surges in cases across the UK have dented the impact of the full reopening of the economy. Recovery is going to be slower than predicted as pandemic support – furlough and government loans – is phased out, labour shortages and trade problems will start to be reflected in the figures.
Despite growing scepticism both in El Salvador and internationally, the country will recognise Bitcoin as legal tender from 7th September. Under the country’s Bitcoin Law, businesses will have to accept it or the US dollar, El Salvador’s other official currency. The government has presented the measure as a way to boost economic development and job prospects in the country. El Salvador has been divided as polls suggest Salvadorians are not prepared for the move, many of whom are unfamiliar with crypto-currency, and the World Bank has warned against its adoption. Bitcoin, a virtual asset with no direct connection to a real economy has experienced large fluctuations in value over the years. Many believe that it is an intrinsically bad means of payment as it can be quite costly for small transactions.
Amid a Covid-driven surge in demand for products and an acceleration in the shift towards online shopping the firm paid £492m in direct taxation following a rise of 50% in sales. Amazon and other tech firms have faced scrutiny over the amount of their tax bills in the UK as they pay tax on profits not sales. The direct tax bill increased by more than two-thirds compared to the previous year. The firm announced they are proud of the significant economic contribution they are making to the UK economy – employing 55,000 people in the UK and having invested £32bn in UK infrastructure since 2010. GMB, the union for Amazon workers, said the company’s tax bill was “frankly insulting” as Amazon workers suffer unsafe, dehumanising work practices.
Culture: Armaan Gheewala
In Madrid, hundreds of people are gathering in support of LGBT rights as homophobic attacks across the country have been on the rise in the last few years (increasing annually by 9% since 2014) however Spain has long been hailed as an extremely friendly LGBT destination and a pioneer for LGBT rights. There have been growing calls for government action so Prime Minister Pedro Sanchez is meeting with ministers, community leaders and police to discuss how to combat these attacks.
Thousands of healthcare workers are gathering in Warsaw, Poland to protest their pay and working conditions as the country is currently facing a fourth wave of covid cases. These protesters contained all sorts of workers such as nurses, doctors, parademics, therapists and so forth. They are currently asking for the government to increase expenditure on healthcare by 8% of GDP instead of the currently planned 6% for 2022. They’re also asking for more people to be employed in administrative roles to reduce the bureaucratic burden on doctors and nurses. However, the government has refused the demands claiming that this will be implemented within ‘the next few years’.
Science & Technolgoy: Abi Byrne
As part of the UK government’s winter plan for England which is due to be set out today by PM, Boris Johnson, the new recommendations on who will get booster jabs will be revealed. This decision will follow from the official findings of the Joint Committee on Vaccinations and Immunisation. It is thought that About 400,000 to 500,000 people with severely weakened immune systems will be eligible for a third dose of vaccine, including those with blood cancer, advanced HIV and recent organ or stem-cell transplants.
In Scotland the decision has been made to introduce the use of a vaccine passport scheme which will come into effect on the first October. Under the scheme nightclubs and large events will only be able to allow entry to people who can show they have had two doses of a Covid vaccine. There are still many questions regarding exactly how the passport will work but it is understood that it will be broadly similar to the system currently in place across Europe. An app has been developed to both display and read the Scottish vaccine passport’s QR codes which are already available to download or request a paper copy of. There are some concerns about the level of security that will come with this vaccine passport scheme, the Scottish government has previously stayed away from digital proof of vaccination status after it was found online certification could easily be falsified with editing technology. And ministers in England say a similar scheme will not go ahead in England.
Theory: Cassi Ainsworth-Grace
The IMF has just announced its largest allocation of its Special Drawing Rights (SDRs). US$650 billion of SDRs has become available, and will be directed towards extending additional liquidity to the global economy. This injection will be significant for developing and emerging economies, who can reduce their reliance on more expensive sources of liquidity. The IMF anticipates that many countries will use this allocation to fund their fight against the pandemic, such as through the purchase of vaccines. The body will offer a framework for effectively utilising the SDRs, as well as monitoring SDR holdings, transactions and trading over the coming years.
The St Andrews Economist 