The World This Week

Our editors give us a breakdown of this week’s current affairs

United Kingdom: Harry Street 

The annual Conservative party conference started at the latter end of this week, which is taking place in Manchester. This year, the key message will be similar to last year: Build Back Better. For Johnson, this entails changing the UK and levelling up the country, rather than just reverting back to how things were before the COVID-19 pandemic. In particular, it’s expected that the conservatives will emphasise how the government plans to address regional inequalities. Nevertheless, although the country’s future will be a major conversation at the conference, the conservatives won’t be able to ignore the major staff and petrol shortages facing the UK right now. Despite the military assisting with petrol shortages, many households still fear that food shortages and rising prices will continue throughout 2021. So far, little has been done by the UK government to address these potential crises, and it’s likely more solutions will be revealed over the 4-day conference.

Morrisons, the fourth-largest supermarket in the UK, will finally be taken over by Clayton, Dubliner & Rice after they won an auction with a £7billion bid. The supermarket giant has been in the headlines for months, when investment groups started to discuss takeovers in June. Under new management, the private equity firm hopes to build on Morrisons’ strengths and making it an even more competitive UK supermarket. The bid for Morrisons was just one of the first companies targeted by overseas investors. The pound’s value fell greatly after Brexit, which was made worse by the pandemic; it has still not recovered to its pre-Brexit level. This makes investing into UK companies more appealing for overseas investors, since the prices are relatively cheaper. However, with more firms being taken over by private buyouts, many are concerned how this could affect UK business, as decision-making moves abroad. 

Europe: Cameron Fulton 

​​The German elections led to one of the most divisive results in modern history. No major party was able to grasp a majority, with the SPD’s Olaf Schulz being the leading candidate with 206 seats and 25.7% of the vote. In comparison, the ending of Angela Merkel’s reign on the CDU was a sombre affair: her party falling more than 8 percentage points from their 2017 result of 32.9%. Ultimately, the result was predicted well by polls, with the effective position of kingmaker being jointly held by the Greens (14.8%) and the FDP (11.5%). Multiple coalitions are possible, with analysis available on the FT. The government will not be confirmed for many months, with Merkel also remaining in power for the rest of the year, but the Greens and FDP have stated their intention to collaborate to ensure a stronger position in negotiations.

The European Court of Justice ruled in favour of the Polario Front, an independence group fighting for the sovereignty of a disputed, and resource-rich territory in the Western Sahara. The result comes as a blow to Morocco, who have claimed the disputed area, and will now be unable to export goods previously agreed according to a now debunked 2019 treaty. However, fears are now beginning to grow that this may affect trade from the region into Spain – specifically, harming another oil supply into the EU. Indeed, geopolitics has flared recently alongside the ruling, with Algeria supporting the independence group. This consequently has caused tensions between Algeria and Morocco, with supplies between them, and European routes expected to be limited. European energy supplies are already on a shoogly peg in the lead up to winter, with lower natural supplies being provided by Gazprom and Russia pushing prices up. Indeed, Europe and the UK have seen record prices during September, with this decision likely to have a further adverse effect.

As a result of the record high energy prices, the eurozone hit a 13-year high inflation rate of 3.4% this week. The issue has also not been helped by Chinese state-backed companies buttoning down the hatches,securing their energy supplies at any cost, under the command of their central government. Pressure is now mounting to reverse monetary stimulus and curb the exponential inflation growth. Adversely, experts suggest the crisis to be short-term, believing a longer, and colder, winter would be required for the jump in prices to be sustained

Asia Pacific: Sophie Evans 

The continuing economic crisis in Myanmar has fuelled underground currency trading. Following the military coup in February, the country has been facing massive issues with its financial system – highlighted this week when the kyat currency dropped to new lows after the central bank stopped its attempts to prop it up. As a result, many licensed money exchanges were forced to shut their doors. The ruling military council spokesman Zaw Min Tun commented on Thursday that the central bank had not been able to meet local demand for dollars. As such many are turning to online groups in order to bypass official channels to trade currencies. The online groups, primarily found on Facebook, are a key way for buyers and sellers of currencies to connect with one another. Users of the groups rely on trust when arranging physical exchanges of notes. The online groups have also been tapping into money flows from overseas workers in neighbouring countries such as Thailand, with an unlicensed money trader commenting that “millions of dollars are being smuggled into Myanmar from Thailand daily.” Myanmar stipulates that money traders must get a license to operate, however this current exchange black market continues to operate undeterred.  

Phuket has expanded the ‘sandbox’ scheme to vaccinated travellers from all countries. Thailand’s tourism industry took a heavy blow following the coronavirus pandemic and its associated restrictions. The sector had been the fifth largest source of national income, and due to travel restrictions the nation has had their worst economic performance in over two decades. The “sandbox” scheme was launched in July and allowed fully vaccinated travellers from certain countries (those considered low to medium risk) to roam free on the beach island for a fortnight and then travel to the mainland without quarantine. As of last week, authorities have cut required stay to a week in line with national changes to quarantine rules. On Friday, the Tourism Authority of Thailand announced that the scheme had been broadened from around 80 countries already eligible. The scheme has already brought in over 38,000 visitors to Phuket. However, travel advice from other nations that discourage tourists to take part in the scheme could dampen Thailand’s aims to reboot the tourism industry. The UK and US have already issued travel warnings against visiting due to the country facing its third wave of COVID-19 and a stagnated vaccine roll out.  

India: Rudra Sen

The Indian government will now require all fully vaccinated British nationals arriving in India to quarantine for 10-days as a retaliatory move after similar measures were imposed on Indian nationals. While the British government has allowed fully vaccinated travellers to skip quarantine norms and take fewer tests, it does not recognise India’s vaccination programme yet. A majority of Indians have been vaccinated with the locally manufactured version of Oxford, AstraZeneca vaccine and the failure to recognise the same by the British government has been termed as ‘discriminatory’ by India’s Foreign Secretary. 

Indian utilities have reported that their coal inventories are at critically low levels and 16 out of 135 coal-fired power plants have zero coal stocks as of 29th of September 2021. Furthermore, more than half of the power plants have said that their stock will last fewer than three days while 80% have less than one week’s stock left. This is an alarming situation for India’s electricity market as coal accounts for 70% of India’s electricity output. Several media outlets claim that the increase in power demand and the widening gap between lower domestic prices and global coal prices has resulted in buyers shunning imports thereby, leading to a shortage. State-run Coal India has said that it will ramp up its supplies to utilities in the wake of a coal shortage in the county and rising electricity demand. Coal India seems confident that a sense of normalcy should be expected soon as it continues to supply coal despite monsoon challenges and non-payment of outstanding dues by utilities. Additionally to meet this crisis, Indian firms are buying 2 million tons of Australian coal that is  lying in Chinese warehouses at a discounted rate. 

India and the UAE have agreed to work towards normalising air transport between the two countries after the ninth meeting of the UAE-India High-Level Joint Task Force on Investments. The meeting was chaired by Piyush Goyal, India’s Minister of Commerce and Industry and by Sheikh Hamed bin Zayed Al Nahyan, Member of the Executive Council of the Emirate of Abu Dhabi. The two parties also agreed to amend the Bilateral Investment Treaty as soon as possible to strengthen their economic ties.

Africa: Laura da Silva 

The purchase price of cocoa to farmers in Côte d’Ivoire, the world’s leading producer, has been set 17.5% percent lower than the previous season’s purchase price. This is devastating to Ivorian farmers, more than half of whom live below the poverty line (according to a study by The World Bank). These farmers are already the big losers of the international cocoa market where they receive only 6% of the $100 billion annual revenue generated from the global cocoa and chocolate market, which is locked up by the large industrialists of the market. The cocoa industry is largely strategic in Côte d’Ivoire where it accounts for 10%-15% of GDP, 40% of export earnings, and employs a staggering one-fifth of the population, about five to six million people. The Ivorian Fair Trade Network has expressed disappointment in the lowering of prices and has called for a firmer commitment to the Decent Income Differential (DID) that was introduced last year to boost farmers’ income. Moreover, they have called on the European Union to support the DID by requiring companies that put cocoa or chocolate products on the European market to ensure that the farmers involved in the supply chain are able to support themselves with a living wage.

The Nigerian Supreme Court is yet to rule over the controversial national VAT collection. Nigerian states Rivers and Lagos are currently involved in a legal dispute with the central government over the collection of tax in their states. The Supreme Court decision aims to provide clarity over whether it is the duty of the Federal Inland Revenue Service, or States to collect VAT. Nigeria has faced a massive decline in tax collection with a decrease of 37% from 2015 to 2020. Moreover, addressing this issue of tax collection is key for the African nation that is already facing government revenue problems. Earlier this year, President Muhammadu Buhari presented the Senate with another request (which was approved) of new foreign borrowings to the tune of $4 billion. This addition to the country’s long list of debt and infrastructure borrowing skyrocketed Nigeria’s foreign debt portfolio by 366% since 2015, when the total outstanding foreign debt was $9.7 billion.

Middle East: Dhruv Shah  

Iran has held military drills near the Azerbaijan border in a show of force, in response to the deepening ties between Azerbaijan and Israel. Reports indicate that as of Friday, Iran has mobilised tanks, artillery, helicopters and soldiers to an unspecified location in northwestern Iran. Iran has openly expressed their concerns with this relationship in recent months; particularly at Israel providing high tech assault drones and other technology to the Azeri army. Tensions between Iran and Azerbaijan escalated last month after Azerbaijan imposed a road tax on Iranian trucks moving through the Karabakh region, which led to two Iranian truck drivers being detained.  

Tunisia’s president, Kais Saied, faces severe backlash and protest from Tunisians following a power grab within the country which has solidified his power. President Saied has extended the suspension of parliament and stated that he will “rule by decree” until an amended constitution could be written by a select committee. The move comes after President Saied sacked the government in July and announced the assembly will be stopped for 30 days after members of parliament supposedly planned a “coup against the constitution.” However, many Tunisians believe this is a blatant grab of power which is set to undermine democracy within the country. 

North America: Amelia Brown 

US pharmaceutical company Merck finished phase 3 of trials for an antiviral treatment for covid-19 on Friday. The company is seeking FDA authorization for the drug, molnupiravir, after preliminary analysis of the trial data shows it halved the chances of death or hospitalization from a covid infection. The US government has a deal to acquire 1.7 million courses of the treatment, which is a twice-daily pill for 5 days once infected with covid. A catch with the pill is that the trial was based on starting the regime within 5 days of showing symptoms, but in reality many aren’t diagnosed within those first few days which is critical to the pills working as well as in trials. Regardless, the company’s stock rose 9 percent after the successful trials, a welcome sign for Merck in their race against Pfizer to be the major supplier of an antiviral pill.

The House voted this week to suspend the US debt ceiling (supposed to be the maximum borrowing limit of the government)  in order to keep the country running and avoid potentially severe economic blowback from defaulting. If the ceiling is not raised, the government would run out of funds by the middle of the month according to Treasury secretary Janet Yellen. This is a real concern, as the Republican party, the minority party but necessary for the 60 votes, has vowed to not give any votes to passing the debt increase. The GOP has told Democrats that they will not be involved in raising the debt ceiling, and that they should use a debt reconciliation process that only needs 50 votes, but that they argue is much too time-consuming and complex to use for the national debt. The delay has already caused consumers to lose faith in the government’s spending ability, causing investors to dump their short-term Treasury bills which were set to mature after the government could run out of money.

Canadian Prime Minister Justin Trudeau was confirmed to hold onto his role in the most recent election. He has begun announcing his new cabinet and their priorities, which so far have focused on containing the virus. Trudeau announced that Chyrstai Freeland would continue to serve as deputy PM and financial minister, citing the importance of continuity in both roles. His biggest focus has been a vaccine mandate, aiming to get all federal workers and anyone looking to board any form of travel vaccinated. 

Business: Aoife Doyle 

Successful vaccination programmes were driving the post-pandemic recovery of the global economy. Stock markets were back at record highs, and life was going back to the ‘normal’ we once knew. Instead, a global supply backup that initially cast doubt on Christmas gifts has turned into a crisis with global energy, energy, labour and transport shortages. A surprise fall in factory output in China amid curbs on energy use and increase in prices for parts and commodities echoes what many are claiming that the supply chain problems are much more persistent than policymakers expected. Energy shortages are providing the starkest illustration of the problem, with numbers of petrol stations running out of fuel – the SE England supplies remaining at a critical level. Higher demand and restricted supply equals inflation and warnings about the threat of stagnation are leading more economists to believe that central banks might have to move more quickly to increase interest rates if inflation takes hold across the developed world.  

Trade talks between Australia and the European Union have been postponed as a row with France over the ‘Aukus’ security partnership deepens. In mid-September, Canberra cancelled a $37bn (AUS) deal with France to build a fleet of conventional (diesel-powered) submarines instead choosing to build at least eight nuclear-powered submarines with the US and UK technology. s is a security pact between Australia, the US, and the UK, allowing for a greater sharing of intelligence – giving Australia the technology to build nuclear-powered submarines despite not being equipped with nuclear weapons. The aim of the security partnership is as a response to the growing power of China and its influence in the contested South China Sea. The EU is Australia’s third-biggest trading partner and had previously talked of a free-trade deal.    

Culture: Armaan Gheewala

In Russia, LGBT+, feminist and child free groups ‘should all be labelled as groups with extremist ideologies … and should be branded as extemist groups’ according to Andrei Tysganov, chairman of the commission for the protection for children. This follows Russia’s long list of ‘state sponsored homophobia’ where many LGBT+ hate crimes are often left unchallenged by authorities. This, combined with politicians intolerance towards queer people has allowed for extreme laws of discrimation to be made against LGBT+ people.

Across many cities in the US, tens of thousands of people have been protesting for abortion rights. This follows as many states are proposing extremely stringent laws on abortion, similar to the bill Texas passed, further infringing on one’s right to abortion. Some of the bills include the reward of $10,000 for anyone who sues anyone who helped with an illegal abortion.

Science & Technology: Abi Byrne

In the wake of Brexit the UK are relaxing rules on gene editing in crops. The UK has previously followed regulations set by the European Union, which required gene-edited agricultural products to be tested just as rigorously as those which had been genetically-modified (GM). The change has been made as many argue gene-editing shouldn’t require as much scrutiny as it makes smaller and more precise changes to the genome than those made in GM crops. Often these changes are so small they could in theory be found in nature, unlike GM which involves inserting genes or DNA sequences from other species of plant or animal into the genome. The decision will save both time and effort of researchers involved in creating new crops which will hopefully have higher yields and will be able to better withstand our ever changing climate. 

Talks between world leaders have been taking place in Milan for the PreCOP26 conference. There has been a general consensus that the talks are positive and real progress has been made ahead of the Glasgow COP26 climate conference in November. However there are still several obstacles which will need to be overcome before talks can go ahead in a month’s time. Ministers from developing countries, which are also more likely to be at increased risk of adverse conditions driven by climate change, have been accusing wealthy nations of not doing enough to reach targets. With one minister condemning “selfishness or lack of good faith” in the rich world. Based on pledges made so far scientists have suggested that climate change could be limited to an increase of around 2.7C, and have warned that allowing the world temperatures to rise more than 1.5C above pre-industrial levels is highly dangerous. Ministers from developing countries have said this is just not acceptable, as many are already experiencing significant impacts on their economies with warming currently just over 1C.

Theory: Cassi Ainsworth-Grace 

New work has found that in the sphere of academic economics, the geographic diversity of economics papers is poor. Research by Simon Angus, Kadir Atalay, Jonathan Newton and David Ubilava has found that most editorial power in economic journals is concentrated in the US, with very little representation in Asia, particularly East Asia. They highlight that this is concerning for two main reasons: a lack of geographic diversity could lead to a suboptimal narrowing of perspectives; and economists might exhibit bias in favour of those from similar worlds to themselves. In total, 63% of editorial power is located in the US, and Europe also accounts for 27%. Of concern is the fact that the states of California, Massachusetts and Illinois have more editorial power than the four continents of Asia, South America, Africa and Australasia combined.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s