The World This Week

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

United Kingdom: Harry Street 

The long-awaited Spring Speech took place this week, as Rishi Sunak announced the government’s plans to tackle the rising cost of living. Alongside a 5p cut to fuel duty, the chancellor also announced an additional £500 million for local authorities, which will be directed to help the lowest income families and individuals in the UK. Additionally, Sunak announced that the threshold at which national insurance must be paid will increase by £3,000, further reducing the tax burden on lower-income individuals. However, despite the appraisal in the House of Commons from Tory backbenchers, many fear that these measures will do very little to alleviate the growing pressures on household income. Though the energy price cap is already set to increase by 54% in April, the Office for Budget Responsibility have already suggested that it could rise again to more than £2,800 per household per year in October. Thus, additional support will be needed in the coming months – contradicting the government’s plans to raise tax levels in the coming years.

Pressures continue to mount on P&O Ferries, as the Chief Executive – Peter Hebblethwaite – admitted the company willingly broke the law to sack its entire UK crew without notice or consultation. The UK Transport Secretary has said that all P&O ferries must be inspected before they return to service, following the detainment of one ship in Northern Ireland, since it was “unfit to sail”. Consequently, Members of Parliament are now calling for Hebblethwaite to quit after he deliberately used a loophole to sack staff and employ replacements, who will legally be paid below the UK minimum wage, since the boats are in international waters.

Though global trade has recovered for the vast majority of countries, UK goods exports continue to underperform compared to the global average. This week, the Netherlands Bureau for Economic Policy Analysis (CPB) reported that UK goods exports fell 14 per cent in the three months to January compared to the same period in 2020; in contrast, the global average was an 8.2 per cent rise across the same period. In response, the UK’s Office for Budget Responsibility warned that trade lagged behind the country’s domestic recovery, and suggested that this failure to recuperate may be the result of Brexit. The OBR estimates that exports are 15 per cent lower than if Britain had remained a part of the EU, since the new free trade agreements and other regulatory changes are yet to have a material positive impact on UK trade.

Europe: Cameron Fulton 

Russia this week has announced that its initial phase of the Ukraine conflict is complete. It plans to refocus its offensive into the eastern Donbas region, whilst other streams of attack are implied to be scaled back. Sergei Rudskoy, a high-ranking official in the Kremlin, described other attacks beyond Donbas, such as on the capital Kyiv, as a ‘distraction’ for the Ukrainian army. This rhetoric shifts from Putin’s initial stance on the invasion and is likely a scaling back caused primarily by the surprising resistance faced. The Ukrainian army’s efforts have certainly surprised the Kremlin, leading to waning Russian morale and provisions from overstretched supply lines. The move will concentrate attacks on the region, but the shift in rhetoric must be perceived as a coup for President Zelensky. Ukrainian forces have even begun regaining territory in areas such as the southern city of Kherson, alleviating pressures of the strategic port city of Odesa.

The EU has also begun to combat the resulting energy crisis of the war. EU leaders pledged on Friday a joint bulk purchase of natural gas. And suppliers have begun discussions, with America planning to deliver 15 billion cubic metres of gas, to reduce European reliance on Moscow. The joint purchase will reduce the potential of a bidding war between member states spiralling the costs further, though it must be noted the market is not a monopsony. They also began reviewing fuel usage in electricity prices, to alleviate spiralling costs for its citizens. However, heterogeneity in responses to the crisis could leave the single market exposed, with Spain and Portugal deviating by implementing energy caps. Other nations, such as Germany, oppose these and will likely be a heated topic of discussion in Brussels for the upcoming weeks. Their government has reduced its dependency on Russian coal imports from 50 to 25 per cent, on oil imports from 35 to 25 per cent, and on gas from 55 to 40 per cent, through quick renegotiation with suppliers. 

Africa: Laura da Silva 

The ILO has elected the first African to lead the organisation since its founding over a century ago. The former prime minister of Togo, Gilbert Houngbo, was elected this Friday as the Director-General of the International Labour Organisation (ILO). Gilbert Houngbo was deputy director of ILO between 2013 and 2017. Houngbo will succeed former British trade unionist Guy Rider, who has been in office for 10 years, when he begins his five-year term in October.

An NFT of the arrest warrant for South Africa’s first democratically elected president Nelson Mandela is up for auction this weekend in Cape Town. A digital reproduction in NFT form of the only arrest warrant against anti-apartheid hero Nelson Mandela was announced as up for auction by Momint – a South African digital auctioneer. The original 1961 arrest warrant written in English and Afrikaans has been kept in the archives of Lilliesleaf Farm in Johannesburg – the anti-apartheid site turned museum where Nelson Mandela lived clandestinely. The anti-apartheid museum will receive the proceeds from the sale. Nelson Mandela was arrested on the 5th of August 1962 and served 27 years in prison on Robben Island from June 1964 until February 1990. He was elected as South Africa’s first black president in the country’s first democratic election in 1994.

Zimbabweans have voted in crucial by-elections this past Saturday. The parliamentary and local authority by-election that took place this weekend has been seen as a yardstick of what is to come in next year’s general polls. ZANU-PF, headed by President Emmerson Mnangagwa, has led the country since independence from Britain in 1980. Critics have accused Mnangagwa, who took power in 2017 after dictator Robert Mugabe’s 37 years of rule, of “muzzling dissidents” and the opposition has voiced concerns that the election may not be credible. Opposition leader Nelson Chamisa is seen as the most formidable challenger to Mnangagwa. Chamisa formed a new party, Citizens Coalition for Change (CCO), three months before this by-election. The CCO has complained of growing repression by the authorities as several party events were banned, and unrest at an opposition rally last month left one dead and twenty-two injured. The by-elections were meant to be held in 2020 but were delayed by President Mnangagwa citing the Covid-19 pandemic.

North America: Amelia Brown 

The White House has declared that Russia has committed war crimes in their invasion of Ukraine. Although Biden had called Putin a ‘war criminal’ last week, this was the US government’s official assessment. Attacks on civilian cites, such as hospitals and buildings marked as housing children contributed to the assessment and designation. The next focus for the US in supporting Ukraine is tackling countries helping Russia and its most powerful citizens avoid US and European sanctions. Biden in his trip to Brussels plans to coordinate with Nato and G7 a position to present to Beijing ahead of talks with China. The US wants to double down on sanctions in addition to closing loopholes in avoiding the sanctions.This means possibly imposing secondary sanctions on individuals or companies outside Russia that are found to be circumventing the sanctions meant to financially pressure the Kremlin and its close friends.   

Domestically, Biden is planning on imposing a new minimum tax on 0.01 percent of Americans. The tax would target households worth over $100 million, requiring them to pay a 20% tax on all income, including unrealized income from stocks and bonds. Half the revenue raised from the tax would be from billionaires. The last attempt of a tax increase on the wealthiest citizens in the budget in October was stifled by moderate Democrats in the Senate, despite a Democratic Senate majority. The goal of the tax is not only to make sure the wealthiest pay a fair share, but also to raise revenue to pay down the national deficit. Combined with other components of the president’s budget proposal, the White House says the minimum tax will reduce the deficit by $1 trillion over the next decade. 

Prime Minister Justin Trudeau spoke to European Parliament, warning of increased threats to democracy, referring mainly to the Russian invasion of Ukraine. Right-wing and anti-vaccine members slated Trudeau for his handling of the Freedom Convoys this past month. A Croatian MEP called Trudeau’s government a “dictatorship,” while a German MEP said his handling of the protests was “trampling on democratic rights.” The Canadian government enacted the Emergencies Act for the first time to give the police more power to quell the protests that had held Ottawa and other parts of the country in a standstill for almost a month. Despite the strong rhetoric, the majority of members gave a standing ovation for the speech, which was delivered to a packed room. 

Latin America: Leo Le Borgne 

EP Petroecuador, Ecuador’s state-owned oil company, declared force-majeure on two Russian diesel cargo ships. Force-majeure is often declared when contractual obligations in a trade agreement can not be followed due to an extreme and unexpected event. The company was unable to secure adequate funds from banks with the supplier BB Energy following the barrage of stringent sanctions imposed by the US and other western nations on Russian trade. The two ships had already left Russia before the outbreak of the war. BB energy eased payment conditions following the declaration. The events of this case study reflect the general logistical and financial hardships impacting the Latin American nations in light of economic sanctions that have paralysed Russia’s oil industry. The constricted oil supply will contribute to the region’s creeping inflation.

Business: Aoife Doyle 

Official figures that the cost of living in Russia has surged following the invasion of Ukraine by Putin and his government. Russia’s economic ministry has said annual inflation had jumped 14.5% in the week ending the 18th of March and it is set to keep rising as the rouble has fallen sharply since the Ukraine invasion began. The inflation data was announced as the Russian stock market resumed trading on Thursday after a month-long hiatus. The benchmark Moex index was up by 5.6% at midday in Moscow, with the government’s plan to buy billions of dollars worth of Russian shares supporting the market. However, the biggest culprit to the rising cost of living is imported inflation. Anything that Russia imports is pricier due to the weaker rouble. The cost of sugar has risen by an average of 14% but as much as 37.1% in some regions of the country. Onions cost 13.7% more nationwide with price highs reaching 40.4% in some areas. The continued sanctions are also biting away at the Russian economy. The Bank of Russia has more than doubled its interest rate to 20% in March, an attempt to control the value of the rouble. Russian President Putin also announced that the country would start selling natural gas to “unfreindly” countries in roubles, a move aimed to support the currency. This announcement drove the rouble to a three-week high. 

UK chancellor Rishi Sunak announced his Spring Statement on Wednesday to the House of Commons as inflation in Britain rose to a 30-year high. Sunak announced that he will cut fuel duty, raise the threshold at which people start paying National Insurance, and pledged to cut the basic rate of income tax before the next general election. Analysts have sensed that the chancellor is focusing on “what he can do for now” rather than “whatever it takes”, the mindset during the Covid pandemic. The statement is intended to mitigate around a third of the squeeze from surging prices. The decision to raise the threshold of National Insurance concentrated on supporting those just below-average incomes. As Sunak didn’t choose to ensure that incomes of recipients of tax credits, benefits, and pensions rise in line with inflation will ultimately lead to an increase in poverty. Keeping the cash totals for spending, despite the increase in inflation, means that Sunak is effectively squeezing public services. The current changes to policy leave options for further support for the British public amid fears of further interest rate increases in the autumn. A tax cut of £5bn to help people’s incomes timed for the pre-election year of 2024 is unlikely to alleviate current worries as a calculated tax rise of £6bn will hit the pockets of the British people this year. As uncertainty grows around how long energy prices and inflation will stay at such inflated levels, it is easy to see why the government and Sunak have kept some power, but the pressure to use such will come rapidly. 

The deal agreed on Friday during US President Joe Biden’s recent trip to Brussels, will consist of the US assisting in the short term by providing increased shipments of liquified natural gas (LNG) to Europe, with 15bcm added this year. The deal will strip Putin of Russia’s status as Europe’s main supplier of gas, a title turned weapon Putin has been using as a response to sanctions against the Kremlin and its allies. The increase in transatlantic gas deliveries would end Europe’s dependence on Russian energy before the end of the decade. Ursula von der Leyen, the president of the European Commission expressed her delight that the amount the US was providing would allow Europe to instantly replace one-third of the Russian gas, with the aim to cut Russian imports by two-thirds by the end of the year. The proposals also aim to cut Europe’s gas usage overall by focusing on energy efficiency and renewable energy in order to meet climate goals. 

Science & Technolgoy: Abi Byrne

Russia’s war in Ukraine has served to highlight the fragility of the global food supply. Ukraine and Russia contribute nearly one-third of all wheat exports, as well as almost one-third of the world’s barley and one-fifth of its corn, providing an estimated 11% of the world’s calories. Countries such as Lebanon get 80% of its wheat from Ukraine alone. Meanwhile, heavy rains have dented China’s winter wheat crop. The invasion has sent wheat prices soaring to record highs, threatening food security in some regions that already face increasing difficulties surrounding food poverty. Wealthy nations, and their food chains and consumers, can absorb price increases much more readily than poorer countries. In low-income nations, the ability of governments to continue to subsidize bread is becoming strained, and the knock-on effects on overall government spending and provision of public services will reach far beyond wheat. The situation “highlights the folly of having 2.5 billion people depend so heavily on three main regions”, says Alison Bentley, director of the Global Wheat Program at the International Maize and Wheat Improvement Center in Texcoco, Mexico.

The Great Barrier Reef is experiencing its fourth mass bleaching event in the past six years. The Great Barrier Reef Marine Park Authority (GBRMPA) confirmed the event following aerial surveys that showed widespread bleaching across a representative sample of 750 reefs, despite the cooler La Niña weather system. In a statement the GBRMPA said “It is important to note that bleached coral is stressed but still alive…If conditions moderate, bleached corals can recover from this stress, as was the case in 2020.” Scientists have urged UNESCO (the United Nations cultural organization) to declare the reef ‘in danger’ to raise awareness that it is nearing its tipping point, beyond which the reef will lose its function as a viable ecosystem. 

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