The World This Week

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

United Kingdom: Ross Alexander Hutton 

Tensions brewing this week between the E.U. Commission and AstraZeneca quickly turned – momentarily – into a trade war between the E.U. and the U.K. The row erupted because AstraZeneca factories in the E.U. experienced lower vaccine production yields, leading the E.U. to demand that AstraZeneca fulfil its ‘contractual obligation’ by shifting some of the U.K. output to the E.U. Since no firm commitments arose from the legal debate over the E.U.-AstraZeneca contract, the E.U. decided to push the ‘nuclear option’ – but quickly backtracked. The Commission announced its protectionist decision to trigger article 16 of the Northern Ireland Protocol which suspends the Brexit deal’s guarantee of an open border between the E.U. and Northern Ireland. Despite the intention for article 16 to be used when either side considered an aspect of trade under the agreement to be causing “economic, societal or environmental difficulties”, the Commission used the article to suspend E.U. vaccine exports to the U.K. to allay concerns over the Northern Ireland-Great Britain trade route – but, in so doing, created a hard regulatory border on the island of Ireland, contradicting years of intransigence that it would never countenance such an outcome. A few hours after the initial announcement, the E.U. reversed its decision amid sharp criticism from London, Dublin and Belfast. 

This is a story about ‘vaccine nationalism’ intertwined with the Brexit saga. With significant shortages of vaccine supply globally and immense pressure on governments to protect their populations, protectionism is naturally their first instincts. Yet, coronavirus is a global problem, not a national problem: the long-term interests of all countries are co-operation and co-ordination to ensure the most vulnerable are vaccinated first to diminish the chance of new vaccine resistant variants emerging. But, where does Brexit fit into this? The triggering of article 16 was used as a means to disrupt trade and move away from co-operation – an outcome inherent in the new E.U.-U.K. relationship. That is, the big structural flaws in the deal will persist as arbitration panels and ‘rebalancing’ clauses translate into perpetual uncertainty over assured co-operation. As with the problem of ‘vaccine nationalism’, the future relations between the U.K and the E.U. can only be solved when there is the will to co-operate – a will, like the vaccine, in short supply. 

Europe: Peter Hourston

The Polish government announced that a controversial court ruling from last October, limiting abortions to only cases of of rape, incest and where the mother’s life or health was at risk, would take effect this week, leading to protests in cities across the country. Similar demonstrations last autumn forced the ruling conservative-nationalist Law and Justice party to delay the introduction of the measure. The measure concerns abortions in the case of severe foetal abnormalities, after the Constitutional Tribunal ruled a 1993 law which permitted this as unconstitutional.

Italian Prime Minister Giuseppe Conte has resigned after his parliamentary majority collapsed when the Italia Viva party of his predecessor Matteo Renzi withdrew their support in protest at the government’s handling of the pandemic. Italian President Sergio Mattarella confirmed that Conte would continue in office as caretaker prime minister while negotiations between the political parties take place to form a new government. Conte has been in office since May 2018 – making him a fairly long serving premier by the standards of post-war Italy – despite limited political experience before rising to the top. If Conte is to remain in power in the medium term will depend on the support of the dominant parties in his coalition – the populist Five Star Movement and the Democratic party – since the change of political makeup of the government in 2019. Party leaders will need to find a new majority within current parliamentary arithmetic as President Mattarella is reluctant to call a general election during the pandemic.

Asia Pacific: Satyajit Mohanan 

India: Farm Protests Turn Violent

Thousands of farmers clashed with the police in New Delhi as India celebrated its 71st Republic Day ( a national holiday that marks the anniversary of India officially adopting its constitution). Indian farmers have been protesting since November 2020 against the Modi governments controversial agricultural- reform laws that pave way for private sector participation. The laws proposed by the government does not provide any regulation or safeguards against exploitation by big agri-businesses. One protestor died and more than 300 police officers were injured. Police have detained more than 200 protestors and have filed cases against opposition members and media houses. 

Biden Administration Reviews Trade Deal with China:

The Biden Administration is said to have put America’s trade deal with China under review. The “phase 1” trade deal signed in 2020 by the Trump administration paused the escalating trade war between Washington and Beijing. This review comes at a time when China has missed its purchases of US goods as promised in the “phase 1” agreement. America’s new trade representative has states that growing competition from China would be the most important issue for the US. The outcome and progress of the negotiation will be critical in terms of the broader US-Sino relations. 

Africa & Middle East: Camille Capelle 

Hopes for a renewed nuclear deal with Iran have been dampened by Iran’s rejection of new participants in the negotiations, reacting to the suggestion that Saudi Arabia should join the new accord. Macron’s attempt to make the deal more inclusive and viable long-term by including more regional actors was not well received by Iran, whose proxy-wars with Saudi Arabia rage on on both sides. Iranian Foreign Minister Khatibzadeh countered saying that the international agreement was set and unchangeable, arguing that countries like France should achieve better control over their arms sales to the Middle East, and the Gulf in particular, if they want to help avoid conflict. 

In Libya, first steps are being made towards a peaceful rebuilding of the country’s government, under careful supervision of the United Nations. This week, candidates for a transitional government were chosen to bridge the gap until the elections expected at the end of 2021. However, after 10 years of fighting and civil strife, there is a fear that the political competitions ahead may cause renewed tension or more. While there is still a long way to go, these steps are cause for optimism as they signal goodwill and cooperation on different sides. 

Science & Technology: Paula Plechschmidt 

Following the surge in stocks such as GameStop, AMC and BBBY and Robinhood responding with restrictions on buying these shares, Google has taken action against upset Robinhood users. Thousands of one star reviews were left for the trading app, designed to manipulate the product’s overall score, which Google has now removed due to the malicious intent behind these reviews. However, more ratings have continued to appear and it is clear there are genuine grievances towards the app.

Over the past week the shortage in semiconductors has become more apparent with chipmakers considering another raise in prices for these scarce goods. Especially the automobile industry has been hit hard by this development, with many car makers having to shut down production plants. This is reinforced by to the rapid growth in the electric vehicle (EV) sector for which these parts constitute a vital element of the supply chain. It is clear that this will be a major issue in the future as demand for EVs is not slowing down but also does not take up a large enough share of semiconductor production to give car makers more negotiation power in obtaining these parts.

Business: Tom Woods 

Investors from the Reddit “wallstreetbets” forum successfully triggered a rise of almost 1,000% in the price of GameStop shares in an attempt to ruin the profitability of hedge funds and Wall Street institutions. Last week, hedge fund Melvin Capital Management announced it was taking a short position on GameStop, the Texas-based video games retailer. In essence, this means that sold a number of shares in GameStop and agreed to buy them back at a lower rate, delivering them profit. As GameStop’s shares have been gradually falling as their industry becomes increasingly digitised, the position may have appeared shrewd. By issuing a public statement about their position, Melvin expected that prices would fall. However, users of the 7-million-strong forum “wallstreetbets” on popular discussion site Reddit noticed the short position and, in a spirit of vengeance against those whom they consider responsible for the 2008 financial crisis, decided to sabotage it by driving up the price of GameStop shares. Tens of thousands of users bought shares in the firm, rocketing its price up from $40 to around $350 at one point. Since then, commission-free trading app Robinhood and its UK counterpart Trading 212 have removed GameStop from their platforms as a tradeable stock. This has in turn triggered questions about the motives of such platforms. Commentators have accused the firms of not being at all interested in “democratizing finance for all” and instead defending the positions of established players. Robinhood has in turn defended itself by claiming logistical problems prevented it from continuing to trade the stock.

A similar if less principled trend has happened to popular “meme” cryptocurrency Dogecoin this week, with its value almost inexplicably rising by around 1000% on Thursday. Traders on the “SatoshiStreetBets” forum on Reddit urged others to buy up huge sums of the cryptocurrency, which is a favourite of tech tycoon Elon Musk, to trigger a “copycat” reaction in the price similar to that experienced by GameStop. As a result, the asset’s price soared from around £0.005 to £0.05 in just a matter of hours on Thursday before recently settling at around £0.02, where it has found a semblance of stability.

Theory: Cassi Ainsworth-Grace 

The UK Competition and Markets Authority (CMA) has recently published research on how the new popularity of algorithms diminishes competition and hurts British consumers. Whilst the development of algorithms used in online activities have seen incredible gains in efficiency, their increasing complexity and sophistication makes these ‘algos’ less and less transparent. As a result, the CMA has argued that it has become challenging to identify when algorithms are causing more harm than good for consumers. Examples of such negative consequences include the manipulation of consumer choices through personalisation, and exclusion of competitors. Appropriate methods are needed to audit these systems, and increased information-gathering powers on either a case-by-case basis, or an overarching regulator like the proposed Digital Markets Unit (DMU).

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