The World This Week

United Kingdom: Ross Alexander Hutton 

Something changed in Holyrood this week. For months – indeed years now – the ongoing controversy over the Scottish Government’s handling of harassment allegations against the former First Minister Alex Salmond has been largely dismissed as a ‘Holyrood bubble story’. But not anymore – the bubble has burst. Salmond’s testimony to the so-called ‘Salmond Inquiry’ raised eyebrows as he unambiguously accused his successor of breaking the ministerial code and claimed that while ‘Scotland hasn’t failed, its leadership has failed”. Even though Sturgeon and her allies will dispute Salmond’s claims, and the ins and outs of this story (which have been so difficult to follow) are highly contentious, the real fallout of this political upset is only just beginning. Perhaps the emerging ‘cut-through’ of this political storm lies in the growing concern over the robustness of Scotland’s institutions to hold its executive to account. With trust and good-faith running in short-supply, Sturgeon’s appearance at the committee next week is unlikely to be the end of this fierce and consequential dispute. 

Next week is also set to be significant in Westminster as the Chancellor reveals his highly anticipated budget. Indeed, such is the anticipation for Sunak’s speech at the dispatch box that the former Chancellor Philip Hammond carefully advised Sunak to tell the public “some difficult home truths” about the state of the U.K. economy. Hammond argues that the fiscal response to the coronavirus crisis has been the financial equivalent of “fighting a war” and thus requires a period of ‘economic unpopularity’. Of course, this is all about the national debt – specifically ‘how’ and ‘when’ to deal with it. On the one hand, there are advocates for fiscal consolidation at the expense of the economic recovery and, on the other hand, proponents of a more laissez-faire approach to the debt problem relying on the relatively low real cost of servicing the debt (but this calculation could be changing in response to recent market turmoil). Sunak’s balancing of ‘fiscal sustainability’ with a strong and unfettered recovery will be the crucial pillar of one of the most momentous budgets of our time.

Europe: Peter Hourston

Jailed Russian opposition leader Alexi Navalny went missing from his Moscow prison cell this week, days after the EU imposed sanctions on Russia in response to his detainment. The Russian authorities have not disclosed where Navanly might have been taken, but his lawyer, Vadim Kobzev Kobzev suggested he would be sent “Most likely to a prison camp but possibly somewhere else.” Navalny returned to Russia from Germany last month after receiving treatment in a Berlin hospital following a suspected nerve agent attack ordered by President Vladimir Putin. EU foreign ministers agreed to impose travel bans and asset freezes on four individuals responsible for Navalny’s “arrest, sentencing and persecution”, according to EU High Representative Josep Borrell. The new US Secretary of State, Antony Blinken, supported the measures announced by Brussels, although supporters of Navalny had wanted Western countries to go further. In a separate development, Amnesty International withdrew Navalny’s status as a “Prisoner of Conscience” over statements he made some years ago which “may have amounted to advocacy of hatred that constitutes incitement to discrimination, violence or hostility”. The Human Rights NGO has come under serious criticism for its decision and has set up an internal investigation but denied that it was “influenced by the Russian state’s smear campaign against Navalny.”

In a speech to a plenary meeting of the European Parliament, European Central Bank President Christine Lagarde said that policymakers were, “closely monitoring the evolution of longer-term nominal bond yields” as European government bonds fell to their lowest levels for almost six months. As governments seek to finance the large fiscal expansion to support economies through the pandemic, the sell-off of bonds has increased the cost of borrowing for governments, as bond yields move inversely to prices. The prospect of a post-Covid economic recovery, and inflationary pressures on prices, as vaccines are rolled-out across the world, has been attributed as the cause of the sluggish bond market. Ed Yardeni of Yardeni Research said, “I’m seeing more and more signs of mounting inflationary pressures as a result of the unprecedented stimulus that fiscal and monetary policymakers are providing in response to the pandemic.” However, there was a short-lived rally on European bonds when the Chief Economist of the European Central Bank, Philip Lane, indicated that the bank would act to “preserve favourable financing conditions over the pandemic period” for governments, firms and households through increasing the speed of its pandemic emergency bond repurchase programme. Of the €1.85tn the ECB has to purchase bonds by March 2022, there is just under €1tn still to be spent. 

Asia Pacific: Satyajit Mohanan 

India inks free-trade pact with Mauritius. The Indian cabinet approved the signing of a comprehensive free trade agreement with its Asian partner. This agreement is expected to boost trade and business between the two countries. The Union Cabinet meeting, chaired by Prime Minister Narendra Modi, approved the signing of the Comprehensive Economic Cooperation and Partnership Agreement (CECPA).The free trade pact would cover 310 export items for India, including foodstuff and beverages, agricultural products, textile and textile articles, base metals, electricals and electronic items, plastics and chemicals, wood and its articles. Mauritius would benefit from preferential market access into India for 615 products, including frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel. The bilateral trade between the countries has been dipped to $690 million in 2019-20 from $1.2 billion in 2018-19. While India’s exports in 2019-20 aggregated at $662 million, the imports stood at $27.89 million.

Myanmar’s Junta fires UN envoy after he urged countries to use “any means necessary”  to reverse the coup. Myanmar state television announced on Saturday that Kyaw Moe Tun had been fired for betraying the country.U.N. Secretary-General Antonio Guterres’ special envoy on Myanmar, Christine Schraner Burgener, warned the 193-member U.N. General Assembly on Friday that no country should recognize or legitimize the Myanmar junta. Kyaw Moe Tun told the United Nations on Friday that he was speaking for Suu Kyi’s government and appealed for help to overturn “the illegal and unconstitutional military coup”.

Africa & Middle East: Camille Capelle 

In Yemen, fighting has escalated over the Marib province, which lies strategically close to the oil rich areas in the north of the country. Houthi forces launched a renewed campaign to take the area a few weeks ago but since Friday much more casualties have appeared on both sides, supposedly including a senior military commander of the government forces. Current military gains are all the more crucial to ensure a stronger position in possible peace talks. 

While the example of Israel is being advertised as the ultimate COVID success story, Palestinians are facing another heavy lockdown as they enter the “most difficult period” of the pandemic. The third wave of the pandemic has hit the area especially hard due to the arrival of new variants and the lack of supplies. Although a vaccination campaign was launched in the West Bank at the beginning of this month, similar efforts weren’t able to start in the Gaza strip until this week due to a significant shortage in vaccinations. Meanwhile Israel has received strong criticism over its plans to send vaccines abroad instead, and is being accused of using the vaccines as a token for diplomatic gain and political blackmail. Palestine has received only 2,000 vaccines from Israel, while Israel has sent out several thousands to Czech Republic, Honduras and others. 

After the official end of the Gulf crisis last month, Qatar has held its first individual talks since 2017 with both Egypt and the UAE this week. The purpose of the talks was to follow up on the Al-Ula agreement which reaffirmed common goals and rectify any individual issues between these countries. A delegation from Kuwait was also in attendance at these talks, acting as an effective mediator and helping to ensure the smooth restoration of relations.

North America: Amelia Brown 

The US FDA is set to officially approve the Johnson & Johnson covid vaccine in the coming days after giving the company the go-ahead on Friday. Although virus cases are down significantly from a daily peak of over 250,000 cases in January, cases this week have trended up compared to last week, despite over 70 million doses of the Moderna and Pfizer/BioNTech shots given already. The Johnson & Johnson regime is a single shot, shown to be 88% effective at preventing serious illness; the company is set to deliver 4 million doses as soon as the emergency authorization is official, with another 100 million by July. While the vaccines have given people hope for returning to normalcy soon, new variants which may be more transmissible and more deadly have brought worry—the Johnson & Johnson vaccine has shown however to be effective against at least one strain, prevalent in South Africa, at a similar 82% prevention rate for severe cases. 

A more controversial move by the US government this week, President Biden used his military power for the first time in his presidency to order airstrikes on a supposed Iranian-backed militia facility in eastern Syria. Biden calls his actions “self-defense” as a response to rocket strikes in Iraq earlier this month on a US led coalition military base. Senators are pushing for Biden to justify using military action without congressional approval, though it is within his authority as commander and chief of the military. Others are disappointed in Biden’s inaction over the news that the Saudi Crown Prince, Mohammed bin Salman (MBS) , was responsible for the killing of dissident and Washington Post journalist Jamal Khashoggi. Biden is expected to talk more on the matter this coming week, but so far has not risked the backlash of imposing sanctions on the crown prince. 

Mark Manchin, the head of the Canada Pension Investment Board, resigned this week after facing backlash from a trip to the United Arab Emirates to get a covid vaccine shot. The pension fund, worth over $350 billion, is the country’s largest as it’s a government mandated fund that manages most working Canadian’s pensions. Canada has strict travel rules, essentially cutting itself off from any flights and its US neighbor, hoping to keep the virus at bay while they work on vaccinating. The vaccine rollout has been slow, but Prime Minister Justin Trudeau is surely hoping that the Friday approval of the AstraZeneca vaccine will allow them to meet their assurance that every Canadian who wants a vaccine will have it by September.

Latin America: Leo Le Borgne 

Protests are currently underway in Quito following the first round of the Ecuadorian presidential elections. Indigenous activist and environmentalist Yaku Perez remains in third place following a partial recount, only trailing centre-right candidate Guillermo Lasso by 0.35%. Claiming election inconsistencies, Perez and the protestors hope to initiate a complete recount of 17 of Ecuador’s 24 provinces. Although they are only a small percentage of Ecuador’s population, indigenous peoples endure restricted access to government services, with many indigenous reserves often vulnerable to exploitative resource extraction. Guillermo will take on Andres Arauz in the April election runoff. The current political turbulence takes place in the midst of a series of deadly prison riots, where at least 79 gang-affiliated inmates were killed.

Colombia’s president Ivan Duque announced the formation of a 7000-member elite force designed to tackle the country’s resurging cocaine production problem, and counter drug-trafficking and terrorist rebel operations. The new elite force will seek to destabilise the ELN, the last remaining left-wing guerilla in Colombia, along with the remaining ex-FARC rebel groups. Departments bordering Venezuela will be the primary target region, where Duque has previously accused Venezuela’s Nicolas Maduro of providing a safe haven for transnational criminal organisations. This most recent development has only worsened tensions between Colombia and Venezuela. Colombia currently does not recognise Maduro as Venezuela’s leader.

Brazil’s COVID death toll has passed the grim 250,000 mark. With the second most amount of COVID deaths worldwide, the country began its vaccination campaign in January with China’s Sinovac vaccine, although other vaccine brands such as AstraZeneca have also been approved. President Jair Bolsonaro has been at the receiving end of intense criticism due to his handling of the pandemic.

Business: Tom Woods 

UK Chancellor Rishi Sunak has announced that a grant scheme worth £5 billion in total will be at the centre of the upcoming budget. Around 700,000 business across the UK will be eligible to receive the “restart grants”, worth up to £18,0000 per firm. National chair of the Federation of Small Businesses Mike Cherry described the news as a “much-needed lifeline” for British business, but also encouraged Sunak to boost funding for groups that have been “excluded from income support throughout the crisis”. The development takes government spending on direct grants to businesses to £25 billion during the pandemic, a fact has been condemned by some fiscally conservative commentators as irresponsible. Indeed, the government has already borrowed £271 billion this financial year (up £222 billion from 2019-20), spiralling the national debt up to a whopping £2.13 trillion. The response from Conservative Party backbenchers has been to urge the government to raise taxes, with Lord Clarke particularly pushing for increases in VAT, national insurance, and income taxes. However, others, such as David Davis, have instead rallied against tax increases.

International Airlines Group, which owns British Airways, has recorded its biggest loss ever as revenues dropped by 69% in 2020. The conglomerate, which also owns Iberia, Aer Lingus, and Vueling, recorded a tremendous €7.4 billion loss after exceptional items. This is one of the heaviest losses a British corporation has faced in a turbulent 2020, with the only FTSE 100 companies to have faced worse returns oil giants Royal Dutch Shell and BP. IAG has particularly suffered under the pandemic as a result of its non-COVID friendly business model, which primarily targets big-ticket corporate customers and long-haul routes. But there could still be cause for optimism in 2021. Following Mr Johnson’s unveiling of the “roadmap” to the “new normal”, which specified that international travel could return in May, British Airways saw a surge of bookings. The firm’s CEO Sean Doyle is also pushing the government to introduce a vaccine passport system and other health apps to replace alternative restrictions.

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