The World This Week

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

United Kingdom: Ross Alexander Hutton 

A rare statement from Buckingham Palace announcing the death of the Duke of Edinburgh shook the U.K. this week. As the monarchy and country mourn the passing of the longest-serving consort in British history, tributes from leaders at home and abroad have marked the Duke’s ‘extraordinary life’ of public service. Prime Minister Boris Johnson recognised how Prince Phillip has “earned the affection of generations here in the United Kingdom, across the commonwealth and around the world”. With flags lowered across the country – including in St Andrews – and political campaigning put on hold, the British people continue to engage in a period of quiet reflection. 

Tensions in Northern Ireland have escalated as rioters ignored cross-community calls for a de-escalation of violence, partially fuelled by frustrations with the enactment of the U.K.-E.U. trade deal. These unsettling events have raised fresh doubts over the stability of the peace process – almost 23 years since the signing of the Good Friday Accord – as Irish Taoiseach Micheál Martin encouraged the “two governments and leaders on all sides to work together to defuse tensions and restore calm”. Even though the temperature has been lowered, the days ahead are particularly uncertain with divisions running deep and the atmosphere remaining worryingly tense. 

Turning to the U.K.’s vaccine rollout, despite the changes in the rollout of the AstraZeneca vaccine for young people (due to a re-balancing of potential harms and benefits), the government remains optimistic that the supply issue will not hold the country back from reaching its inoculation targets and the risk of vaccine hesitancy on these isle remains minimal. Indeed, conditional upon this staggering success in immunisation, the IMF has upgraded its economic outlook for the UK and suggested that it may rebound with fewer long-term consequences than previously expected. In response to the IMF report, Chancellor Rishi Sunak said “as we progress with the U.K.’s roadmap and the vaccine rollout, I believe there are reasons for optimism, and we are paving the way for brighter times ahead”. Perhaps, most notably, the first signs of such a recovery are emerging from U.K. labour market statistics showing the strongest rebound in hiring since 2015 as recruiters act on their expectations of the government’s glide path out of lockdown. 

Europe: Peter Hourston

Turkish president Recep Tayyip Erdogan was accused of sexism this week after a meeting in the presidential palace in Ankara in which European Council president Charles Michel sat in a chair opposite his Turkish counterpart but Commission president Ursula von der Leyen was not offered a seat and instead had to sit on a sofa. In a Facebook post, Michel accused the Turkish side of a failure in protocol which, “gave rise to a distressing situation: the differentiated — even inferior — treatment of the president of the European Commission” although this was rebuked by Erdogan who claimed that the “arrangement was made in line with the European Union’s suggestions. Full stop.” The incident has turned into something of a diplomat spat between Turkey and the EU with Italian prime minister Mario Draghi calling Erdogan a “dictator” and added von der Leyen had suffered “humiliation”.

The minutes of the March meeting of the Governing Council of the European Central Bank were released this week when policymakers noted the “slow pace of vaccination [in the EU] compared with other parts of the world” would result in “weakness in activity [that] might continue well into the second quarter and beyond”. However, the prospects of global growth were better based on, “a combination of ongoing vaccinations, learning effects on how to live with the pandemic and the additional fiscal stimulus in the United States” and therefore “the risks surrounding the euro area growth outlook over the medium term had become more balanced.” The ECB staff macroeconomic projections were also presented to policymakers, which suggest that real GDP in the Eurozone would not recover to its pre-crisis (fourth quarter of 2019) level until the second quarter of 2022. Analysts noted the differences in policymakers that was evident with Frederik Ducrozet, strategist at Pictet Wealth Management, arguing the minutes also pointed “to a disagreement within the governing council over the risks posed by higher bond yields and over the appropriate reaction function” and Carsten Brzeski, global head of macro at ING, suggesting “that there must have been a lively debate . . . with some ECB members pointing to more positive factors for growth and others to more negative factors”.

The French Government has confirmed plans to close the elite Ecole Nationale d’Administration (Ena) which educates many of France’s politicians and civil servants, including the current President Emmanuel Macron and four of his predecessors. Macron had originally pledged to close the l’ENA during the gilets jaunes protests two years ago. Instead, a new “public management school” will replace l’ENA which is intended to draw its candidates from a broader range of backgrounds than the current institution – in recent years, of the eighty French citizens who graduate from l’ENA each year, around 70 per cent come from the upper classes. The decision by Macron comes a year ahead of the next presidential election, where his popularity has been affected by his handling of the pandemic.

Africa & Middle East: Camille Capelle 

The Saudi oil giant Aramco made $12.4 billion on Friday through the sale of the minority share of its new pipeline to a Washington-based investor group in an effort to restore more significant cash flow to the Saudi government, the primary owner of Aramco. Despite the financial losses in the oil sector caused by the pandemic this year, Saudi Arabia continues to try to raise funds in order to further diversify its economy. “Saudi Aramco, which has pledged to pay the bulk of $75bn in annual dividends to the state, alongside taxes and royalties, is also expected to lead a new domestic investment plan to modernise Saudi Arabia.”

Prince Hamzah bin Hussein of Jordan was placed under house arrest after making comments about the corruption and apparent incompetence of members of the government. The arrest was part of the government’s reaction to an apparent coup attempt, charges which the Prince denies. While officials have died the Prince’s house arrest, a video was released where he claims he is his communication with the outside world was cut off and that he was not allowed to leave his house. 

North America: Amelia Brown 

The vote at Amazon’s Bessemer warehouse on whether or not to join the Retail, Wholesale, and Department Store Union (RWDSU) came out to a ‘no’ this week. With voter turnout of over 50% of the employees in the warehouse, the final vote was a landslide for not unionizing—1,789 to 738. Despite the defeat, the fact that the warehouse got to an official vote was a big blow for a company that has done everything in its power to fend off union attempts. The RWDSU plans to appeal the decision to the National Labor Relations board, claiming illegal influence by Amazon in dissuading employees from voting to unionize. Amazon denies intimidating employees, and thanked them for participating in the vote. 

All eyes have been on the court these past few weeks as the trial of Derek Chauvin for the murder of George Floyd is set to enter its thrid week on Monday morning. Chauvin’s defense is slowly getting torn down with each testimony, as the Minneapolis police chief denied Chauvin’s use of force being within protocol, and expert pulmonologist Dr. Martin Tobin said that, “A healthy person subjected to what Mr. Floyd was subjected to would have died as a result of what he was subjected to.” These talk to two main defense claims by Chauvin: that the kneeling on Floyds back for over 9 minutes was within police procedure, and that preexisting conditions and drugs caused his death. The testimonies against Chauvin by other police officers is a rare sight, as cops involved in lethal incidents are primarily never brought to trial, and secondly rarely not supported by colleagues.

Canada’s Liberal party had a three day virtual policy convention this week. One of the major policies voted ‘yes’ on by the majority party was Universal Basic Income (UBI), basing it off of the success of the pandemic recovery program, Canada emergency response benefit. The delegates also supported other progressive policies—A ‘green new deal’ and a pharamcare program among them. A capital gains tax exemption reduction was nixed, as well as an inheritance tax. Although the policies accepted or rejected have no legal binding, the policy endorsements singal the Liberal party’s agenda and goals. Prime Minister Justin Trudeau spoke on a video at the conference, calling out the Coservative party for undermining the vaccination effort and not understanding the struggles caused by the pandemic.   

Latin America: Leo Le Borgne 

Brazil has marked another somber record with 4,247 coronavirus deaths taking place over Thursday. The Brazilian P1 variant, which swept through the Amazonian city of Manaus last year, is now pushing the country’s entire healthcare system on the brink of collapse. President Bolsonaro, who has previously referred to the virus as ‘just a little flu’, is under high domestic and international scrutiny as Brazil’s neighbours shut their borders in fear of attracting the P1 variant.

The volcano ‘La Soufrière’ in St. Vincent and the Grenadines has erupted following decades of being dormant. Situated on the largest island of St. Vincent, the volcano spit out a colossal 4 kilometre column of ash into the atmosphere. An evacuation of 1,600 residents in the northern part of the island is underway as the ash begins to settle in the region.

Business: Tom Woods 

Maersk, the world’s largest shipping company, has warned that global supply chains will suffer for a further few months after the Suez Canal was blocked up last month. The canal, which is one of the largest and busiest in the world, became blocked last week when the Ever Given, a 400-metre-long ship, got stuck in the middle of the canal, preventing any other vessels from getting through it. The fiasco was extraordinarily damaging for the shipping industry, holding up approximately £7 billion worth of goods every day for six days. Eventually, rescue workers managed to move the boat, but there remains a huge backlog of goods that firms sought to push through the canal. In a recent interview with the FT, Maersk’s CEO Lars Mikael Jensen warned that there would not be a quick return for normal after the blockage. He said that the “ripple effects” of this event would continue to be felt until the end of May, with large scale operations only just opening back up again in Europe and Asia in the last few days. As a result, companies may make fewer orders, which could have an impact on consumers by reducing supply and extending delivery times for products.

Saudi Arabia has raised $12.4 billion by selling a minority stake in a new oil pipeline project to a group of investors. Aramco, which is Saudi Arabia’s state-owned oil behemoth, sold 49% of Oil Pipelines venture to the consortium headed by US-based EIG Global Energy Partners. The Saudi state has retained a 51% stake in the pipeline business, which allows it to control its operations and administration. It sold the remaining 49% to the consortium in an effort to raise money for the government. It plans to use these funds to spawn further diversification of the Saudi economy, which is currently heavily dependent on oil. This is just Saudi Arabia’s latest attempt to shift itself away from oil, whose price and demand has suffered greatly in the wake of the COVID pandemic and the push for the energy transition. Saudi Arabia’s strategy is similar to the moves of other Arab states, particularly the UAE, which has recently sold off parts of its own Abu Dhabi National Oil Company.

Theory: Cassi Ainsworth-Grace 

On the 4th of April, Nobel-Prize winning economist, intellectual architect of both the Euro and Reaganomics, Robert Mundell died at his home at the age of 88. One of his most well-known theoretical contributions was the Mundell-Fleming model, which explains the implications of a floating currency that allowed for the complexity of open economies, often assumed away in orthodox models. He also created a plan for a pan-European currency, three decades before the euro was first implemented. In the US, Mundell is recognised for his promotion of a policy mix that involved tax cuts to spur investment, and high interest rates to quell inflation pressures. This economic policy combination defined what became known as Reaganomics.

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