Our editors give us a breakdown of this week’s current affairs
United Kingdom: Harry Street
Interest rates have risen once again, reaching their highest level since the COVID-19 pandemic started. On Thursday, the Bank of England’s Monetary Policy Committee approved the increase from 0.5 per cent to 0.75 percent, which hopes to curb the high levels of inflation facing the UK economy. Inflation is now expected to reach 8 per cent by the end of June, and could hit double-digits by October, which will further exacerbate the cost of living crisis facing many millions of Britons. The MPC said that consumer confidence continued to fall and the squeeze on household income was set to be higher than its predictions made in February. Eight of the nine committee members voted in favour of the interest rate increase; however, the Bank of England deputy governor – Sir Jon Cunliffe – voted against this increase. He believes that the current crisis in Ukraine will hit economic activity in the UK and slow the rate of inflation; thus, the increase in interest rates would not be necessary.
Sunak’s plans to tackle the living costs have come to light, as he is expected to announce how he will ease pressure on businesses and households next week. On Friday, he outlined to Tory activists that cutting taxes is a priority, which will help alleviate the strain on disposable incomes. One channel that Sunak plans on using is to cut fuel duty, with fuel prices reaching new records each day. Furthermore, many feel it is necessary that VAT is cut as well, which will help to relieve inflationary pressures on goods and help make goods more affordable for households. However, the chancellor’s plan will not be certain until it is announced next week.
Asia Pacific: Sophie Evans
Millions of exams have been cancelled in Sri Lanka for school students in the Western Province due to a shortage of print paper, caused by a lack of dollars to finance imports, officials have stated. Education authorities have said that exams will now be postponed indefinitely due to the acute shortage. Sri Lanka is currently facing its worst financial crisis since 1948, brought on by a deficit in foreign exchange reserves to finance imports. This has caused food, fuel and essential pharmaceutical shortages. The department of education in the Western Province has stated that, “School principals cannot hold the tests as printers are unable to secure foreign exchange to import necessary paper and ink.” A portion of the postponed exams were part of a continuous assessment process to decide if students are promoted to the next grade. Sri Lanka recently announced it would be seeking an IMF bailout to resolve its foreign debt crisis. The nation recently received a US$1 billion credit line from India to buy urgently needed food and medicine.
A ferry carrying dozens of migrants sank off of the coast of Indonesia, officials reported on Sunday. At least 2 of the passengers died and 26 others are missing. The wooden fishing boat was carrying 89 when it departed from Malaysia through an unguarded route. However, the boat sprang a leak following departure before being hit by strong waves. A man and woman were found dead while 61 others were rescued and taken to hospitals for treatment. The remaining passengers are currently being searched for, as head of local search and rescue team Ady Pandawa stated “We have deployed our personnel to search for the 26 missing victims but our efforts haven’t been fruitful so far.” He also added the passengers were seeking work in Malaysia without proper documentation. Malaysia, a relatively affluent south-east Asian country. Is home to millions of migrants from poorer parts of Asia and many are undocumented. The majority of these work in the construction and agriculture industry. Indonesians regularly seek illegal work in Malaysia, and often risk dangerous sea crossings such as these. Accidents are common due to poor safety measures and bad weather.
There have been reports of hundreds of students exchanging cryptocurrency for hard currency in Herat, Western Afghanistan. Students have been receiving around US$200 a month in cryptocurrency since last September thanks to the American non-governmental organisation, Code to Inspire. Following the return of the Taliban last August, Afghanistan’s economy has virtually collapsed and the country is in the grip of a crisis caused by the seizure of billions of dollars of assets held abroad. However, digital currencies and their decentralised architecture – which is impervious to international sanctions – has granted a handful of young Afghans a solution to the worst of the crisis. Arezo, a young Afghan in Herat who exchanges cryptocurrency, stated that “”It was very surprising for me to learn that this could be used in Afghanistan. It was really helpful.” Code to Inspire was founded to teach computer programming to women in Herat, but it is now helping students get funds in the deprived nation. Bank transfers are currently almost impossible in Afghanistan, as foreign bodies are hoping to prevent funds from falling into the hands of fundamentalists.
India: Rudra Sen
Indian Prime Minister and his Japanese counterpart Kishida discussed the adverse effects on international stability due to the Russian invasion of Ukraine. Both the countries highlighted how this invasion has shaken the very foundation of the international order. India and Japan are part of the Quadrilateral Security Dialogue that involved the United States of America and Australia too. However, India is the only country part of this group that has not strongly condemned the invasion which could jeopardize the future of this security arrangement. In contrast, Japan has imposed sanctions on the Russian state and individuals in response to its invasion of Ukraine. Meanwhile, Kishida has announced Japan’s intention to invest $42 billion in India over the next five years.
Sri Lanka is facing its worst economic crisis since its independence in 1948 primarily due to a significant hit on essential sectors of its economy like tourism that has suffered since the advent of the pandemic. The Sri Lankan government fears that it might default on its foreign debt payments as well. In such times of crisis, it has reached out to its South Asian counterpart, India has secured $1 billion as a line of credit. This line of credit is in addition to having lent $500 million recently for the Rajapska led government to buy oil. The IMF has urged the Sri Lankan government to implement coherent and comprehensive policies for macroeconomic stability.
North America: Amelia Brown
The US Fed has followed through on its plan to raise the benchmark interest rate as a tool to curb growing inflation. At the Federal Open Market Committee meeting on Wednesday, the quarter point increase was implemented. Previous plans had included four more quarter point increases in 2022, but now it seems that six more hikes are likely, with increases of over a quarter point still on the table. This rise marks the first time since 2018 that the rate had gone up, a testament to how rampant inflation is currently. The rise in interest rate is one of the Fed’s monetary policy tools for cooling the economy–higher interest rates encourage saving rather than spending as the cost of mortgages, car loans, and credit debt among others will rise for many. Savings accounts or buying government bonds is also more lucrative with a higher interest rate. However, the pandemic has left those able to save with high savings after the amount of time spent at home over the past two years, while those living in positions unable to save are still facing an incredibly high cost of living. The rising prices of necessities such as gas, electricity, and food, means that many people could be hard hit by the rising interest rates.
President Biden signed the government funding bill this week to keep the federal government and federal operations running until September. Included in the budget was $13.6 billion in funding for helping Ukraine. Some of the money will go to defensive equipment for the Ukrainian army, while some will go to humanitarian aid for refugees in neighboring countries and in the US. Lacking from the bill was more funding for coronavirus relief. Party lines are drawn around the issue of giving billions more to continue to fight and treat the virus, with House Democrats unable to make a bipartisan deal with Republicans to get the money in the bill. If a covid funding bill isn’t passed soon, the US’s capacity for giving booster shots, antiviral pills, antibody treatment, and testing will run out quickly.
Canada has gone viral recently for their UN mission’s Tweet of a letter sent by the Russian ambassador about the war in Ukraine. The tweet showed a sarcastically commentated and annotated letter in order to highlight the misinformation that Russia tried to spread about the unprovoked war. A Russian representative to the UN called the tweet “kindergarten-level Russophobic libel,” while other countries around the world commended the transparency and criticism of showing the letter.
Latin America: Leo Le Borgne
Peru’s highest tribunal permitted ex-president Alberto Fujimori to be released early from prison. The former president is serving a sentence for human rights violations supposed to terminate in 2023. The ruling overturns the previous judicial cancellation of a presidential pardon given to Fujimori on grounds of the 83 year old’s declining health. Fujimori is a divisive figure in Peruvian politics, and was persecuted over his violent crackdown of the leftist Shining Path guerilla during his presidency in the late 1990s. The case will now go to the Inter-American Court of Human Rights in Costa Rica, although the legal implications of such a ruling will take months and is subject to a lack of enforceability.
The Colombian presidential election is fully underway as primaries of political alliances have selected their candidates. Ahead of the race is the left-wing, ex-guerilla and former Bogotá mayor Gustavo Petro representing the Pacto Histórico. Two former mayors of Medellin have also won their respective primaries: centrist Sergio Farado from the Centro Esperanza coalition and Federico Gutierrez from the Equipo pro Colombia coalition, who received former president and influential right-wing Alvaro Uribe’s political blessing. Colombia has traditionally held a right-wing political orientation. However, Petro may cause a seismic shock in Colombia’s political arena, currently leading with 42% of the popular vote. It is possible for him to win the election outright should he succeed in obtaining over 50% of the vote in the first round of voting. Petro lost the last general election to the current president Ivan Duque. A victory by Petro would allow Colombia to join the cohort of Latin American countries that voted for left-wing leaders in recent years, including Peru, Mexico, Chile, and Honduras, reflecting the overarching political shift occurring in Latin America as a result of frustration with governmental corruption and an ineffective response towards criminal and police violence. A leftist win in one of the most conservative countries in Latin America would solidify the rising power of socialist policies in the region.
Business: Aoife Doyle
Interest rates in the UK and the US have both risen to combat further increases in the cost of living. The Federal Reserve increased its benchmark interest rate by a quarter of a percentage point, where the main policy change in the Fed was a shift in the so-called dot plot, where the median dot now shows seven hikes for 2022. The move marks the Fed’s first rate rise since 2018 as an attempt to tackle the 40-year high inflation rate in the US. The Bank of England has also increased interest rates to 0.75% from 0.5%, the highest rate since March 2020. Explaining the rate changes, the bank said that the invasion of Ukraine by Russia has led to further increases in energy and food prices, increasing the uncertainty around the economic outlook significantly. The Office for National Statistics (ONS) has said that prices have increased by 5.5% in the year to January, the fastest rate for 30 years and well above the Bank’s 2% inflation target. The European Central Bank (ECB) have yet to announce any plans to increase the interest rate with President Christine Lagarde stating that any increase in the ECB policy rate will be gradual and only come some time after its bond-buying programme ends. Policy makers have argued for an increase sooner to combat inflation, however Lagarde emphaised that the ECB would use all means available to them to ensure monetary policy reaches all corners of the euro zone.
In a Zoom call on Thursday 800 P&O employees were told that it was their “final day of employment”, an action the government have called “wholly unacceptable”. The announcement comes as the company plan to replace the workers with cheaper agency workers, as the firm try to save money. Workers refused to leave their ships in protest and there have been protests outside of the London office of P&O Ferries’ owner DP World and at docks in Hull, Liverpool and Dover. The RMT union is threatening legal action against the ferry company and MPs have raised the issue in parliament.
Culture: Armaan Gheewala
As the invasion of Ukraine still continues, Mariupol, another city in Ukraine has braced itself with ‘tanks in the streets’ where thousands have been attempted to be rescued. The city has reported to have no electricity, gas or running water as well as local officials that almost 80% of the infrastructure has either been damaged or destroyed, therefore it is of immediate urgency that residents need to be evacuated. Because of the ‘immense fighting’ between opposite forces, evacuation strategies have become extremely complicated with approximately ‘1,300 remained trapped but 40,000 people had managed to leave the city over the past five days’. This entire invasion has continuously been speaking to a broader issue of a war crime and a clear human rights violation.