Top COVID-19 Developments 3/25/20
Supply chains, Taiwan, Slovakia's dilemma, and a bevy of other issues.
Creaky supply chains. Coca-Cola CEO James Quincey told CNBC that supply chains around the world were “creaking” and that it was “harder to get ingredients through” certain flash points. This is particularly true for the pharma industry, where India’s 21-day shut-down announced yesterday has ground the economy to a confused halt. India’s biggest ecommerce businesses suspended all services earlier today despite the fact that Prime Minister Narendra Modi said food and medicine would be exempt from the lockdown measures announced.
What it means: The issue appears to be a combination of a lack of communication between enforcement agencies on the ground and an uneven (and at times overzealous) application of lockdown rules preventing movement of goods and food across Indian state lines. The US pharma supply chain in particular depends heavily on China and India for production; already reeling from China’s shutdowns, now disruptions could affect the Indian pharmaceutical companies that supply roughly 50 percent of all U.S. generic drugs. Meanwhile, factories across Asia are struggling and even temporarily shutting down because of a lack of orders and reduced consumer demand in the West. Decoupling -- a fancy word to describe the trend towards reduced economic interdependence in politically or strategically sensitive industries -- is not solely a U.S.-China issue, and even as Chinese factories come back online, disruption in global supply chains as a result of COVID-19 are only just beginning.
China-Taiwan relations: Taiwan criticized China for continuing to conduct military drills in the South China Sea despite the COVID-19 pandemic and for covering-up the extent of the COVID-19 crisis on the mainland to the WHO. The U.S. Navy announced one of its destroyers fired a missile during a live-fire test in the Philippine Sea last week. China decried a recent U.S.-Taiwan joint statement pledging cooperation (and 100,000 Taiwanese masks donated weekly to the US going forward) as “despicable behavior” and said that Taiwan’s previous statements on China suppressing information on COVID-19 were “shameless and disgusting.”
What it means: When China-U.S. relations deteriorate, as they are doing now, the most dangerous flashpoint for real conflict is Taiwan. China does not view Taiwan as a foreign policy issue; it views Taiwan as a domestic issue, and it views U.S. interference in Taiwan as if the US were interfering in China itself. China does not want a military conflict -- it’s not clear that China is strong enough to take Taiwan by force, and even if it could, China’s long-term goal is to make reunification with the mainland a fait accompli rather than a decision made at gunpoint -- but this is also one area where a Xi-led China is less likely to back down from a provocation. On the brighter side: China resumed imports of US liquified natural gas after a 20-month hiatus today.
The eyes of Slovakia are upon you. Slovakia passed a law that makes it legal for the Slovak government to use telecoms data to monitor the location of people suffering from COVID-19. According to the Slovak Health Ministry, it could begin receiving the data as early as this week, and it will use the information to determine which municipalities or groups are at greater risk. The law is set to expire on December 31st and neither the police nor the Slovak secret services are allowed unfettered access to the data, only the Slovak Public Health Office will gain access.
What it means: To a dark place this line of thought could take us. I took some comfort from one article, which said that Slovakia “probably does not have the technology to determine exact location.” The Slovak Parliament was also obviously very intentional about the wording of the law and sought to make sure it is not abused by the state. This is not as bad as the Hungarian Parliament attempting to indefinitely extend the state of emergency in Hungary (for which Hungary earned a formal rebuke from the Council of Europe yesterday), but it raises difficult ethical and political questions about the role of the state and the sanctity of privacy and individual rights during a pandemic that I do not know how to answer.
In India, a video surfaced of people who had violated curfew being forced to do squats while saying, “We are enemies of society.” Someone please tell the Austin police to enforce this at Barton Springs.
Turkey of all countries is calling for an international fund as part of a more global effort to tackle the COVID-19 pandemic.
Kosovo’s two-month-old government fell to a vote of no confidence earlier today; Kosovo’s Prime Minister had resisted declaring a state of emergency in the country as a result of COVID-19.
Russian President Vladimir Putin indefinitely postponed an April 22 referendum that would allow him to continue in his position until 2036.
The UN is calling for a ceasefire in Yemen due to the COVID-19 pandemic; don’t hold your breath.
Germany’s lower house of parliament approved an $814 billion aid package and suspended a debt ceiling that previously capped the maximum amount the German government is allowed to borrow in a year.
The Bank of Korea said it was finalizing a currency swap deal with the US to alleviate the dollar shortage caused by the economic impact of COVID-19.
Not COVID-19 related, but it’s not every day that a country’s former Foreign Minister gets arrested for murder.