22 March 2020   Leave a comment

Virtually all my news feeds are related to the COVID-19 crisis. There’s a lot to think about and the crisis is clearly going to command our attention for an extended period of time. I am not going to pretend that I have any original insight into the crisis, and, at this moment, there does not seem to be any other issue in the world that seems to be more urgent. We are all hunkered down and keeping as safe as we can, but it is discouraging to get news reports that some governments in the world have yet to respond effectively. So here are some diversions to help alleviate some of the discouragement.

Posted March 22, 2020 by vferraro1971 in World Politics

19 March 2020   Leave a comment

The have been many press reports about the state of preparedness in the US for the onset of a pandemic such as the country is experiencing currently. It is, to my mind, a curious question since there are many historical examples of plagues which completely transformed daily life in many societies. The real question is why, given the evidence, most societies were completely unprepared for such a devastating possibility. The question is even more perplexing because there is substantial information about systematic studies that were offered to governmental officials about what needed to be done to more effectively address the potential for a pandemic. Those studies, however, failed to elicit any response to this glaring threat to the security of citizens.

The New York Times published today a report about the information the Trump Administration had about the US government’s preparedness for a pandemic. The report was issued by the Health and Human Services agency on a simulation of a pandemic outbreak, entitled “Crimson Contagion” in October 2019. The simulation was run in January, April, and May of 2019. According to The New York Times:

“The draft report, marked ‘not to be disclosed,’ laid out in stark detail repeated cases of ‘confusion’ in the exercise. Federal agencies jockeyed over who was in charge. State officials and hospitals struggled to figure out what kind of equipment was stockpiled or available. Cities and states went their own ways on school closings.

“Many of the potentially deadly consequences of a failure to address the shortcomings are now playing out in all-too-real fashion across the country. And it was hardly the first warning for the nation’s leaders. Three times over the past four years the U.S. government, across two administrations, had grappled in depth with what a pandemic would look like, identifying likely shortcomings and in some cases recommending specific action.

“In 2016, the Obama administration produced a comprehensive report on the lessons learned by the government from battling Ebola. In January 2017, outgoing Obama administration officials ran an extensive exercise on responding to a pandemic for incoming senior officials of the Trump administration.”

To its credit, the Obama Administration created a position on the National Security Council dedicated to coordinating federal resources to address the possibility of a devastating pandemic. That office briefed the incoming Trump Administration in January 2017. But that office was eliminated in January 2018.

It is clear that pandemics should be considered as national security threats as devastating as any threat posed by states or non-state actors. And we should fund defenses against pandemics (as well as climate change, by the way) to the same degree that we currently find defenses against more traditional acts of war. And we should assess the failure of anticipating such threats as egregious failures of the state.

Posted March 19, 2020 by vferraro1971 in World Politics

18 March 2020   Leave a comment

Barry Posen has written a very insightful essay on the relationship between the US and Iran, a relationship that continues to escalate in an uncertain way. Posen details the more recent history of the US-Iranian relationship, paying particular attention to the significance of the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iranian nuclear deal. The re-imposition of sanctions, as well as the secondary sanctions imposed by the US on the other signatories to the agreement, have placed the Iranians in a desperate situation. Posen describes the attitude of the Iranians:

“In its eyes, the sanctions are particularly malevolent, because Iran had agreed, after long negotiations with the Obama administration and the European Union, to constrain its nuclear ambitions in return for enhanced economic exchange with its negotiating partners. The Trump administration defected from this agreement, dubbed the Joint Comprehensive Plan of Action (JCPOA). So long as Iran adhered to its obligations under the JCPOA, other states were ostensibly committed to trade with Iran. But other guarantors did not hold up their end, even though Iran initially adhered to the terms. The European Union, in particular, has done essentially nothing to fulfill its part of the JCPOA bargain, because the United States has threatened punishing secondary sanctions on foreign banks and companies if they do so. Russia and China, the other co-guarantors of the JCPOA, have been somewhat more willing to help Iran, but the help is furtive and insufficient to ameliorate the U.S. sanctions effort.”

Posen believes that the Iranians are currently holding out for a new US President. But if Trump is re-elected, the Iranians will be forced to figure out a way to break the US control over likely Iranian trading partners. That course of action would involve continuing the incremental attacks on US forces in Iraq as well as attacks on US Arab allies in the Gulf. THat course of action would require a US response, but Posen believes that US military action would not achieve US objectives:

“The United States could try to end such a war quickly and cheaply by bombing Iran’s diverse capabilities out of existence, though this would probably take more time than many expect and probably would not fully succeed. The U.S. air campaigns against Serbia and Libya took much longer than anyone expected; both adversaries managed to continue military operations while under aerial pressure. Both were much weaker than Iran. At some point, the United States would ask Iran if it is ready to capitulate. And if Iran is unwilling, as is likely, then the United States would have five options: negotiate an end to the war that includes compromises on U.S. objectives; stop bombing and hope that the Iranians also stop fighting; settle in for a long, grinding blockade and attrition war; escalate the bombing to civilian targets, a war crime that the president has already hinted at in one of his tweets; or invade Iran with ground forces. None of these options look good. War would be costly, and probably unwinnable in the traditional sense without an invasion of Iran.”

Both the US and Iran have been rattled by COVID-19 and it is likely the case that neither side wishes to take provocative action at this time. But the vulnerability of both could lead to serious miscalculations.

Posted March 18, 2020 by vferraro1971 in World Politics

17 March 2020   1 comment

Research published in the journal Nature Energy (the article is paywalled–for those who wish to buy it, the link it here) which provides data which confirms what is intuitively obvious: the rich are the primary contributors to the process of climate change. The BBC reports:

“The rich are primarily to blame for the global climate crisis, a study by the University of Leeds of 86 countries claims.

“The wealthiest tenth of people consume about 20 times more energy overall than the bottom ten, wherever they live.

“The gulf is greatest in transport, where the top tenth gobble 187 times more fuel than the poorest tenth, the research says.

“That’s because people on the lowest incomes can rarely afford to drive.

“The researchers found that the richer people became, the more energy they typically use. And it was replicated across all countries.

“And they warn that, unless there’s a significant policy change, household energy consumption could double from 2011 levels by 2050. That’s even if energy efficiency improves.”

The rich travel more often and disproportionately take longer airline flights. They also have larger homes which require more energy to heat. The breakdown by countries is illustrative:

“It shows that a fifth of UK citizens are in the top 5% of global energy consumers, along with 40% of German citizens, and Luxembourg’s entire population.

“Only 2% of Chinese people are in the top global 5% of users, and just 0.02% of people in India.

“Even the poorest fifth of Britons consumes over five times as much energy per person as the bottom billion in India.”

The information provides a very compelling case for reducing income and wealth inequality, as well as targeting the most energy-intensive activities as the ones that should be discouraged, primarily through higher taxes on things such as air transportation. The Center for Biological Diversity quantifies the role of airplane emissions: “Airplanes could generate 43 gigatonnes of planet-warming pollution through 2050, consuming almost 5 percent of the world’s remaining carbon budget, according to a new Center report…..Aircraft emit staggering amounts of CO2, the most prevalent manmade greenhouse gas. In fact they currently account for some 11 percent of CO2 emissions from U.S. transportation sources and 3 percent of the United States’ total CO2 emissions. All told, the United States is responsible for nearly half of worldwide CO2 emissions from aircraft.” Needless to say, the rich would likely try to block their activities, but the planet can ill-afford their selfishness.

The European Union (EU) has announced that it will close all Schengen borders for 30 days. The Schengen agreement, adopted in 1985, allowed the free movement of people and goods throughout the EU and is applied by 26 members (although Great Britain will end its participation when the final Brexit Agreement is signed). The move is in response to efforts to contain the spread of COVID-19 and it will undoubtedly create difficulties for the Union (imagine the chaos if all fifty US states placed border controls on each other). Europe is emerging as the center of the COVID-19 crisis:

“Italy, the worst-hit country outside of China, has recorded a total of 23,073 positive cases and 2,158 deaths, in figures released by its health ministry on Monday. Some 2,749 have recovered.

“Spain, the next most affected, posted an extra 1,438 cases today, bringing its total to 9,191, while Germany has 6,012 – up 1,174 from yesterday – and suffered 13 deaths.

The move is a symbolic blow to the idea of European unity. We should all hope that the action slows down the spread of the virus, but it may already be too late to make much of a difference.

Posted March 17, 2020 by vferraro1971 in World Politics

16 March 2020   Leave a comment

Once again, I need a break from the news. Something to ease the sense of Kierkegaardian dread.

Posted March 16, 2020 by vferraro1971 in World Politics

15 March 2020   Leave a comment

The German newspaper, Die Welt, is reporting that the Trump Administration has tried to buy the German pharmaceutical company, CureVac, for exclusive rights to a promising COVID-19 vaccine. The Guardian reports:

“The US president had offered the Tübingen-based biopharmaceutical company CureVac “large sums of money” to gain exclusive access to their work, wrote Die Welt.

“According to an anonymous source quoted in the newspaper, Trump was doing everything to secure a vaccine against the coronavirus for the US, ‘but for the US only’.

“The German government was reportedly offering its own financial incentives for the vaccine to stay in the country.

“The German health minister Jens Spahn said that a takeover of the CureVac company by the Trump administration was ‘off the table’. CureVac would only develop vaccine ‘for the whole world’, Spahn said, ‘not for individual countries’.

Daniel Menichella, an American citizen, was the CEO of CureVac and he attended the recent meeting at the White House of biopharmaceutical companies discussing strategies for addressing the COVID-19 crisis. But he abruptly left the position, and the founder of the company, Ingmar Hoerr took his place. CureVac has been working on a potential vaccine against COVID-19 and some reports about its efforts are promising.

It is hard to assess the report since there is only one source so far (but I suspect that there will be more information forthcoming). The report, however, is deeply troubling for two reasons. First, the idea that the US would exploit a vaccine against the interests of non-Americans is reprehensible. Second, the attempt by the US government to buy a private company smacks of the dreaded “socialism” that Mr. Trump has railed against recently. We will continue to monitor the situation.

After a third inconclusive election, there has been an interesting development in Israeli politics. The leader of the Blue and White Party, Benny Gantz, announced that he had secured a one-vote majority in the Knesset. That majority, however, would include the members of the Joint List, a coalition of four Israeli Arab parties which now commands the third largest number of seats in the Knesset. No Israeli governing majority has ever included Arab Israeli parties, largely because many Israelis question the loyalty of Israeli Arabs–who comprise 20% of the population–on the issue of Israel as a Jewish state. Gantz also received support from Avigdor Liberman, the leader of the fiercely nationalist, but secular, Yisrael Beiteinu Party. It remains to be seen if Gantz can form a governing majority, but the possibility of Arab Israelis in the government is an astonishing development. In the meantime, current Prime Minister Netanyahu has gotten a two month reprieve from his upcoming corruption trial due to the exigencies of the coronavirus.

Posted March 15, 2020 by vferraro1971 in World Politics

14 March 2020   Leave a comment

Iranian-backed militias in Iraq have launched a series of attacks on US military bases in Iraq. The attacks are part of a series of attacks and counterattacks between the US and Iran after the US assassination of Iranian General Qassem Soleimani. On Thursday, the US attacked a military base which it considered a base of operations for Kataib Hezbollah, an Iranian militia group in Iraq. In the attack, the US killed “three Iraqi army soldiers, two policemen and a civilian worker”, placing the Iraqi government in a very difficult position. The Iranian objective in these attacks is clear: it wishes to put the Iraqi government in a position where it has no choice but to ask the US to leave Iraq. Up to this point, the US has managed to deflect such demands by threatening to withhold vital military assistance and cash payments. But these attacks on Iraqi sovereignty cannot be ignored much longer: Iran is very close and the US is very far away. The Irish Times describes the tension:

“Around 5,000 US troops remain in Iraq, most in an advisory capacity, as part of a wider international coalition formed to help Iraq drive back and defeat Islamic State militants.

“But the Iraqi military said the new US air attack went against ‘any partnership’ under the coalition. ‘It will have consequences that subject everyone to the most serious dangers.’

“Iran’s foreign ministry said on Friday that the ‘presence and behavior’ of US and allied forces in Iraq was to blame for attacks against them.

“Iranian-backed paramilitary groups have regularly rocketed and shelled bases in Iraq that host US forces and the area around the US embassy in Baghdad.

“The United States, which believes Iran wants to drive it from the region, has conducted several strikes inside Iraq, killing top Iranian general Qassem Suleimani and Kataib Hizbullah founder Abu Mahdi al-Muhandis in January.

“Many Iraqis say it is they who stand to suffer most from US-Iranian tensions and some, including caretaker prime minister Adel Abdul Mahdi, have called for US troops to withdraw.”

Iraq does not wish to be the battlefield in a war between the US and Iran. There is no likelihood that Iran will attack the US, nor does it need to to fulfill its strategic objectives. The question is whether the US will decide that the only effective course of action to deter future Iranian attacks is an attack on Iran itself. There seems to be no viable alternative given US objectives.

Posted March 14, 2020 by vferraro1971 in World Politics

13 March 2020   Leave a comment

I rely heavily on news feeds that are sent to my email for collecting news about events around the world. Unfortunately, 95% of all the feeds that I have received for the last few days have been on the COVID-19 pandemic. It is an issue of unquestionable importance, but one about which I do not feel comfortable. I have no expertise on viruses and as far as I can tell there is actually little hard evidence about the pandemic that I deem reliable. The problem is that some states, such as China, do not have a good track record on providing information. Other states, such as the US, have not been testing so there is no way to assess the spread in the US. But we have hard evidence from Italy that the virus is truly deadly and that it spreads very quickly.

What became clear today is that perceptions about COVID-19 are driving many decisions about how to respond to the pandemic. Professional and collegiate sports have cancelled their activities. Colleges and elementary and secondary schools are closing. And global stock markets are declining precipitously. And all these decisions were made the day after US President Trump made a speech designed to reassure citizens. In my lifetime, I have never seen a presidential speech fail so abjectly. Today, the President declared a national emergency because of COVID-19 and the US stock market responded with a 2,000 point increase in the Dow Jones Index. The volatility is a measure of how uncertainty affects decision-making.

It is impossible for me to predict how this particular pandemic will play out. We have historical records of previous pandemics, but they all occurred at times when medical techniques were significantly inferior to those available today (we should keep in mind that two centuries from now, people will remark at how primitive medicine was in 2020). The most catastrophic pandemic was the Black Death which peaked in Europe between 1347-1351. The Economist notes:

“The Black Death carried off an astounding one-third to two-thirds of the population of Europe, leaving lasting scars. But in the wake of the plague there was far more arable acreage than workers to farm it. The sudden scarcity of workers raised labourers’ bargaining power relative to landlords and contributed to the breakdown of the feudal economy.

“It seems also to have ushered parts of north-west Europe onto a more promising growth path. Real incomes of European workers rose sharply following the pandemic, which struck the continent from 1347 to 1351. In pre-industrial times, higher incomes usually enabled faster population growth, which eventually squeezed incomes back to subsistence levels (as observed by Thomas Malthus). But in parts of Europe, Malthusian rules did not reassert themselves after the pandemic receded. Nico Voigtländer, of the University of California, Los Angeles, and Hans-Joachim Voth, now of the University of Zurich, argue that the high incomes induced by plague led to more spending on manufactured goods produced in cities, and thus to higher rates of urbanisation. The plague effectively shoved parts of Europe from a low-wage, less urbanised equilibrium on a path more congenial to the development of a commercial, and then an industrial, economy.”

The Economist article continues on a less optimistic note:

“More often, though, a pandemic’s economic consequences are unambiguously negative. Trade links which spread a pathogen can themselves be undone by its effects. During the Roman Empire, a high degree of specialisation and trade lifted incomes to levels that would not be reached again for more than a millennium. Alas, the same links facilitated the spread of disease. The Roman economy was dealt a blow in the late second century ad, when an outbreak of what is thought to have been smallpox ravaged the empire. A century later, the Plague of Cyprian, which may have been a haemorrhagic fever, emptied many Roman cities and coincided with a sharp and permanent decline in economic activity, as measured by numbers of shipwrecks (a proxy for trade volumes) and levels of lead pollution (generated by mining activity). Reduced trade fed a cycle of falling incomes and weakened state capacity from which the western empire never recovered.”

How COVID-19 will ultimately affect today’s societies really depends on how those societies respond to the challenges. It is likely that the pandemic will significantly retard the process of globalization as companies realize how fragile the supply chains they have assiduously constructed actually are. But that process of deceleration was already coming into play because of the economic inequities created by the reliance on low wage workers. We will also have to see how the pandemic affects international travel and the movement of people across national borders.

Posted March 13, 2020 by vferraro1971 in World Politics

10 March 2020   Leave a comment

Saudi Arabian Crown Prince Mohammed bin Salman (often referred to as MbS) is consolidating his control over the Saudi government by arresting other royals he suspects of disloyalty. The Crown Prince is a close friend of Jared Kushner, US President Trump’s son-in-law, and when he became Crown Prince he was hailed as a reforming modernizer. But The Guardian has published an editorial by Madawi al-Rasheed casting doubts on that characterization:

“Though the prince built his reputation as a young moderniser, garnering favour among the western media as a monarch who could free Saudi Arabia from the shackles of religious conservatism, economic stagnation and a state-controlled economy, his idea of progress was always two-faced. Prince Mohammed allowed women to drive while presiding over the arrests of women’s rights activists and the criminalisation of feminism. He promised religious reforms and social liberalisation while detaining hundreds of religious scholars, activists and intellectuals.

“The young prince silenced debates inside the kingdom and pursued his critics abroad. The brutal murder of journalist Jamal Khashoggi was the final stroke in shattering his international reputation, while his decision to pursue a disastrous war in Yemen has embarrassed his western allies, which continue to sell arms to Saudi Arabia.”

bin Salman does not have a lot to brag about. His boycott of Qatar its close relationship to Iran has not led to any change of policy by Qatar. The war in Yemen, which he initiated, has been an unmitigated disaster, both politically and morally. The murder of Jamal Khashoggi has left an indelible stain on his regime. And his most recent move, initiating an oil price war with Russia and the US shale oil producers, will place incredible strains on the Saudi government budget. The purge in many respects reflects the weakness of his regime.

Posted March 10, 2020 by vferraro1971 in World Politics

8 March 2020   Leave a comment

For the last three years, Russia has been working with the Organization of Petroleum Exporting Countries (OPEC) on production schedules that served to stabilize oil prices. But the advent of the COVID-19 virus has led to a dramatic decrease in petroleum consumption globally. OPEC, led by Saudi Arabia, proposed some dramatic production cuts in order to prevent a further decline in prices. But Russia refused to go along with the production cuts, and Saudi Arabia has retaliated with an unprecedented increase in oil production from 10 million to 12 million barrels a day. The act was the opening salvo in what we call a price war, where Saudi Arabia intends to undercut other producers and draw their customers away. It is a risky strategy because Saudi Arabia is betting that it can weather the loss of revenues better than other producers. At some point, producing oil for export will become unprofitable for some producers. The Middle East Eye reports:

“The break in a three-year alliance between the Saudi-led oil cartel and Russia to support prices may be temporary. The moves over the weekend may well have been part of a negotiating chess game, and the Saudis and Russians can still reach a compromise. But if the collapse is lasting, oil executives say there is nothing to stop oil prices from tumbling to the lowest levels in at least five years, the New York Times reported on Sunday.

“’If a true price war ensues, there will be plenty of pain in the oil markets,’ Badr Jafar, president of Crescent Petroleum, a United Arab Emirates oil company, told the Times. ‘Many will be bracing for the economic and geopolitical shocks of a low-price environment.’

“The production increase and deep discounts mark a dramatic escalation by the Saudis after Russia rejected an ultimatum on Friday in Vienna at the Opec+ meeting to join in a collective production cut. After the talks collapsed, Russia indicated countries were free to pump-at-will from the end of March.

“With jet fuel, gasoline and diesel consumption rapidly decreasing amid the economic impact of the coronavirus outbreak, the energy market now faces a simultaneous supply-and-demand shock.

“After the failure in Vienna, Riyadh responded within hours by cutting its so-called official selling prices, offering record discounts for some of the crude it sells worldwide, according to a copy of the prices seen by Bloomberg News. Aramco has set the prices, but the official communication to clients is likely to come on Monday, a person familiar with the matter said.”

Brian Sullivan of CNBC assesses the economic impact of the price war on American producers:

“Many industry people I spoke with over the weekend expect oil to open trading in the $30 dollar range, if not worse by week’s end.  That’s very bad news for Texas, North Dakota and anyone still left invested in oil and gas stocks. Shares of Chevron are down 20% in 2020, making it the best performing energy stock in America.  Most are down 30%, 40% or even 50% since January 1st.  The S&P Oil & Gas ETF (XOP) is down 33% this month.

“The industry is facing a three-sided attack: falling prices, a move of institutional investors to divest from fossil fuel companies, and crushing debt loads.

“Debt is the problem. The U.S. oil and gas industry has about $86 billion of rated debt due in the next four years, according to Moody’s.  Nearly all of that debt is either junk rated, or rated just above junk. Fifty-seven percent of that is due in just the next two years.  As oil prices fall and credit markets tighten, many companies won’t be able to refinance their debts or extend maturities.”

Both Saudi Arabia and Russia fear the productivity of the US fracking potential which has propelled the US into the spot of being the top oil producer in the world. Their objective is to throttle the fracking industry to eliminate the competition. But they also wish to slow down the transition to renewable energies and an oil price of $20 a barrel would make many of those alternatives unprofitable. Consumers all over the world will benefit from the lower prices and that result will mitigate some of the costs of containing COVID-19. The actual winners and losers will not be fully known until the process plays out completely.

Posted March 8, 2020 by vferraro1971 in World Politics