Apr 21, 2020

Axios World

Welcome back to Axios World. Hope you managed to have a nice weekend, even if you were stuck inside.

  • Tonight's edition starts in Africa and ends up in North Korea 1,664 words (6 minutes) later.
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1 big thing: Africa suffers before the outbreak

A local official in Kampala, Uganda, spreads the word about social distancing. Photo: Badru Katumba/AFP via Getty Images

The global economy has never faced a challenge like the coronavirus, but it’s in Africa that the pain could be deepest and recovery slowest.

Why it matters: Years of progress on alleviating extreme poverty will be undone, and economies that had been among the world’s fastest growing could face deep recessions. That’s even if Africa averts a Europe-style public health catastrophe.

Flashback: “Long before we began to see any of the health impacts of this virus, Africa was already feeling the brunt of the economic impact,” says W. Gyude Moore, a former Liberian public works minister now at the Center for Global Development.

  • As China shut down ports and then factories early in the outbreak, countries like Kenya that rely heavily on trade with China were hit hard.
  • As demand for exports fell, revenues plummeted — particularly in oil exporters like Nigeria and Angola.
  • Meanwhile, investors were fleeing emerging markets. Borrowing costs increased and existing debts weighed more heavily, just as spending was needed to prepare for a public health crisis.

Many African countries went into lockdown even before they had significant outbreaks.

  • Economies are largely informal so most people can’t earn money without leaving home — and massive stimulus packages are out of the question.
  • Some fear the health crisis will yield security crises across the continent, foreshadowed by the recent deadly crackdowns in Kenya from police enforcing a curfew.

What they're saying:

  • The UN warns that 29 million more Africans could be pushed into extreme poverty, reversing a decades-long decline. Jakkie Cilliers of the Institute for Security Studies in South Africa says it could rise as high as 94 million in a slow-recovery scenario.
  • Marius Oosthuizen of CUSP Consulting predicts "a difficult period in the next two to three years, and then a medium-term filled with lots of difficult challenges to overcome before we see a return" to high growth levels.
  • Rwandan President Paul Kagame told the FT it could take “a generation or more" for the continent to recover. He says at least $100 billion in international support to the continent is needed this year alone.

Where things stand: G20 countries agreed last week to freeze payments on bilateral loans to poor countries until the end of this year.

  • China is party to that agreement, and it holds the lion's share of Africa's bilateral debt. But it tends to renegotiate debts on a country-by-country basis to maximize political leverage.
  • "Some African governments already bilaterally petitioning China for relief say Chinese envoys are citing provisions in loan agreements that would transfer collateral, in some cases strategic state assets, into Beijing’s hands," WSJ reports.

What to watch: Moore, who was in government during the 2014 Ebola outbreak, said at that time “the rest of the world could mobilize resources to help three small countries."

  • "At this point, though, every country and territory is fighting the same thing."

The bottom line: Moore says that if Italy can't even get the help it's demanding from the EU, "you can imagine what the response to Africa will be."

Go deeper: African nations scramble for supplies

2. Health vs. hunger: The view from Pakistan

A woman waits for emergency financial assistance in Islamabad. Photo: Aamir Qureshi/AFP

Pakistan is also grappling with the question of whether economic shutdowns could do more long-term damage than COVID-19 itself.

Driving the news: Pakistan has extended its nationwide lockdown to April 30 while loosening restrictions on some key industries. The National Coordination Committee will meet Tuesday to discuss whether the lockdown can be lifted.

  • The government has announced a one-time payment to 12 million poor households, but Prime Minister Imran Khan says debt relief and international aid is needed to allow for a more robust response.
  • He had initially opposed a lockdown, warning that people would die of hunger.

What they’re saying: “That is the most difficult decision in poor countries, where unemployment rates are high, jobs are scarce and people don’t have savings to tap into when they are not able to go out and work,” Asad Majeed Khan, Pakistan’s ambassador to the U.S., told Axios in an interview.

  • “So for any leader in the developing world, this presents even a starker choice — of looking after the health of individuals and at the same time making sure that the economic impact does not devastate the survivors.”
  • “The fear of dying from infection or from hunger — that’s a tough choice.”

What to watch: Pakistan's testing and contact tracing systems lag far behind those in countries like Germany and South Korea, which are also attempting to restart their economies.

  • Khan says those capabilities are improving and restrictions on travel will remain in place until they are fully developed.
  • “We are a big country, and if things get out of hand, they will really be very, very difficult to control,” he acknowledges.
3. Israel gets a government

Netanyahu before Gantz. Photo: Artur Widak/NurPhoto via Getty Images

Israeli Prime Minister Benjamin Netanyahu and his former rival Benny Gantz signed a deal on Monday to form a “national emergency government,” ending more than a year of political deadlock in which Israel held three elections.

Why it matters: Despite corruption charges and protests against him, and just weeks after it seemed his political career could be over, Netanyahu will remain in office as prime minister. His trial has been postponed until May 24 as a result of the coronavirus crisis.

  • This finalizes a stunning about-face by Gantz, whose center-left bloc had been united around the central goal of ousting Netanyahu.
  • It also means Israel will avoid a fourth election.

Details: According to the coalition deal, both Netanyahu and Gantz will be sworn in together as prime minister and prime minister-designate. Netanyahu will serve for 18 months, followed by 18 months for Gantz.

  • The deal also says Netanyahu can bring "understandings with the Trump administration" on annexing parts of the West Bank to a discussion in the Cabinet, and to a vote either in the Cabinet or in the Knesset from July 1, Barak Ravid reports. Go deeper.

Meanwhile: More than 2,000 Israelis stood 6 feet apart in Tel Aviv's Rabin Square on Sunday to protest what they consider the erosion of democracy under Netanyahu.

4. Poll: What worries voters about Trump's foreign policy

A poll designed to test President Trump’s vulnerabilities on foreign policy finds that 56% of voters in 12 battleground states believe he has made America less respected in the world, compared to 31% who say America is now more respected.

By the numbers: Among the 16% of voters who remain undecided ahead of November's vote, 59% agree that Trump is making the U.S. less respected, compared to 16% who say the U.S. is now more respected.

The poll was commissioned by National Security Action, a group founded by former Obama administration officials to advise Democrats on foreign policy.

  • Ned Price, the group's director of policy and communications, told Axios that Democrats now need to “connect for voters why the fact that America’s reputation is in the dumpster makes us less safe."

Voters were also given 10 possible foreign policy priorities and asked which three were most important to their vote.

Data: Hart Research Associates; Graphic: Axios Visuals
  • The top choices were protecting the U.S. from terrorism, on which Trump polls well, and standing up for American values, on which he polls poorly.
  • Standing up to China ranked last, suggesting Trump’s recent claims that Joe Biden is “soft” on China may not resonate strongly.
  • While border security is a top issue for Republicans, independents are more likely to prioritize international cooperation on climate change.

The big picture: While a plurality (+6%) believes Trump has done a good job keeping America safe from terrorism, a larger one (+22) says he’s increased the likelihood of war.

  • Opinion is deeply polarized. While 81% of Republicans think Trump is making America safer, 81% of Democrats think he’s making America less safe.

What to watch: Presented with a list of criticisms of Trump's foreign policy, voters expressed the most concern about his unwillingness to listen to facts from experts and advisers — a tendency that has gained more scrutiny as the coronavirus crisis has deepened.

  • Worth noting: The poll was conducted March 9–15 — after the coronavirus pandemic arrived in the U.S. but before it became the top issue on every American’s mind.

Details: 1,204 people were polled across Arizona, Colorado, Florida, Georgia, Iowa, Maine, Michigan, Minnesota, New Hampshire, North Carolina, Pennsylvania and Wisconsin.

5. Paying to sell oil

Illustration: Aïda Amer/Axios

Life isn't getting any easier for oil exporters. For the first time ever, U.S. producers had to pay to sell their own crude today, as the unprecedented fall in demand has caused storage infrastructure to fill with unwanted oil.

Worth noting: It's partially a timing thing, Axios' Ben Geman reports. While May futures prices for West Texas Intermediate settled at -$37.63, contracts for June are higher (but still dirt-cheap at around $21).

The big picture: The coronavirus-fueled lockdowns around the world are choking off oil demand and throwing the oil industry — which was already oversupplied before the pandemic — into historic chaos, Axios' Amy Harder writes.

  • It could have been even worse. An equally historic production cut from the world’s biggest producers likely delayed the price plunge we’re seeing today.
  • Trump will likely face new pressure to take whatever action he can — like tariffs on oil imports — to throw a lifeline to the struggling sector.
6. What I'm reading: Dillydally on Downing Street

Late arrival. Photo: Leon Neal - WPA Pool/Getty Images

The Sunday Times of London paints a devastating portrait of 38 days (Jan. 24–March 2) in which Prime Minister Boris Johnson skipped five emergency coronavirus meetings, prioritized the messaging around Brexit, and took a two-week "working holiday."

“There’s no way you’re at war if your PM isn’t there. And what you learn about Boris was he didn’t chair any meetings. He liked his country breaks. He didn’t work weekends. It was like working for an old-fashioned chief executive in a local authority 20 years ago. There was a real sense that he didn’t do urgent crisis planning. It was exactly like people feared he would be.”
— Downing Street senior adviser

Why it matters: The U.K. approach to the virus had already been widely criticized, but mainly because its initial approach proved flawed and was suddenly abandoned when cases began to spike. However, the Times suggests the crucial mistakes were actually made weeks prior.

Zoom out: Pandemics had been officially listed as the U.K.'s top national security threat for years, but got less attention amid budget cuts and Brexit contingency planning, the Times reports.

“The interesting thing for me is, I’ve worked with Singapore ... and basically they copied the U.K. pandemic preparedness plan. But the difference is they actually implemented it.”
— Martin Hibberd, London School of Hygiene and Tropical Medicine

The flipside: The British public appears to have rallied around the flag and their prime minister, whose approval ratings were rising even before his own battle with the coronavirus.

7. Stories we're watching

A bride in Wuhan. Photo: Hector Retamal/AFP via Getty Images

  1. Making the most of an imperfect WHO
  2. Mass shooting in Canada
  3. China raises Wuhan death toll by 50%
  4. Bangladeshis spurn lockdown for massive funeral
  5. Virus tests delivered by drone
  6. U.S. and Canada keep border closed
  7. Podcast: Europe’s cautious reopening
“I received a nice note from him recently."
— Trump on Saturday, speaking about Kim Jong-un
“The relations between the top leaders ... are not an issue to be taken up just for diversion nor it should be misused for meeting selfish purposes."
— North Korea's Foreign Ministry on Sunday, denying any such note was sent