Nigeria’s booming informal trade is costly for society, business and government, yet a critical opportunity exists to formalize such trade and drive more sustainable and less volatile growth, argues a new report from Chatham House.

According to one estimate, informal activity accounts for up to 64 per cent of Nigeria’s GDP. Nigeria's Booming Borders: The Drivers and Consequences of Unrecorded Trade finds that this is a result of obstacles that impede trading through formal channels. These drivers include bureaucratic burdens and other factors, such as:

• The need for Nigerian businesses to produce at least nine documents in order to send an export shipment and at least 13 in order to bring in an import consignment.
• Rigid and dysfunctional foreign-exchange regulations that push most smaller traders into the incompletely regulated parallel exchange market.
• Corruption and unofficial ‘taxation’, especially on major border highways, which delegitimize formal channels and encourage the use of smuggling routes.

As a result, the state loses direct tax revenues that would be generated by formal cross-border trade. This is not just siphoned into the informal economy; some is lost entirely. For example, many shippers opt to dock in neighbouring countries rather than deal with the expense and difficulty of using Nigeria’s ports.

Informal trade also undermines the social contract between the private sector and government. The state lacks tax revenues to pay its officials, improve infrastructure or implement reforms, while traders feel the government provides no services in return for any taxes they might pay.

‘Every day tens of thousands of unofficial payments are made, none destined for the government. Policy-makers need to create an environment that encourages trade to flow through formal channels and capture lost revenue’, says co-author Leena Koni Hoffmann.

‘Formalization would assist Nigeria to pursue more high-quality, high-tech economic activity at a time when rising labour costs in Asia are creating scope for Nigerian manufacturers to compete’, she adds.

The report makes a number of recommendations for how Nigeria could encourage more formal trade, including:

• Strengthening the resources and capacity of the Federal Ministry of Industry, Trade and Investment to coordinate action across key government ministries, departments and agencies, as well as public and private stakeholders.
• Prioritizing engagement in the development of Economic Community of West African States (ECOWAS) trade policies and fully implementing the ECOWAS Protocol on Free Movement of Persons to reduce harassment at borders.
• Allowing banks to operate simple services for small and medium-sized businesses to make trade payments directly from Nigerian naira to CFA francs and vice versa.
• Improving basic facilities that support traders, including improving the efficiency of border posts, installing truck parks and all-weather surfacing on market access roads, and introducing online booking for trucks to enter ports.
• Separating responsibilities for assessing duty and tariff liabilities from revenue collection in order to reduce opportunities for corruption, an approach already tested with success by the Lagos State Internal Revenue Service.
• Increasing funding and technical support for the National Bureau of Statistics, which has a significant role to play in measuring and capturing more of Nigeria’s external trade.

Interviews conducted for the report reveal that business people would welcome the opportunity to pay taxes, but only if they received assurance that these payments would represent a contract with government guaranteeing that conditions for business would be improved.

‘As Africa’s largest economy, formalizing external trade would allow Nigeria to fulfil its potential as the trading engine of the West and Central African economy and shape the business landscape across the region,’ says co-author Paul Melly.

Following the institute’s purchase of the ground floor of the adjoining building (Ames House) in 2013, this generous grant from SNF will enable Chatham House to occupy this space and undertake a significant renovation project to create the ‘Stavros Niarchos Foundation Floor’ at Chatham House.

This will help the institute meet the growing demand for its research and analysis and take full advantage of its location in central London, given the city’s exceptional international connectivity and status as a global hub.

The SNF Floor will contain state-of-the-art meeting facilities for the institute’s research staff and fellows of the Queen Elizabeth II Academy for Leadership in International Affairs, and will significantly enhance the institute’s convening and communication capacities. To this end, the renovated space will include a ‘simulation room’, the Asfari Centre and a media room, as well as new breakout and meeting areas. The SNF Floor will be directly accessible from the ground floor of 10 St James’s Square, the institute’s main building.

The SNF grant is an important step forward for the institute’s Second Century Initiative which aims to ensure the institute’s long-term financial independence. The initiative has three principal targets:

● to endow a number of Research Fellowships and interdisciplinary Research Centres;

● to secure endowments to support the Queen Elizabeth II Academy for Leadership in International Affairs in order to nurture independent thinking on international policy among a new generation from around the world; and

● to secure the necessary physical space and infrastructure here in London to meet the growing demand for and scope of the institute’s work.

Dr Robin Niblett, director of Chatham House said: ‘We are enormously grateful to the Stavros Niarchos Foundation for this transformational grant which will significantly enhance Chatham House’s capacity to serve as a trusted and creative space for addressing the most important challenges in international affairs.’

Andreas Dracopoulos, co-president of SNF’s board of directors, said: ‘We are delighted to support the growth of Chatham House, one of Europe’s leading independent, non partisan policy institutes, at a time when the risks to global prosperity and stability are expanding. Chatham House’s reputation for providing world-leading analysis needs to remain as strong as ever and I am confident that this grant will help the institute take its research and convening activities in new interactive and interdisciplinary directions.’

International Affairs, the institute’s peer-reviewed journal, has published high-quality, policy relevant articles for over 90 years and its global readership includes many of the world’s pre-eminent academic thinkers, policy-makers and practitioners. From January, when its current contract to publish with Wiley-Blackwell ends, OUP will assume responsibility to publish, distribute and market the journal to new and existing readers and audiences.

Vanessa Lacey, senior publisher for Oxford Journals, commented on the acquisition: 'We are thrilled to have been chosen by Chatham House to publish their prestigious journal International Affairs from 2017. International Affairs is a critically important, ‘must read’ journal of relevance to international relations academics and policy-makers alike. We look forward to partnering with Chatham House and International Affairs’ exceptional editorial team to reinforce its position as a global leader in its field.'

Robin Niblett, director of Chatham House, said: 'Chatham House is delighted to have teamed up with OUP, the world’s leading university press, to publish International Affairs. In terms of shared values, reputation and vision, OUP is an ideal partner for International Affairs and Chatham House. This is an exciting opportunity to develop further the journal’s digital outreach and its engagement with new audiences around the world.'

Andrew Dorman, commissioning editor of International Affairs also commented: 'The IA team is really pleased to be working in partnership with OUP to produce the journal. We share a common vision to publish cutting edge articles from across the discipline, which influence both the academic and practitioner communities in all parts of the world.'

OUP adds International Affairs, the foremost UK international relations journal and one of the top ten internationally, to a growing portfolio of respected international relations-related journals. 

The Chatham House Prize is presented annually to the person, persons or organization deemed by members of the Royal Institute of International Affairs to have made the most significant contribution to the improvement of international relations in the previous year.

This year, members voted for John Kerry and Mohammad Javad Zarif in recognition of their crucial roles, throughout 2015, in successfully negotiating the historic nuclear deal between Iran and the P5+1 – considered to be one of the most intractable diplomatic stand-offs in international affairs in the 21st century.

The deal was one that many thought impossible. Overcoming enormous technical complexity, entrenched domestic opposition in the United States and Iran and three decades of intense hostility between their two countries, Kerry and Zarif’s leadership and commitment, in particular, were imperative to sustaining and driving the negotiations to their successful conclusion. With the vital participation of officials from other permanent members of the UN Security Council, Germany and the EU, they secured a deal, endorsed by the UN Security Council and more than 90 countries, which was a victory for diplomacy as well as against nuclear proliferation.

Events

John Kerry at Chatham House: Chatham House Prize Presentation
31 October 2016

Mohammad Javad Zarif at Chatham House: Overcoming Regional Challenges in the Middle East
4 February 2016

Nominees

The nominees for the Chatham House Prize 2016 were:

• Laurent Fabius, Minister of Foreign Affairs, France (2012–16) and Christiana Figueres, Executive Secretary, UN Framework Convention 
• Attahiru Muhammadu Jega, Chairman, Independent National Electoral Commission, Nigeria (2010–15)
• John Kerry, US Secretary of State and Dr Mohammad Javad Zarif, Iran’s Minister of Foreign Affairs

About the Chatham House Prize

The Chatham House Prize is presented to the person, persons or organization deemed by members of Chatham House to have made the most significant contribution to the improvement of international relations in the previous year.

The selection process is independent, democratic and draws on the deep knowledge of Chatham House's research teams, making the Prize a distinctive and unique award in the field of international affairs.

A short-list of nominees is selected by the institute's three presidents from a longer list submitted by the research programmes and departments in their areas of expertise. The recipient is then determined by Chatham House's broad membership base on a one-member, one-vote basis. The award is presented on behalf of the institute's patron, Her Majesty the Queen, representing the non-partisan and authoritative character of the Prize.

The Chatham House Prize was launched in 2005. Previous recipients of the Prize include Burmese democracy campaigner Aung San Suu Kyi, Médecins Sans Frontières, former US Secretary of State Hillary Clinton, and Melinda Gates, co-founder of the Bill and Melinda Gates Foundation.

For more information, please contact:
Jenny Williams, Media Relations Manager
Email: jwilliams@chathamhouse.org
Phone: +44 (0) 7921 867 626 

Professor Tim Benton has joined Chatham House’s Energy, Environment and Resources department to help develop the institute’s work on the critical challenges of climate change, resilience and sustainable development. He brings renowned expertise on food security and environmental change, and will focus on establishing new initiatives at the intersection of research and policymaking.

Previously Tim has been UK champion for global food security, acting as an ambassador and spokesperson as well as coordinating work between research councils and government departments in this increasingly important area or research. Tim is also the dean for strategic research initiatives at the University of Leeds and a global agenda steward for the World Economic Forum.

Rob Bailey, director of the Energy, Environment and Resources department, said: 'I am delighted to welcome Tim to Chatham House. He has distinguished himself as a leading thinker on climate change and food security and we are all excited at the prospect of working with him.'

Tim Benton said: 'It is an honour to join Chatham House, with its great international reputation for independent thinking. I am looking forward to making a contribution to meeting the challenges implicit in managing the world’s resources sustainably whilst the global population and economy grows.'

His Royal Highness met with young fellows from the Queen Elizabeth II Academy for Leadership in International Affairs and discussed the important role that the next generation of leaders must play in bringing about positive change in their communities. 

The Academy was formally launched by Her Majesty The Queen at Chatham House in 2014.

Prince Harry also contributed to the first scenario exercise held in the institute’s new simulation centre, which explored how to respond to a humanitarian emergency that required landmine clearance, drawing on the prince’s work in the field of landmine eradication.

The opening of the Stavros Niarchos Foundation Floor marks a significant moment in the modern history of the institute and is a core component of the Chatham House Second Century Initiative, which aims to strengthen the institute’s capacity to innovate and meet the growing demand for its research in the lead-up to its centenary in 2020.

The extension includes a series of new facilities, including the Asfari Centre for Academy Fellows, the simulation centre, new meeting spaces and a media studio, which will ensure that Chatham House can continue to contribute to building a sustainably secure, prosperous and just world over the coming decades.

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Refugees in Burkina Faso, Kenya and Jordan will benefit from greater access to affordable, clean energy for domestic use and to power ‘microbusinesses’, following a grant scheme from the Moving Energy Initiative which launches today.

The Moving Energy Initiative is supporting projects ranging from a solar-powered ICT hub in Kenya’s Kakuma camp and vegetable growing zones watered by solar-powered pumps in Burkina Faso’s Goudoubo camp, to reliable energy generation for north Jordan’s Al Mafraq hospital where Syrian refuges and local residents access health care.

In total, four projects will be implemented over the next 12 months, with all involving training for refugees and local staff to use and maintain the clean energy technologies. They aim to deliver tangible reductions in CO2 emissions whilst increasing access to vital services, saving costs and providing livelihood opportunities for local communities and refugees. The projects are also expected to fuel entrepreneurship, opening up the potential for setting up businesses, small shops and restaurants which can expand beyond this initial grant.    

Project partners were chosen through an open and competitive process kicked off in February 2017 in Burkina Faso, Kenya and Jordan. Bidders were asked to demonstrate their ability to provide solutions that reduce fossil fuel consumption and increase access to energy in camps. The successful projects were chosen on the basis of the applicants’ ability to innovate in a humanitarian setting, as well as their track record and their approach to sustainability.

Find out more about why these projects are needed and the impact they aim to have by watching the video:

 

Check out the Moving Energy Initiative website for more information.

Keep updated on the progress of these projects as they develop by following us on Twitter @CH_EERD. 

 

Related content

Moving Energy Initiative: Sustainable Energy for Refugees and Displaced People

The Moving Energy Initiative Expert Workshop

Toolkits for the Moving Energy Initiative

In recognition of Chatham House’s continued dedication to workplace diversity, the institute has been listed in the Inclusive Top 50 UK Employers List – a definitive ranking of UK-based organizations that promote inclusion across all protected characteristics, throughout each level of employment within an organization.

Powered by the Excellence in Diversity Awards, the Inclusive Top 50 UK Employers recognizes the organizations that demonstrate the promotion of all strands of diversity including age, disability, gender, LGBT, race, faith and religion.

Complied by a dedicated panel of judges, the list has been collated based on each organization’s performance in a range of areas within the diversity arena. Organizations featured have provided sufficient evidence on an amalgam of topics including recruitment procedures, training and a host of diversity related initiatives.

The Inclusive Top 50 UK Employers List, in partnership with recruitment specialists Rullion, recognizes the outstanding efforts of organizations that have begun their journey to attracting and retaining a truly diverse workforce, achieving equality, diversity and inclusion in its purest form.

Lisa O’Daly, Director of Human Resources, Chatham House, said: ‘I am delighted that Chatham House has been included in the Inclusive Top 50 UK Employers List. This is just really the beginning of our journey to diversity and inclusion and is a recognition of the collective efforts of our staff which is changing Chatham House for the better.’

‘The UK companies on the list are showing by their actions that they are integrating what they believe into how they operate creating an inclusive culture, which begins at the very top of the organization,’ said Donna Herdsman, EMEA Partnership Manager, Rullion. 

The gift will create the Stavros Niarchos Foundation (SNF) Wing, enabling a permanent expansion of the institute’s research and providing a home to its Queen Elizabeth II Academy for Leadership in International Affairs. The wing will also house the ‘Chatham House SNF CoLab’, an initiative to open Chatham House’s policy research to wider public audiences.

The funds from the Stavros Niarchos Foundation (SNF) will be used to integrate a three-storey wing with the institute’s renowned building at 10 St James’s Square. The SNF Wing will support research collaboration and provide a stimulating environment to explore ways to engage people in the institute’s research, using interactive multimedia and other digital tools. Inauguration of the Chatham House SNF CoLab and the SNF Wing is anticipated in fall of 2019.

The gift from SNF is one of the largest in the institute’s history and is a major milestone in the foundation’s long-standing support of Chatham House, which dates back to 2007 and includes grants for research, infrastructure and student outreach totalling over £4.5m in the past 5 years.

Chairman of Chatham House, Lord Jim O’Neill said, 'This exceptional gift from SNF is a vote of confidence in the independence, quality and impact of the institute’s work. It will guarantee that the institute can innovate for the future, especially by engaging younger generations into its research and ideas, which is essential.'

Director of Chatham House Dr Robin Niblett said the gift will encourage informed public debate at a time of unprecedented global uncertainty and deepening political polarisation.

'The SNF Wing and Chatham House SNF CoLab will ensure Chatham House can continue to serve as a trusted hub for dialogue and a source of credible information, analysis and ideas on international affairs. It is an enormous boost to our staff and their work as we begin our second century, and of special value in such turbulent times.'

SNF Co-President Andreas Dracopoulos said, 'Chatham House is one of our key partners, and this grant marks an important new stage in our collaboration. At a time of uncertainty in international affairs, supporting the world-class independent analysis that can help citizens around the world engage in informed decisions about their future is essential. We are proud to help Chatham House maintain its independent voice while deepening its engagement with the public.'

The Stavros Niarchos Foundation’s past support has enabled Chatham House to establish an ‘SNF Floor’ with a broadcast media studio, a purpose-built simulation centre and training facilities, which will now be incorporated into the larger SNF Wing. The floor was officially opened by His Royal Highness the Duke of Sussex in 2017, when he took part in a scenario exercise exploring how to respond to a humanitarian emergency that required landmine clearance, drawing on the Duke’s ongoing work in this field.

For more information please contact:

pressoffice@chathamhouse.org
Phone: +44 (0)207 957 5739

He brings substantial expertise on food systems and environmental change to the role and will focus on establishing new initiatives at the intersection of research and policymaking.

Tim was appointed as a distinguished visiting fellow of Chatham House in the Energy, Environment and Resources Department in 2016. He has since contributed to the institute in a number of ways, not least through leading the GCRF-AFRICAP project which aims to enhance policy making in Sub-Saharan Africa, through building climate-smart food systems.

Tim’s research focuses on food security and building food systems that are resilient and sustainable, working within the broader areas of ecology, natural resources and climate change impacts. He has published over 150 academic papers, most tackling the core themes of agriculture’s environmental impact and more generally how systems respond to environmental change. He is a lead author of the upcoming Intergovernmental Panel on Climate Change (IPCC) special report on climate change and land. He is also coordinating lead author on international risks for the UK’s Climate Change Risk Assessment, which draws on his broader interests in sustainable finance, trade and energy. He has advised other governments as well as global companies on related issues.

Tim joins Chatham House in his new capacity from the University of Leeds where he is dean of strategic research initiatives. Prior to this, from 2011 to 2016, Tim was the champion of the UK’s Global Food Security programme, a large multi-agency partnership of the UK’s public bodies involved in addressing challenges around food. He has also been research dean in the Faculty of Biological Sciences, and head of department, at Leeds.

Dr Robin Niblett, director of Chatham House, said: 'Tim’s wealth of experience will be especially valuable as we build up our interdisciplinary Chatham House research theme of promoting sustainable growth. We look forward to welcoming Tim to his new role in early July.'

Tim Benton said: 'I am honoured to be joining Chatham House as Research Director for Energy, Environment and Resources. Chatham House has a global reputation in these areas, on which we can build. Informed analysis, combined with effective action to transition towards sustainable economies, is needed now, more than ever.'

About the Energy, Environment and Resources Department

The Energy, Environment and Resources department at Chatham House seeks to advance the international debate on energy, environment and development policy and to influence and enable decision-makers – governments, NGOs and business – to take well-informed decisions that contribute to achieving sustainable development. Independent of any actor or ideology, we do this by carrying out innovative research on major policy challenges, bringing together diverse perspectives and constituencies and injecting new ideas into the international arena.

Tim Benton takes over the role from Rob Bailey who has joined Marsh & McLennan Insights as Director, Climate Resilience.

The Chatham House Prize is awarded to the person, persons or organization who is deemed to have made the most significant contribution to the improvement of international relations in the previous year. The presentation ceremony and panel discussion with the winners will be livestreamed on Wednesday.

The Blue Planet II series highlighted the damage caused by discarded plastics to the world’s oceans and marine wildlife. It is estimated that there are more than 150 million tonnes of plastic in the world’s oceans; resulting in the deaths of 1 million birds and 100,000 sea mammals each year. 

Dr Robin Niblett, director of Chatham House said: ‘Plastic pollution is one of the gravest challenges facing the world’s oceans, and undoubtedly an international issue. Sir David and the BBC Studios Natural History Unit played an instrumental role in helping to put this issue at the forefront of the public agenda. Blue Planet II spurred a passionate global response and generated clear behavioural and policy change.’

This year the G20 agreed on an international framework to address marine plastic litter, acknowledging the increasing urgency of the issue and the need for an international solution. This follows action from the UK government, including a plan to ban common plastic items and investment in global research.

See full award citation

Read more about Chatham House's research work in this area

Other nominees

Dr Niblett thanked Chatham House members for voting and acknowledged the outstanding achievements of the 2019 nominees:

Abiy Ahmed, prime minister of Ethiopia, nominated for his efforts to transform civic leadership and promote plural politics, free speech and peace in Ethiopia 

Katrín Jakobsdóttir, prime minister of Iceland, nominated for her commitment to gender equality and women’s financial inclusion in Iceland 

Event

The Prize was presented to Sir David and Julian Hector by Her Majesty The Queen at Chatham House on Wednesday 20 November.

Watch video from the event

For more information please contact

Chatham House Press Office
pressoffice@chathamhouse.org
+44 (0)207 957 5739

BBC Studios Natural History Unit Communications Manager
Lynn.li@bbc.co.uk
+44 (0) 7513 137893

About the Chatham House Prize

The Chatham House Prize is voted for by Chatham House members, following nominations from the institute’s staff. The award is presented on behalf of the institute's patron, Her Majesty the Queen, representing the non-partisan and authoritative character of the Prize.

The Chatham House Prize was launched in 2005. Previous recipients of the Prize include the Committee to Protect Journalists, Colombian president Juan Manuel Santos, president of Ghana John Kufuor, Médecins Sans Frontières and Melinda Gates, co-founder of the Bill and Melinda Gates Foundation.

Chatham House is a world-leading policy institute based in London. Our mission is to help governments and societies build a sustainably secure, prosperous and just world. We engage governments, the private sector, civil society and our members in open debate and private discussions about the most significant developments in international affairs.  Our research and policy ideas involve rigorous analysis of critical global, regional and country-specific challenges and opportunities.

About BBC Studios Natural History Unit 

BBC Studios Natural History Unit produces the world’s most iconic natural history programmes, such as Blue Planet II and Planet Earth II, which have been watched by more than a billion people globally. Ranging from technically challenging live shows and super-landmarks to long-running series and children’s content, The Natural History Unit programmes include Dynasties, Blue Planet Live, Springwatch, Animal Babies: First Year On Earth, Andy’s Dinosaur Adventures as well as the currently on air Seven Worlds, One Planet presented by Sir David Attenborough and third-party commissions for Discovery, Apple, Quibi, National Geographic and BBC America. 

The Natural History Unit is part of BBC Studios, a subsidiary of the BBC, which develops, produces and distributes bold, British content, making over 2,500 hours of content each year, operating in 22 markets globally and generating revenue of around £1.4bn. In the year to March 2019, it returned £243m to the BBC Group, complementing the BBC’s licence fee and enhancing programmes for UK audiences.

In the context of the coronavirus outbreak, and in response to internal and external concerns, Chatham House staff have been instructed to work from home until further notice.

We believe that being cautious and taking the health and welfare of our workforce and community is the best approach at this point.

We are running a programme of online events that will allow you to remain engaged and up to date through Chatham House on the coronavirus outbreak and on other issues as we continue to deliver our work as normally as possible. 

We will post updates on the situation as it develops on this page.

 

 

In the meantime, and during any period of closure in the coming weeks, the membership help desk, membership@chathamhouse.org, will be answering members’ emails between 09:30 - 17:00 on weekdays to support those who have an urgent query.

And you will still be able to access research and resources online, including the Library catalogue and eLibrary.

In the meantime, we apologise for any inconvenience and thank you for your understanding as well as your ongoing support during this uncertain time.

See latest Stay At Home information from the government

Dr Robin Niblett, director of Chatham House, is chair of the NATO Group of Policy Experts, tasked with providing NATO Secretary-General Anders Fogh Rasmussen and the North Atlantic Council with ideas on how to strengthen the Alliance's transatlantic bond ahead of September's  NATO summit in Wales. 

The group's report Collective Defence and Common Security: Twin Pillars of the Atlantic Alliance was published on 10 June for discussion at a NATO conference in Brussels on the transatlantic bond.

 

Executive Summary 

Key points from the Policy Experts report to NATO Secretary-General Anders Fogh Rasmussen, released at the Conference on Strengthening the Transatlantic Bond in Brussels on 10 June 2014:

• Transatlantic security cannot be taken for granted. Following its withdrawal from Afghanistan, NATO needs to reaffirm its value around the twin objectives of collective defence and common security. 

Upholding peace and stability in Europe 

• The commitment under NATO’s Article V to treat an attack against one as an attack against all must be credible, and NATO members should take concrete steps together to make it so. Tallinn should be as secure as Toronto. 

• There can be no return to a ‘strategic partnership’ between NATO and Russia so long as Russia’s actions threaten European security.

• European governments bear particular responsibility for ensuring their own territorial security. They must invest in the necessary R&D, equipment and deployable capabilities. No amount of ‘smarter’ defence will compensate for a failure to reverse falling defence spending.

• NATO needs to develop effective responses to the ‘non-linear’ forms of aggression seen during the crisis in Ukraine. But the EU should take the lead in helping its members and neighbours embed good governance practices that will lessen their vulnerability to external destabilization.

•  European countries should reduce their dependence on Russian energy. Russia’s main strength should no longer be Europe’s main vulnerability. 

• NATO’s door should remain open to all European democracies that share the values of the Alliance. However, existing members must be ready, willing and able to extend the full benefits of Alliance membership to them, including those in Article V.

 Confronting international insecurity 

• NATO should not turn inwards after 2014. Much of the Middle East, and North Africa face a decade of turmoil which will pose direct threats to NATO members. 

• In Asia, unresolved territorial disputes and historical animosities are driving dramatic rises in defence spending. It must be remembered that the Pacific Ocean is the western flank of NATO. 

• In this context, it should not be left to the United States and a handful of others to deploy hard power beyond NATO’s borders. An over-reliance on US power projection will erode the foundations of the transatlantic bond over time. 

• NATO and the EU must also cooperate closely to deliver their comprehensive range of capabilities to manage international crises, from market access and development assistance to military intervention and post-conflict civilian support. 

• Completion of the Transatlantic Trade and Investment Partnership (TTIP) will strengthen the transatlantic community strategically as well as economically.

• NATO needs to differentiate its approach to working with its international partners. In particular, it should develop long-term cooperative arrangements with the small number of countries in Europe and beyond which have contributed actively alongside NATO to international security in recent years. 

• The NATO–Russia Council should continue to operate at ambassadorial and higher levels. This will help the two sides coordinate responses to international crises and potentially rebuild trust on European security. 

• NATO publics are increasingly sceptical about the value of any form of external intervention. Political leaders need to communicate better the deterioration of the security situation in Europe; the importance of international security to their nations' welfare and prosperity; and the need to protect the core values that underpin the Alliance, especially democratic governance, open economies and the rule of law.  

Chatham House press release: Director of Chatham House to Chair New NATO Group of Policy Experts

 

NATO press release: NATO Secretary General to attend conference on Strengthening the Transatlantic Bond

2014 is a pivotal year for NATO. Prompted by transatlantic defence austerity, Russian activities in Ukraine, and the conclusion of NATO’s major operations in Afghanistan, allies are raising important questions about NATO’s future in the run-up to the summit in September. 

At this event, representatives from two of the closest partners in the alliance will explore challenges and potential strategies for NATO.

The situation in Ukraine remains in flux and despite Europe and the US toughening sanctions on Russia, President Putin continues to increase the scope of Russia’s involvement in the conflict between the Ukrainian government and the separatists. It remains unclear how far Putin is willing to go, what his broader regional ambitions are, and what he will do if forced further into a corner by Western actions. In this time of uncertainty and instability it is therefore vital to assess how the transatlantic partners should respond to this increasingly precarious situation. 

At this all-day event, the group will discuss how US policy towards Russia is changing, what this means for Europe and, subsequently, how Europe should respond. 

Attencance at this event is by invitation only.

The event is part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will come together to discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Stiftung.

The NATO Summit, held in September in Newport, Wales, was a way point in the larger strategic vision for NATO over the coming decade. The deliverables that the leaders laid out must now been acted upon. NATO and its member states must find ways to more effectively harness their significant resources to meet the challenges ahead, from the ongoing conflicts in Ukraine and the Middle East, to the longer term threats posed by cyber-attack and energy insecurity.

The event will bring together senior representatives from a number of the NATO member states, NATO partners and external experts from industry, the media and the think-tank and academic communities, to discuss how best to move the deliverables forward, and how to most effectively work together in so doing.

This is the first of two workshops being held in collaboration with SWP-Berlin.

The international community is in urgent need of successful, cooperative strategies for both preventing mass atrocities before they begin and stopping those in progress. As recent crises have highlighted, effective international cooperation to save lives and preserve peace and security remains largely aspirational. Participants will discuss current thinking on mass atrocity prevention and intervention, and identify how transatlantic cooperation in this space could be more effective.

Attendance at this event is by invitation only.

Early last month NATO launched a new maritime security mission, ostensibly to prevent people smuggling across the Aegean Sea. This mission, however, was not originally a reaction to the humanitarian catastrophe at sea. Instead, it was a response to growing Russian assertiveness.

A maritime patrol unit was first discussed in the North Atlantic Council in December 2015, when the Alliance agreed to provide a ‘tailored package of assurances’ to Ankara in a period of heightened tensions after Turkey shot down a Russian jet. The package included measures such as early reconnaissance planes (AWACS), air policing, naval presence in the Eastern Mediterranean, provisions for Maritime Patrol Aircrafts (MPA) and Intelligence, Surveillance & Reconnaissance (ISR), and port visits. None of the discussion at the time linked it with protecting refugees. Now framing this decision in that light creates a new mission for NATO’s Maritime Command (MARCOM), a mission that it has never conducted before.

Neither NATO’s founding documents or the most recent 2010 Strategic Concept provide for this type of mission, and NATO units are not trained to carry out an actual rescue mission. Protecting strategic assets and goods, such as oil tankers, escorting naval vessels providing food into conflict zones, deterring piracy and monitoring the Mediterranean for terrorist activity have been the main priorities for MARCOM in the post-Cold War period. These activities and maritime exercises were aimed at defence against non-state actors.

The positioning of NATO’s maritime fleet in the Aegean Sea to save refugees, however, has the potential to be used as a deterrent against Russia’s Anti Access/Anti-Denial capacity in the eastern Mediterranean. Russia, meanwhile, has increased its naval presence at the Tartus naval base in Syria, which it has used to support its air campaigns in Syria. This level of reciprocated military build-up is hard to sustain in the long-run.   

NATO−Russia tensions

Over the past few years, Russia’s assertive policies – its multiple military operations, the continuing modernization of its army and ‘simulated attacks’ such as the one in 2013 that tested Sweden’s air defence response mechanisms − have increasingly worried the Alliance and its partners. Clashing interests over Syria’s future and Russia’s attacks against the Western-supported rebel groups have also served to increase tensions between NATO member states and Russia. Recent analysis logged 60 dangerous incidents in the Euro-Atlantic area between Russia and NATO counties in the period between March 2014 and March 2015. NATO’s preparedness has been severely tested by these incidents, and has led the alliance to strengthen its presence on Europe’s southern flank.

Such increased tensions could create a situation whereby accidents and miscalculations lead to escalation. NATO forces and Russia are already engaged in further force posturing − the decision to accelerate Montenegro’s accession to NATO and the increased conduct of wartime exercises, such as NATO’s search for submarines in open waters (Dynamic Manta 2016), reconnaissance operations (Cold Operation 16) or Russia’s simulated exercises, for instance – which could undermine global stability. Three weeks after the Russian jet was shot down, a Russian patrol ship fired warning shots at a Turkish vessel to attract attention and avoid a collision. This event did not escalate but given the heightened tensions, similar events may spiral out of control.  

The tentative cease-fire in Syria is a confidence building measure that could normalize and rebuild relations. But further steps should be taken to establish political dialogue, open up the channels for potential meetings at the NATO−Russia Council, and increase transparency and risk mitigation in exercises and activities. The longer both sides wait, the more likely a confrontation will be.

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Summary

• Chatham House brought together 22 participants over a two-day period in May 2016 to discuss US and European responses to a potential conflict between Turkey and Russia. This was the third of four scenario roundtables (the first two involved a conflict between China and Japan and a potential breakdown in the Iran nuclear deal, respectively).
• The scenario was designed and the roundtable took place before a number of crucial subsequent developments, including the partial restoration of Turkish/Russian relations, the British vote to leave the European Union (EU), and the attempted coup against Turkish President Recep Tayyip Erdoğan. This paper should be read and understood in that context.
• In our simulation, the United States and Europe worked closely together, with cooperation particularly in evidence between the US and Germany. While the US was slightly more willing than Europe to threaten sanctions against Russia, transatlantic unity was not seriously threatened by a Turkey/Russia conflict.
• Western states were wary of bringing NATO into the picture for fear that this would be perceived as militarizing an already tense situation. The EU was also sidelined in favour of more ad hoc negotiating strategies.
• Russia was effective in using international law to defend its position, even as it took steadily more aggressive action in Syria. Neither the West nor Turkey deployed an effective countermeasure to this tactic.

Economic populism is on the rise on both sides of the Atlantic. In the US, both Donald Trump and Bernie Sanders have made protectionist arguments and appealed to voters who feel left behind by globalization. In Europe, left-wing groups like Syriza in Greece and Podemos in Spain as well as far-right groups like France’s Front National, Germany’s Alternative für Deutschland (AfD) and the UK Independence Party are capitalizing on the anti-globalization mood.

Manifestations of the current anti-trade and anti-globalization movements include opposition to trade initiatives like the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) as well as populist calls for an end to the austerity measures and economic reforms that were introduced in the wake of the euro crisis. There have been questions regarding whether capitalism can respond to the rise in inequality seen in many Western states. Many populists also share a distrust of those they perceive as elite policy-makers and a desire to reclaim national sovereignty from international institutions. Thus, the rise of populism could have far-reaching consequences for trade and economic policy-making and the existing trade and broader economic architectures.

The US and the Americas Programme at Chatham House and the German Marshall Fund of the United States in cooperation with the Konrad Adenauer Stiftung will convene an expert roundtable to provide insight and analysis geared towards examining key drivers behind the rise of economic populism, its implications for the international economic system, and possible ways to mitigate the effects of populism in the economic arena.

Attendance at this event is by invitation only. 

The Chatham House Rule

To enable as open a debate as possible, this event will be held under the Chatham House Rule.

As US and European governments grapple with the challenges of reinforcing their economic relationships, traditional negotiations over tax and trade policy may soon be overwhelmed by a far thornier issue: the regulation of data storage, protection and analysis. As traditional global trade in goods and services has levelled off, cross-border data flows continue to expand rapidly.

Christopher Smart will outline the economic promise of data analytics to drive dramatic productivity gains, particularly for industry and financial services. He will explore contrasting political debates in the United States and Europe over personal privacy and national security and analyse how these have influenced many of the assumptions that drive the regulation of data flows. 

This event is open to coporate members only.

This event will be preceded by an informal, welcome reception from 12:15.

To enable as open a debate as possible, this event will be held under the Chatham House Rule. 

Summary

• As the US government and European governments once again grapple with the challenges of reinforcing and expanding the transatlantic economic relationship, traditional negotiations over trade or tax policy may soon be upstaged by a far thornier and more important issue: how to regulate the storage, protection and analysis of data.
• Growth in the traditional global trade in goods and services has levelled off, but cross-border data flows continue to expand rapidly and the challenges of developing policies that protect privacy, security and innovation are already tremendous. For example, data analytics are driving dramatic productivity gains in industry, particularly for large and complex installations whose safety and efficiency will increasingly depend on flows of data across jurisdictions. Meanwhile, ‘fintech’ (financial technology) start-ups and large banks alike are testing new modes of accumulating, analysing and deploying customer data to provide less expensive services and manage the risk profile of their businesses.
• While the US debate on the use of data has often been framed around the trade-off between national security and personal privacy, Europeans often face an even more complex set of concerns that include worries that their digital and technology firms lag behind dominant US competitors. The political and regulatory uncertainty helps neither side, and leaves transatlantic companies struggling to comply with uncertain and conflicting rules in different jurisdictions.
• A global consensus on data regulation is currently well out of reach, but given the expanding importance of data in so many areas, basic agreement on regulatory principles is crucial between the US and the EU. This paper proposes a ‘Transatlantic Charter for Data Security and Mobility’, which could help shape a common understanding. While it would hardly resolve all concerns – or indeed contradictions – around the prevailing traditions on both sides of the Atlantic, it could provide the basis for better cooperation and establish a framework to protect the promise of the digital age amid an unpredictable and emotional debate.

Summary

• The United States and the European Union are deeply integrated economically in terms of movement of goods, services and capital across the Atlantic, but this is not matched by the mobility of labour. Freer movement of high-skilled workers across the Atlantic has a potentially critical role to play in maintaining and strengthening the bilateral economic relationship.
• Both the US and EU seek to attract high-skilled labour through the use of temporary visa programmes. Various routes are available for highly skilled workers from the EU to temporarily work in the US (for instance, through the H-1B visa for foreign nationals in ‘specialty occupations’, as well as other visa categories for treaty traders and investors, intra-company transferees, and international students seeking work authorization in the US before or after graduation). The main ways for highly skilled workers from the US to temporarily work in EU member states are through EU-wide schemes that apply in 25 out of the 28 member states (for holders of EU Blue Cards or intra-company transferees); or via member states’ parallel national schemes.
• The experiences of US and EU employers and workers under the US H-1B programme and the EU’s Blue Card scheme differ greatly. The EU Blue Card scheme avoids many of the drawbacks of the H-1B visa. It does not have an annual cap on the number of visas issued. It also grants greater autonomy to the worker by not requiring the employer to sponsor long-term residence, by providing greater flexibility to switch employment, and by having a longer grace period for visa-holders to find new employment after dismissal.
• The US visa system hampers America’s economic growth. Restrictive policies such as an annual limit on the number of H-1B visas issued, and the associated uncertainty for employees and employers, hinder the ability of US companies to expand and innovate. The complex and costly visa application process is a particular burden for small and medium-sized enterprises. Problems around the timely availability of visas frustrate investors both from the US and from abroad (including from the EU). European firms face difficulties in acquiring visas for intra-company transferees, and not all EU member states have access to the treaty trader and treaty investor visa categories. At times, this impedes foreign direct investment and restricts US job creation. In addition, current policies hinder the economy’s retention of EU and other graduates of US universities. This is of particular concern given that skilled graduates have a critical role to play in addressing the US’s growing shortage of workers in the science, technology, engineering and mathematics (STEM) fields.
• Given the comparability of US and EU wages and labour markets, US concerns about foreign workers ‘stealing’ their jobs or depressing wages generally do not apply to EU citizens. On the contrary, a more open immigration policy for high-skilled workers – in particular for EU citizens – would benefit the US economy.
• Efforts to reform visa systems for high-skilled labour are under way in both the US and EU. In order to facilitate the movement of highly skilled workers across the Atlantic, this research paper recommends (1) creating a special visa for highly skilled EU citizens to work temporarily in the US; (2) extending the availability of treaty trader and investor visas to all EU member states; and (3) increasing efforts to eliminate fraud and abuse in the H-1B system. These measures could potentially help to create more investment, jobs and economic growth in the US.

The Review on Antimicrobial Resistance, chaired by Jim O’Neill, was commissioned by former UK prime minister, David Cameron, in July 2014. Supported by the UK government and the Wellcome Trust, the final report of the review was published in May 2016 and has had a global impact in terms of motivating political leaders and decision-makers to take more seriously the threat posed by antimicrobial resistance.

Yet there is now a perception that the political momentum to address the issue is waning and needs to be reinvigorated.

In a further report produced by Chatham House, the progress of the recommendations of the review is assessed and the key ways to move forward are identified.

Panellists at this event, where highlights of the report are presented, provide their assessment of the progress so far and discuss priorities for future action.

The report was funded by Wellcome.

Linking health and security has become a mainstream approach to health policy issues over the past two decades. So much so that the discourse of global health security has become close to synonymous with global health, their meanings being considered almost interchangeable. While the debates surrounding the health–security nexus vary in levels of analysis from the global to the national to the individual, this article argues that the consideration of health as a security issue, and the ensuing path dependencies, have shifted in three ways. First, the concept has been broadened to the extent that a multitude of health issues (and others) are constructed as threats to health security. Second, securitizing health has moved beyond a rhetorical device to include the direct involvement of the security sector. Third, the performance of health security has become a security threat in itself. These considerations, the article argues, alter the remit of the global health security narrative; the global health community needs to recognize this shift and adapt its use of security-focused policies accordingly.

Even though most African states have signed and ratified the Framework Convention on Tobacco Control (FCTC), a global treaty to limit tobacco use, African states have been slow to pass and implement tobacco control policies like regulations on sales, smoke-free environments and taxes. This article examines how the ineffectiveness of local tobacco-control advocacy contributes to this suboptimal outcome. It asserts that the disconnect between the global tobacco-control advocacy network and local advocates shapes this ineffectiveness. With funding and direction predominately from the Bloomberg Initiative, local advocates emulate the funders' goal of achieving quick, measurable policy results. Their reliance on the network drives African advocates to strive to pass legislation, even in difficult political climates, and to remake their agendas when funders change their priorities. They also emulate the network's focus on evidence-based arguments that stress epidemiological data and biomedical interventions, even when this issue frame does not resonate with policy-makers. Financial dependence can draw local advocates into expectations about patronage politics, undermine their ability to make principled arguments, and lead them to downplay the ways that their home country's socioeconomic and cultural contexts affect tobacco use and control. Based on key informant interviews with African advocates, media analysis and the case-studies of Ghana and Tanzania, the article broadens the study of philanthropy in global health, it adds an African perspective to the literature on global health advocacy, and it deepens knowledge on power dynamics between external funders and local actors in the realms of health and development.

The leaked record of the five meetings of the UK–US Trade & Investment Working Group held in 2017–18 has led to a controversy in the UK election campaign around the claim that ‘the NHS is up for sale’.

But a careful reading of the leaked documents reveals how remarkably little concerns the NHS – in five meetings over 16 months, the NHS is mentioned just four times. The patent regime and how it affects medicines is discussed in more depth but largely in terms of the participants trying to understand each other’s systems and perspectives. For the most part, the discussions were overwhelmingly about everything else a trade deal would cover other than healthcare – matters such as subsidies, rules of origin and customs facilitation.

But this does not mean there will be no impact on Britain’s health service. There are three main concerns about the possible implications of a US–UK trade deal after Brexit – a negotiation that will of course only take place if the UK remains outside the EU customs union and single market and also does not reach a trade agreement with the EU that proves incompatible with US negotiating objectives.

One concern is that the US aim of securing ‘full market access for US products’, expressed in the US negotiating objectives, will affect the ability of NICE (The National Institute for Health and Care Excellence) to prevent the NHS from procuring products that are deemed too expensive in relation to their benefits. It could also affect the ability of the NHS to negotiate with companies to secure price reductions as, for instance, happened recently with Orkambi, a cystic fibrosis drug.

A peculiarity of the main US government healthcare programme (Medicare) is that it has historically not negotiated drug prices, although there are several bills now before Congress aiming to change that. US refusal to negotiate or control prices is one reason that US drug prices are the highest in the world.  

A second concern is that the US objective of securing ‘intellectual property rights that reflect a standard of protection similar to that found in US law’ will result in longer patent terms and other forms of exclusivity that will increase the prices the NHS will have to pay for drugs.

However, it is not immediately apparent that UK standards are significantly different from those in the US – the institutional arrangements differ but the levels of protection offered are broadly comparable. Recent publicity about a potential extra NHS medicine bill of £27 billion resulting from a trade deal is based on the NHS having to pay US prices on all drugs – which seems an unlikely outcome unless the UK contingent are extraordinarily bad negotiators.

Nevertheless, in an analysis section (marked for internal distribution only), the UK lead negotiator noted: ‘The impact of some patent issues raised on NHS access to generic drugs (i.e. cheaper drugs) will be a key consideration going forward.’

A third concern is that the US objective of providing ‘fair and open conditions for services trade’ and other US negotiating objectives will oblige the UK to open up the NHS to American healthcare companies.

This is where it gets complicated. At one point in a discussion on state-owned enterprises (SOEs) the US asked if the UK had concerns about their ‘health insurance system’ (presumably a reference to the NHS). The UK response was that it ‘wouldn’t want to discuss particular health care entities at this time, you’ll be aware of certain statements saying we need to protect our needs; this would be something to discuss further down the line…’

On this exchange the UK lead negotiator commented:  ‘We do not currently believe the US has a major offensive interest in this space – not through the SOE chapter at least. Our response dealt with this for now, but we will need to be able to go into more detail about the functioning of the NHS and our views on whether or not it is engaged in commercial activities…’

On the face of it, these documents provide no basis for saying the NHS would be for sale – whatever that means exactly. The talks were simply an exploratory investigation between officials on both sides in advance of possible negotiations.

But it is a fact that US positions in free trade agreements are heavily influenced by corporate interests. Their participation in framing agreements is institutionalized in the US system and the pharmaceutical and healthcare industries in the US spend, by a large margin, more on lobbying the government than any other sector does. Moreover, President Donald Trump has long complained about ‘the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country’.

It is when (and if) the actual negotiations on a trade deal get under way that the real test will come as the political profile and temperature is raised on both sides of the Atlantic.

At the United Nations General Assembly in September 2019, all governments re-committed their countries to achieving universal health coverage (UHC) whereby ‘all people obtain the health services they need without suffering financial hardship when paying for them’. To achieve UHC, governments will need to oversee health systems that are predominantly publicly financed although countries may use both private and public health providers of health services.

Robert Yates will provide a review of recent transitions towards Universal Health Coverage, highlighting the importance of genuine political commitment by heads of state, and the potential benefits to corporate stakeholders in helping reach this sustainable development goal. What are the political, economic and health benefits of UHC? Why can only public financing mechanisms, rather than a free market in health services, deliver an equitable health system? And what is the role of the private sector within the political economy of UHC?

This event is only open to Major Corporate Member and Partner organizations of Chatham House. If you would like to register your interest, please RSVP to Linda Bedford. We will contact you to confirm your attendance.

To enable as open a debate as possible, this event will be held under the Chatham House Rule.

When it comes to emerging infectious diseases – those newly recognized in humans or in new locations – it is not only what we know that matters but also what we do not know.

An outbreak of a new coronavirus first reported in Wuhan, China, which has so far led to more than 500 confirmed cases and multiple deaths across five countries (and two continents) has prompted the question from several corners of the world: Should we be worried?

Although expert teams coordinated by the World Health Organization (WHO) are working on key questions to get answers as soon as possible, the level of uncertainty is still high.

We do not yet know exactly how deadly the disease is, how best to treat those who get sick, precisely how it is spreading, nor how stable the virus is. It is thought that the virus spread from an animal source, but the exact source is yet to be confirmed and the disease is now in human populations and appears to be spreading from human to human.

It is such uncertainty, inherent in emerging infectious disease outbreaks, that warrants concern. Until they are resolved, it is appropriate for the world to be concerned. It is useful to remember that most established scourges of humanity such as HIV, influenza and tuberculosis likely started as emerging infectious diseases that jumped the species barrier from animals to humans.

Shortly after the Chinese authorities reported the first cases of ‘mystery pneumonia’ in Wuhan, China, to WHO, the virus causing the disease was isolated and identified as being part of the coronavirus family. It belongs to the same virus family as SARS, a highly contagious and life-threatening coronavirus that caused a nine-month epidemic in 2003 that affected 26 countries and resulted in more than 8,000 infections and nearly 800 deaths.

A second novel coronavirus that emerged in 2012 and persists today – MERS, or Middle East Respiratory Syndrome – is less contagious (spread by close contact rather than coughing and sneezing).

The differences between the SARS coronavirus and the MERS coronavirus highlight that, despite belonging to the same virus family, pathogens do not necessarily behave in the same way. It is as yet unknown whether the new virus is, or will turn out to be, more like SARS or MERS, or neither. 

Chinese authorities have confirmed that there is human-to-human transmission. However, it is not yet established whether it is sustained, which would make the outbreak more difficult to control. As of 23 January, the number of cases range from 500 confirmed cases up to an estimated 1,700 cases, according to a disease outbreak model by Imperial College London.

Likewise, we do not know to what extent the virus is able to mutate and if so, how rapidly. Generally, coronaviruses are known to be able to mutate, with the risk that a less contagious form of the virus becomes highly contagious. This could have an impact not only on the transmission pattern and rate but also the death rate. The virus could change in either direction, to become either more or less of a threat.

It is important to take a precautionary approach while uncertainty persists. It is also important not to overreact and for measures to be scientifically sound. Concern over this outbreak is due, but panic is not.

Three virtual networks of experts supporting the response – one of virologists, one of epidemiologists and one of clinicians – are working on the key pieces of the jigsaw puzzle: watching the virus, watching the transmission patterns, and watching the people who have been infected. It is crucial to maintain the ongoing investigation of the disease, stay focused on the science and to keep sharing the necessary information.

Read all our analysis on the Coronavirus Response

The coronavirus outbreak comes at a difficult time for China’s ruling party. A tumultuous 2019 saw the country fighting an economic slowdown coupled with an increasingly hostile international environment. As authorities take assertive steps to contain the virus, the emergency has - at least temporarily - disrupted global trade and supply chains, depressed asset prices and forced multinational businesses to make consequential decisions with limited information. 

Against this backdrop, panellists reflect on the country’s nascent economic transition from 2020 onward. What has been China’s progress towards a sustainable innovation-led economy so far? To what extent is the ruling party addressing growing concerns over job losses, wealth inequality and a lack of social mobility? And how are foreign investors responding to these developments in China?

The coronavirus outbreak in China poses a tremendous test for Beijing. Beyond the immediate public health crisis, the Chinese Communist Party faces a stuttering economy, growing public anger and distrust, and a potentially heavy blow to its global reputation.

The hesitant early response to the outbreak sheds light on the way the Chinese bureaucracy approaches crises at a time when the party leadership is tightening control at almost all levels of society. At first, officials in Wuhan attempted to censor online discussions of the virus. This changed only after President Xi Jinping’s call for a much more robust approach was followed by a sudden increase in the state media coverage of the outbreak. There is no doubt that Xi’s intervention will greatly speed up the response to the crisis, which should be welcomed.

Despite China’s experience with the SARS epidemic between 2002 and 2004, the sluggish reaction by officials in Wuhan should not have come as a surprise. The tendency among bureaucrats to play down crises is deeply entrenched. And, ironically, the party leadership’s recent push for greater bureaucratic accountability and its promise of stiffer punishment for those who take a 'do little' approach have also contributed to the habit of covering up disasters.

Xi has launched an ambitious programme to reform the governance of the Communist Party and re-centralize political control. This has reinforced the tendency of officials to avoid making important decisions and instead to wait for instructions from the party leadership.

For decades, local governments have made things happen in China. But with tighter regulation of lower-level bureaucrats, civil servants across the system now seem less ready, and able, to provide their input, making ineffective and even mistaken policy more likely.

Moreover, the coronavirus outbreak could not have happened at a worse time. Last year was tumultuous and saw China fighting an economic slowdown while also dealing with an increasingly hostile international environment. Now, as the authorities take steps to contain the disease, economic activity has come to a near standstill, with public transport curbed and restaurants and entertainment venues shuttered.

This contrasts with SARS, when double-digit growth in gross domestic product enabled Beijing to raise government expenditure to tackle the outbreak. Today, the Chinese economy is running into some of the most difficult challenges it has faced since the global financial crisis.

In response to the slowdown in growth, Beijing has adopted loose fiscal policy, with an emphasis on public investment. It also continues to push big banks to cut interest rates for individual borrowers and small businesses which were already suffering from the effects of the trade war with the US before the coronavirus struck.

The outbreak should give new impetus to governments, not least those that have close economic ties with China. Being a great power with ambitions for global leadership, as well as domestic reform, is not easy. Even without multi-party elections, it involves increasing, and often uncomfortable, scrutiny. As President Xi himself has put it: the road is long and the task is weighty.

This article was originally published in the Financial Times.

Professor Heymann, who previously led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus, outlines the key facts relating to this outbreak and reflect on the challenges it poses. 

An outbreak of a new coronavirus first reported in Wuhan, China has so far spread to dozens of countries, led to tens of thousands of confirmed cases and almost 2,000 deaths. The World Health Organization has declared the situation a global health emergency thereby prompting questions from around the world about how worried the public should be and how can governments, media, civil society and the global health community best tackle new infectious disease outbreaks?

What do we know – and what do we not know – about this coronavirus at the moment? What lessons learned from previous outbreaks have been applied – and not applied – to this outbreak? How can governments and the media balance public awareness and the risk of panic? And what measures can be taken to reduce the risk of stigma and discrimination of populations during this and other outbreaks?

Epidemics, of the size of Covid-19, have huge economic impacts – not just from the costs of managing the health of people, but stopping them, and keeping the economy working. The 10% fall in global stock markets since it became clear that Covid-19 would not be limited to China has boldly highlighted this.

Suppressing the epidemic, but allowing the economy to still function, requires key decisions, in which central banks and finance ministries play a part.

The role of fiscal and monetary authorities in managing an epidemic economy

The scope to use monetary policy to manage the economic impact of Covid-19 is limited. The fact that the underlying cause of the shock is an infectious disease outbreak (rather than a banking crisis, as in 2008-09) and nominal interest rates are currently close to zero in most major advanced economies reduces the effectiveness of monetary policy.

Since 2010, reductions in fiscal deficits mean there is more scope for supportive fiscal action. But even here, high public debt levels and the desire not to underwrite ‘zombie’ companies that may have been sustained by a decade of ultra-low interest rates remain constraints. 

However, outside broad based fiscal and monetary policies there are six ways in which finance ministries and central banks will play a critical role in responding to the crisis.

A first crucial role for finance ministries and central banks is in helping provide the best possible economic evaluation of strict containment measures (trying to isolate each potential case) versus managing the epidemic (delaying the spread of the virus, protecting the most vulnerable and treating the sick, while enabling the majority of people to get on with daily life). Given the economic consequences, they must play a full part, alongside health experts, in advising political leaders on this key decision.

Second, if large numbers of staff are required to work from home to manage the epidemic, they have the lead role in doing whatever is necessary to ensure that financial markets – and thus the wider economy – will continue to function smoothly.

Third, they need to ensure adequate funding for the public health response. Steps that can make an enormous difference to the success of containment strategies, such as strengthening surveillance, and guaranteeing the availability of testing kits and protective equipment for front line health workers, must not fail because of a lack of funding. 

Fourth, they have a lead role in designing targeted economic interventions for the wider economy. Some of these are needed immediately to re-enforce and incentivize strict containment strategies, such as ensuring that employees without full or adequate sick leave cover have the financial support to enable them to report and self-isolate when they get sick. 

Other interventions may help improve the resilience of the economy in accommodating moderate ‘social distancing’ measures; for example, by providing assistance to small firms to help them gear up for home working.

Yet others are needed, as a contingency, to safeguard the most vulnerable sectors (such as tourism, retail and transport) in circumstances where there is a prolonged downturn. The latter may include schemes to allow deferral of tax payments by SMEs, or steps to encourage loan extensions and other forms of liquidity support from the banking system, or by moves to underwrite continued provision of business insurance.

Fifth, national economic authorities will need to play their part in combatting ‘fake news’ through providing transparent and high-quality analysis. This includes providing forecasts on the likely economic impact of the virus under different scenarios, but also detailed information on the support and contingency measures they are considering, so they can be improved and refined through feedback. 

Sixth, they will need to ensure that there is generous international support for poor countries, by ensuring the available multilateral support facilities from the international financial institutions and multilateral development banks are adequately funded and fit for purpose. The World Bank has already announced an initial $12 billion financing package, but much more is likely to be needed.

They also need to support coordinated bilateral aid where this is more effective, as well as special measures to support particularly vulnerable groups, for example, in refugee camps and prisons. Given the importance of distributing sophisticated medical equipment and expertise quickly, it is also important that every effort is made to avoid delays due to customs and migration checks.

Managing the future

The response to the immediate crisis will rightly take priority now, but economic authorities must also play their part in ensuring the world finally takes decisive steps to prevent a repeat of Covid-19 in future.

The experience with SARS, H1N1 and Ebola shows that, while some progress is made after each outbreak, this is often not sustained. This epidemic shows that managing diseases is absolutely critical to the long-term health of global economy, and doubly so in circumstances where traditional central bank and finance ministry tools for dealing with major global economic shocks are limited.

Finance ministries and central banks therefore need to push hard within government to ensure sustained long-term funding of research on prevention and strengthening of public health systems. They also need to ensure that the right lessons are drawn by the private sector on making international supply chains more robust.

Critical to the overall success of the economic effort will be effective international coordination. The G20 was established as the premier economic forum for international economic cooperation in 2010, and global health issues have been a substantive part of the G20 agenda since the 2017 Hamburg Summit. At the same time, G7 finance ministers and deputies remain one of the most effective bodies for managing economic crises on a day-to-day basis and should continue this within the framework provided by the G20.

However, to be effective, the US, as current president of the G7, will need to put aside its reservations on multilateral economic cooperation and working with China to provide strong leadership.

As coronavirus spreads across the globe, states grapple to find the ideal strategy for coping with the global pandemic. And, in China, Singapore, South Korea, the US, the UK, and Europe, divergent policies are a product of state capacity and legal authority, but they also reveal competing views about the optimal role of centralized state authority, federalism, and the private sector.

Although it is too soon to know the longer-term effects, the apparent capacity of centralized state authority in China, South Korea and Singapore to respond effectively and rapidly is making headlines. In the United States, the opposite has been true. 

America’s response is being shaped by its federal structure, a dynamic private sector, and a culture of civic engagement. In the three weeks since the first US case of coronavirus was confirmed, state leaders, public health institutions, corporations, universities and churches have been at the vanguard of the nation’s effort to mitigate its spread.

Images of safety workers in hazmat suits disinfecting offices of multinational corporations and university campuses populate American Facebook pages. The contrast to the White House effort to manage the message, downplay, then rapidly escalate its estimation of the crisis is stark.

Bewildering response

For European onlookers, the absence of a clear and focused response from the White House is bewildering. By the time President Donald Trump declared a national emergency, several state emergencies had already been called, universities had shifted to online learning, and churches had begun to close.

By contrast, in Italy, France, Spain and Germany, the state has led national efforts to shutter borders and schools. In the UK, schools are largely remaining open as Prime Minister Boris Johnson has declared a strategy defined by herd immunity, which hinges on exposing resilient populations to the virus.

But America has never shared Europe’s conviction that the state must lead. The Center for Disease Control and Prevention, the leading national public health institute and a US federal agency, has attempted to set a benchmark for assessing the crisis and advising the nation. But in this instance, its response has been slowed due to faults in the initial tests it attempted to rollout. The Federal Reserve has moved early to cut interest rates and cut them again even further this week.

But states were the real first movers in America’s response and have been using their authority to declare a state of emergency independent of the declaration of a national emergency. This has allowed states to mobilize critical resources, and to pressure cities into action. After several days delay and intense public pressure, New York Governor Andrew Cuomo forced New York City Mayor Bill de Blasio to close the city’s schools.

Declarations of state emergencies by individual states have given corporations, universities and churches the freedom and legitimacy to move rapidly, and ahead of the federal government, to halt the spread in their communities.

Washington state was the first to declare a state of emergency. Amazon, one of the state’s leading employers, quickly announced a halt to all international travel and, alongside Microsoft, donated $1million to a rapid-response Seattle-based emergency funds. States have nudged their corporations to be first movers in the sector’s coronavirus response. But corporations have willingly taken up the challenge, often getting ahead of state as well as federal action.

Google moved rapidly to announce a move allowing employees to work from home after California declared a state of emergency. Facebook soon followed with an even more stringent policy, insisting employees work from home. Both companies have also met with World Health Organization (WHO) officials to talk about responses, and provided early funding for WHO’s Solidarity Response Fund set up in partnership with the UN Foundation and the Swiss Philanthropy Foundation.

America’s leading research universities, uniquely positioned with in-house public health and legal expertise, have also been driving preventive efforts. Just days after Washington declared a state of emergency, the University of Washington became the first to announce an end to classroom teaching and move courses online. A similar pattern followed at Stanford, Harvard, Princeton and Columbia - each also following the declaration of a state of emergency.

In addition, the decision by the Church of the Latter Day Saints to cancel its services worldwide followed Utah’s declaration of a state of emergency.

The gaping hole in the US response has been the national government. President Trump’s declaration of a national emergency came late, and his decision to ban travel from Europe but - at least initially - exclude the UK, created uncertainty and concern that the White House response is as much driven by politics as evidence.

This may soon change, as the House of Representatives has passed a COVID-19 response bill that the Senate will consider. These moves are vital to supporting state and private efforts to mobilize an effective response to a national and global crisis.

Need for public oversight

In the absence of greater coordination and leadership from the centre, the US response will pale in comparison to China’s dramatic moves to halt the spread. The chaos across America’s airports shows the need for public oversight. As New York State Governor Cuomo pleaded for federal government support to build new hospitals, he said: ‘I can’t do it. You can’t leave it to the states.'

When it comes to global pandemics, we may be discovering that authoritarian states can have a short-term advantage, but already Iran’s response demonstrates that this is not universally the case. Over time, the record across authoritarian states as they tackle the coronavirus will become more apparent, and it is likely to be mixed.

Open societies remain essential. Prevention requires innovation, creativity, open sharing of information, and the ability to inspire and mobilize international cooperation. The state is certainly necessary, but it is not sufficient alone.

Linked to the call for a global response to the Covid-19 pandemic that I, Robin Niblett and Creon Butler have outlined, the case for a specific dramatic economic policy gesture from many policymakers in large economies is prescient.

It may not be warranted from all G20 nations, although given the uncertainties, and the desire to show collective initiative, I think it should be G20 driven and inclusive.

We need some sort of income support for all our citizens, whether employees or employers. Perhaps one might call it a truly People’s QE (quantitative easing).

Against the background of the previous economic crisis from 2008, and the apparent difficulties that more traditional forms of economic stimulus have faced in trying to help their economies and their people - especially against a background of low wage growth, and both actual, and perception of rising inequality - other ideas have emerged.

Central banks printing money

Both modern monetary theory (MMT) and universal basic income (UBI) essentially owe their roots to the judgement that conventional economic policies have not been helping.

At the core of these views is the notion of giving money to people, especially lower income people, directly paid for by our central banks printing money. Until recently, I found myself having very little sympathy with these views but, as a result of COVID-19, I have changed my mind.

This crisis is extraordinary in so far as it is both a colossal demand shock and an even bigger colossal supply shock. The crisis epicentre has shifted from China - and perhaps the rest of Asia - to Europe and the United States. We cannot expect policies, however unconventional by modern times, such as the dramatic monetary steps announced by the Federal Reserve Board and others like it, to put a floor under this crisis.

We are consciously asking our people to stop going out, stop travelling, not go to their offices - in essence, curtailing all forms of normal economic life. The only ones not impacted are those who entirely work through cyberspace. But even they have to buy some forms of consumer goods such as food and, even if they order online, someone has to deliver it.

As a result, markets are, correctly, worrying about a collapse of economic activity and, with it, a collapse of companies, not just their earnings. Expansion of central bank balance sheets is not going to do anything to help that, unless it is just banks we are again worried about saving.

What is needed in current circumstances, are steps to make each of us believe with high confidence that, if we take the advice from our medical experts, especially if we self-isolate and deliberately restrict our personal incomes, then we will have this made good by our governments. In essence, we need smart, persuasive People’s QE.

Having discussed the idea with a couple of economic experts, there are considerable difficulties with moving beyond the simple concept. In the US for example, I believe the Federal Reserve is legally constrained from pursuing a direct transfer of cash to individuals or companies, and this may be true elsewhere.

But this is easily surmounted by fiscal authorities issuing a special bond, the proceeds of which could be transferred to individuals and business owners. And central banks could easily finance such bonds.

It is also the case that such a step would encroach on the perception and actuality of central bank independence, but I would be among those that argue central banks can only operate this independence if done wisely. Others will argue that, in the spirit of the equality debate, any income support should be targeted towards those on very low incomes, while higher earners or large businesses, shouldn’t be given any, or very little.

I can sympathise with such spirit, but this also ignores the centrality of this particular economic shock. All of our cafes and restaurants, and many of our airlines, and such are at genuine risk of not being able to survive, and these organisations are considerable employers of people on income.

It is also the case that time is of the essence, and we need our policymakers to act as soon as possible, otherwise the transmission mechanisms, including those about the permanent operation of our post World War 2 form of life may be challenged.

We need some kind of smart People’s QE now.

The measures taken to limit the spread of the coronavirus - in particular social distancing -  come with significant economic costs, as the drop both in demand for goods and services and in supply due to workers being at home sick will create a short-term economic shock not seen in modern times.

Sectors that are usually less affected by regular economic swings such as transport and tourism are being confronted with an almost total collapse in demand. In the airline sector, companies are warning they might only be able to hold out for a few months more.

Building on the calls to provide income support to all citizens and shore up businesses, European leaders should now be giving explicit permission to the European Central Bank (ECB) to provide whatever financial support is needed.

Although political leaders have responded to the economic threat, the measures announced across the continent have mainly been to support businesses. The crisis is broader and deeper than the current response.

Support for weaker governments

The ECB already reacted to COVID-19 by announcing measures to support the banking system, which is important to guarantee the continuity of the European financial system and to ensure financially weaker European governments do not have to confront a failing banking system as well.

Although government-subsidised reduced working hours and sick pay are a solution for many businesses and workers, crucially they are not for those working on temporary contracts or the self-employed. They need direct income support.

This might come down to instituting something that looks like a universal basic income (UBI), and ensuring money keeps flowing through the economy as much as possible to help avoid a cascade of defaults and significant long-term damage.

But while this is likely to be the most effective remedy to limit the medium-term impact on the economy, it is particularly costly. Just as an indication, total compensation of employees was on average around €470bn per month in the eurozone last year.

Attempting to target payments using existing welfare payment channels would reduce costs, but is difficult to implement and runs the risk of many households and businesses in need missing out.

The increase in spending and lost revenue associated with these support measures dwarf the fiscal response to the 2008-09 financial crisis. The eurozone economy could contract by close to 10% this year and budget deficits are likely be in double digits throughout the bloc.

The European Commission has already stated member states are free to spend whatever is necessary to combat the crisis, which is not surprising given the Stability and Growth Pact - which includes the fiscal rules - allows for such eventualities.

Several eurozone countries do probably have the fiscal space to deal with this. Countries such as Germany and the Netherlands have run several years of balanced budgets recently and significantly decreased their debt levels. For countries such as Italy, and even France, it is a different story and the combination of much higher spending and a collapse in tax revenue is more likely to lead to questions in the market over the sustainability of their debt levels. In order to avoid this, the Covid-19 response must be financed collectively.

The Eurogroup could decide to use the European Stability Mechanism (ESM) to provide states with the funds, while suitably ditching the political conditionality that came with previous bailout. But the ESM currently has €410bn in remaining lending capacity, which is unlikely to be enough and difficult to rapidly increase.

So this leaves the ECB to pick up the tab of national governments’ increase in spending, as the only institution with effectively unlimited monetary firepower. But a collective EU response is complicated by the common currency, and particularly by the role of the ECB.

The ECB can’t just do whatever it likes and is limited more than other major central banks in its room for manoeuvre. It does have a programme to buy government bonds but this relies on countries agreeing to a rescue programme within the context of the ESM, with all the resulting political difficulties.

There are two main ways that the ECB could finance the response to the crisis. First, it could buy up more or all bonds issued by the member states. A first step in this direction would be to scrap the limits on the bonds it can buy. Through self-imposed rules, the ECB can only buy up to a third of every country’s outstanding public debt. There are good reasons for this in normal times, but these are not normal times. With the political blessing of the European Council, the Eurosystem of central banks could then start buying bonds issued by governments to finance whatever expenditure they deem necessary to combat the crisis.

Secondly, essentially give governments an overdraft with the ECB or the national central banks. Although a central bank lending directly to governments is outlawed by the European treaties, the COVID-19 crisis means these rules should be temporarily suspended by the European Council.

Back in 2012, the then president of the ECB, Mario Draghi, proclaimed the ECB would do whatever it takes, within its mandate, to save the euro, which was widely seen as a crucial step towards solving the eurozone crisis. The time is now right for eurozone political leaders to explicitly tell the ECB that together they can do whatever it takes to save the eurozone economy through direct support for businesses and households.

The coronavirus pandemic, first detected in Wuhan, China less than three months ago, continues to expand with most countries affected facing unprecedented social and economic impacts. At this juncture, what do we know – and what do we not know – about the COVID-19 pandemic? 

Join us for the first in a weekly series of interactive webinars on the coronavirus with Professor David Heymann helping us to understand the facts and make sense of the latest developments during the global crisis. Why are governments enacting different plans? Is elimination possible without a vaccine? For how long do restrictions need to last? And what happens next?

Professor Heymann is a world-leading authority on infectious disease outbreaks. He led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus. 
 

In the past few weeks, European Union member states have implemented measures such as social distancing, school and border closures and the cancellation of major cultural and sporting events in an effort to curb the spread of COVID-19. Such measures are expected to have significant economic and political consequences, threatening near or total collapse of certain sectors. Moreover, the management of the health and economic crises within the EU architecture has exposed tensions and impasses in the extent to which the EU is willing to collaborate to mitigate pressures on fellow member states.

The panellists will examine the European Union's response to a series of cascading crises and the likely impact of the pandemic on individual member states. Can the EU prevent an economic hit from developing into a financial crisis? Are the steps taken by the European Central Bank to protect the euro enough? And are member states expected to manage the crisis as best they can or will there be a united effort to mitigate some of the damage caused?  

This event is part of a fortnightly series of 'Business in Focus' webinars reflecting on the impact of COVID-19 on areas of particular professional interest for our corporate members.

Not a corporate member? Find out more.

 

As the COVID-19 pandemic presents the greatest threat to human health in over a century, people turn to their states to resolve the crisis and protect their health, their livelihoods and their future well-being.

How leaders perform and respond to the pandemic is likely to define their premiership - and this therefore presents a tremendous opportunity to write themselves into the history books as a great leader, rescuing their people from a crisis. Just as Winston Churchill did in World War Two.

Following Churchill’s advice to “never let a good crisis go to waste”, if leaders take decisive action now, they may emerge from the COVID-19 crisis as a national hero. What leaders must do quickly is to mitigate the crisis in a way which has a demonstrable impact on people’s lives.

Given the massive shock caused by the pandemic to economies across the world, it is not surprising that heads of state and treasury ministers have implemented enormous economic stimulus packages to protect businesses and jobs – this was to be expected and has been welcome.

National heroes can be made

But, in essence, this remains primarily a health crisis. And one obvious area for leaders to act rapidly is strengthening their nation’s health system to stop the spread of the virus and successfully treat those who have fallen sick. It is perhaps here that leaders have the most to gain - or lose - and where national heroes can be made.

This is particularly the case in countries with weak and inequitable health systems, where the poor and vulnerable often fail to access the services they need. One major practical action that leaders can implement immediately is to launch truly universal, publicly-financed health reforms to cover their entire population – not only for COVID-19 services but for all services.

This would cost around 1-2% GDP in the short-term but is perfectly affordable in the current economic climate, given some of the massive fiscal stimuluses already being planned (for example, the UK is spending 15% GDP to tackle COVID-19).

Within one to two years, this financing would enable governments to implement radical supply side reforms including scaling up health workforces, increasing the supply of essential medicines, diagnostics and vaccines and building new infrastructure. It would also enable them to remove health service user fees which currently exclude hundreds of millions of people worldwide from essential healthcare. Worldwide these policies have proven to be effective, efficient, equitable and extremely popular.

And there is plenty of precedent for such a move. Universal health reform is exactly what political leaders did in the UK, France and Japan as post-conflict states emerging from World War Two. It is also the policy President Kagame launched in the aftermath of the genocide in Rwanda, as did Prime Minister Thaksin in Thailand after the Asian Financial Crisis in 2002, and the Chinese leadership did following the SARS crisis, also in 2003.

In China’s case, reform involved re-socialising the health financing system using around 2% GDP in tax financing to increase health insurance coverage from a low level of one-third right up to 96% of the population.

All these universal health coverage (UHC) reforms delivered massive health and economic benefits to the people - just what is needed now to tackle COVID-19 - and tremendous political benefits to the leaders that implemented them.

When considering the current COVID-19 crisis, this strategy would be particularly relevant for countries underperforming on health coverage and whose health systems are more likely to be overwhelmed if flooded with a surge of patients, such as India, Pakistan, Bangladesh, Myanmar, Indonesia and most of sub-Saharan Africa, where many governments spend less than 1% of their GDP on health and most people have to buy services over the counter.

But also the two OECD countries without a universal health system – the United States and Ireland – are seeing the threat of COVID-19 already fuelling the debate about the need to create national, publicly-financed health system. And the presidents of South Africa, Kenya and Indonesia have already committed their governments to eventually reach full population coverage anyway, and so may use this crisis to accelerate their own universal reforms. 

Although difficult to predict which leaders are likely to grasp the opportunity, if some of these countries now fast-track nationwide UHC, at least something good will be coming from the crisis, something which will benefit their people forever. And ensuring everyone accesses the services they need, including public health and preventive services, also provides the best protection against any future outbreaks becoming epidemics.

Every night large audiences are tuning in to press briefings fronted by their heads of state hungry for the latest update on the crisis and to get reassurance that their government’s strategy will bring the salvation they desperately need. To truly improve health security for people across the world, becoming UHC heroes could be the best strategic decision political leaders ever make.

The coronavirus pandemic, first detected in Wuhan, China over three months ago, continues to expand with most countries affected facing unprecedented social and economic impacts. At this moment, what do we know – and what do we not know – about the COVID-19 pandemic? 

Join us for the second in a series of interactive webinars on the coronavirus with Professor David Heymann helping us to understand the facts and make sense of the latest developments during the global crisis. This week we will be focusing on the issue of testing. To what extent has scientific understanding of the COVID-19 virus developed in the last week? How can the UK increase its testing capacity? What is the role of global cooperation in this pandemic and what does that really mean? 

Professor Heymann is a world-leading authority on infectious disease outbreaks. He led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus. 

This event is open to Chatham House Members only. Not a member? Find out more.

The coronavirus pandemic, first detected in Wuhan, China, continues to expand with most countries affected facing unprecedented social and economic impacts. At this moment, what do we know – and what do we not know – about the COVID-19 pandemic? 

The third in a series of interactive webinars on the coronavirus with Professor David Heymann helping us to understand the facts and make sense of the latest developments during the global crisis. This week we will be focusing on the role of international collaboration, after briefly discussing key current debates, including the role of masks for the general population.

Professor Heymann is a world-leading authority on infectious disease outbreaks. He led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus. 

As tentative evidence emerges that Italy and Spain may have reached - or are close to - the peak of the curve, this could demonstrate that not only can Asian countries get to grips with COVID-19, but so can western democracies. And, if so, this offers a path for the rest of us.

The last few weeks does demonstrate there is a role for governments to intervene in society, whether it be health, finance or any walk of life, as they have had to implement social distancing. Some have been forced, and the interventions are almost definitely only temporary, but perhaps some others may be less so.

Governments of all kinds now realise there is a connection between our health system quality and our economic capability. On an index of global economic sustainability that I presided over creating when I was at Goldman Sachs, the top ten best performing countries on growth environment scores includes eight of the best performing ten countries - so far- in handling the crisis in terms of deaths relative to their population.

Health system quality

The top three on the index (last calculated in 2014) were Singapore, Hong Kong and South Korea, all of which are exemplary to the rest of us on how to deal with this mess. This suggests that once we are through this crisis, a number of larger populated countries - and their international advisors such as the IMF - might treat the quality of countries' health systems just as importantly as many of the other more standard indicators in assessing ability to deal with shocks.

Policymakers have also been given a rather stark warning about other looming health disasters, especially antimicrobial resistance, of which antibiotic resistance lies at the heart. An independent review I chaired recommended 29 interventions, requiring $42 bn worth of investment, essentially peanuts compared to the costs of no solution, and the current economic collapse from COVID-19. It would seem highly likely to me that policymakers are going to treat this more seriously now.

As a clear consequence of the - hopefully, temporary - global economic collapse, our environment suddenly seems to be cleaner and fresher and, in this regard, we have bought some time in the battle against climate change. Surely governments are going to be able to have a bigger influence on fossil fuel extractors and intense users as we emerge from this crisis?

For any industries requiring government support, the government can make it clear this is dependent on certain criteria. And surely the days of excessive use of share buy backs and extreme maximisation of profit at the expense of other goals, are over?

It seems to me an era of 'optimisation' of a number of business goals is likely to be the mantra, including profits but other things too such as national equality especially as it relates to income. Here in the UK, the government has offered its strongest fiscal support to the lower end of the income earning range group and, in a single swoop, has presided over its most dramatic step towards narrowing income inequality for a long time.

This comes on top of a period of strong initiatives to support higher levels of minimum earnings, meaning we will emerge later in 2020, into 2021, and beyond, with lower levels of income inequality.

The geographic issue of rural versus urban is also key. COVID-19 has spread more easily in more tightly packed cities such as London, New York and many others. More geographically remote places, by definition, are better protected. Perhaps now there will be some more thought given by policymakers to the quality and purpose of life outside our big metropolitan areas.

Lastly, will China emerge from this crisis by offering a mammoth genuine gesture to the rest of the world, and come up, with, unlike, in 2008, a fiscal stimulus to its own consumers, that is geared towards importing a lot of things from the rest of the world? Now that would be good way of bringing the world back together again.

This is a version of an article originally published in The Article

Panellists discuss the significance of investing in mental health and the return on the individual, the economy and society. 

Although the economic and societal benefits of investing in health are increasingly recognized, less than two per cent of national health budgets globally are spent on mental health, despite the enormous impact it has on citizens and countries around the world. 

With the global health emergency of COVID-19 accelerating conversations around mental wellness and productivity, governments around the world are under increasing pressure to respond to the immediate challenges of ensuring both physical and mental health. 

Given that mental illness typically rises in times of economic recession and health crises, how are individuals, businesses and societies thinking about this issue? How can governments ensure mental health is integrated in global health coverage? And what role does technology play in mental health provision?

This event was run in partnership with United for Global Mental Health, within the framework of the Speak Your Mind (SYM) nationally led and globally united campaign that calls on leaders to provide quality mental health for all. 

UnitedGMH aims to unite global efforts on mental health and provides advocacy, campaigning and financing support to global institutions, businesses, communities and individual change-makers seeking greater action on global mental health. 

The coronavirus pandemic, first detected in Wuhan, China, continues to expand with most countries affected facing unprecedented social and economic impacts. At this moment, what do we know – and what do we not know – about the COVID-19 pandemic? 

Join us for the fourth in a weekly series of interactive webinars on the coronavirus with Professor David Heymann helping us to understand the facts and make sense of the latest developments during the global crisis. The focus this week is on strategies for transitioning out of 'lockdown'.

Professor Heymann is a world-leading authority on infectious disease outbreaks. He led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus. 

The world is currently witnessing how vulnerable existing production and consumption systems are, with the current global health crisis harshly exposing the magnitude of the risks associated with the global economy in its current form, grounded, as it is, in a linear system that uses a ‘take–make–throw away’ approach.

These ‘linear risks’ associated with the existing global supply chain system are extremely high for national economies overly dependent on natural resource extraction and exports of commodities like minerals and metals. Equally vulnerable are countries with large manufacturing sectors of ready-made garments and non-repairable consumer goods for western markets. Furthermore, workers and communities working in these sectors are vulnerable to these changes as a result of disruptive technologies and reduced demand.

In a recently published Chatham House research paper, ‘Promoting a Just Transition to an Inclusive Circular Economy’, we highlight why a circular economy approach presents the world with a solution to old and new global risks – from marine plastic pollution to climate change and resource scarcity.

Taking the long view

So far, action to transition to a circular economy has been slow compared to the current crisis which has mobilized rapid global action. For proponents of transitioning to a circular economy, this requires taking the long view. The pandemic has shown us that global emergencies can fast-forward processes that otherwise might take years, even decades, to play out or reverse achievements which have taken years to accomplish.

In this vein, there are three striking points of convergence between the COVID-19 pandemic and the need to transition to an inclusive circular economy.

Firstly, the current crisis is a stark reminder that the circular economy is not only necessary to ensure long-term resource security but also short-term supplies of important materials. In many cities across the US, the UK and Europe, councils have suspended recycling to focus on essential waste collection services. The UK Recycling Association, for example, has warned about carboard shortages due to disrupted recycling operations with possible shortages for food and medicine packaging on the horizon.

Similarly, in China, most recycling sites were shut during the country’s lockdown presenting implications for global recycling markets with additional concerns that there will be a fibre shortage across Europe and possibly around the world.

Furthermore, worldwide COVID-19 lockdowns are resulting in a resurgence in the use of single-use packaging creating a new wave of plastic waste especially from food deliveries – already seen in China – with illegal waste fly-tipping dramatically increasing in the UK since the lockdown.

In this vein, concerns over the current global health crisis is reversing previous positive trends where many cities had established recycling schemes and companies and consumers had switched to reusable alternatives.

Secondly, the need to improve the working conditions of the people working in the informal circular economy, such as waste pickers and recyclers, is imperative. Many waste materials and recyclables that are being handled and collected may be contaminated as a result of being mixed with medical waste.

Now, more than ever, key workers in waste management, collection and recycling require personal protective equipment and social protection to ensure their safety as well as the continuation of essential waste collection so as not to increase the potential for new risks associated with additional infectious diseases.

In India, almost 450 million workers including construction workers, street vendors and landless agricultural labourers, work in the informal sector. In the current climate, the poorest who are unable to work pose a great risk to the Indian economy which could find itself having to shut down.

Moreover, many informal workers live in make-shift settlements areas such as Asia’s largest slum, Dharavi in Mumbai, where health authorities are now facing serious challenges to contain the spread of the disease. Lack of access to handwashing and sanitation facilities, however, further increase these risks but circular, decentralized solutions could make important contributions to sustainable sanitation, health and improved community resilience.

Thirdly, it is anticipated that in the long term several global supply chains will be radically changed as a result of transformed demand patterns and the increase in circular practices such as urban mining for the recovery and recycling of metals or the reuse and recycling of textile fibres and localized additive manufacturing (e.g. 3D printing).

Many of these supply chains and trade flows have now been already severely disrupted due to the COVID-19 pandemic. For example, the global garment industry has been particularly hard-hit due to the closure of outlets amid falling demand for apparel.

It is important to note, workers at the bottom of these garment supply chains are among the most vulnerable and most affected by the crisis as global fashion brands, for example, have been cancelling orders – in the order of $6 billion in the case of Bangladesh alone. Only after intense negotiations are some brands assuming financial responsibility in the form of compensation wage funds to help suppliers in Myanmar, Cambodia and Bangladesh to pay workers during the ongoing crisis.

In addition, the current pandemic is damaging demand for raw materials thereby affecting mining countries. Demand for Africa’s commodities in China, for example, has declined significantly, with the impact on African economies expected to be serious, with 15 per cent of the world’s copper and 20 per cent of the world’s zinc mines currently going offline. 

A further threat is expected to come from falling commodity prices as a result of the curtailment of manufacturing activity in China particularly for crude oil, copper, iron ore and other industrial commodities which, in these cases, will have direct impacts on the Australian and Canadian mining sectors.

This is all being compounded by an associated decline in consumer demand worldwide. For example, many South African mining companies – leading producers of metals and minerals – have started closing their mining operations following the government’s announcement of a lockdown in order to prevent the transmission of the virus among miners who often work in confined spaces and in close proximity with one another. As workers are laid off due to COVID-19, there are indications that the mining industry will see fast-tracking towards automated mining operations. 

All of these linear risks that have been exposed through the COVID-19 pandemic reinforce the need for a just transition to a circular economy. But while the reduction in the consumption of resources is necessary to achieve sustainability, the social impacts on low- and middle- income countries and their workers requires international support mechanisms.

In addition, the current situation also highlights the need to find a new approach to globalized retail chains and a balance between local and global trade based on international cooperation across global value chains rather than implementation of trade protectionist measures.

In this vein, all of the recovery plans from the global COVID-19 pandemic need to be aligned with the principles of an inclusive circular economy in order to ensure both short-term and long-term resilience and preparedness for future challenges and disruptions.  

The fifth in a weekly series of interactive webinars on the coronavirus with Professor David Heymann helping us to understand the facts and make sense of the latest developments during the global crisis. 

The coronavirus pandemic continues expand and claim lives as it takes hold across the world. As countries grapple with how best to tackle the virus and the reverberations the pandemic is sending through their societies and economies, understanding of how the virus is behaving and what measures to combat it are working continues to advance. 

Professor Heymann is a world-leading authority on infectious disease outbreaks. He led the World Health Organization’s response to SARS and has been advising the organization on its response to the coronavirus. 

As the coronavirus pandemic continues to expand and claim lives across the globe, the OECD has warned that the economic shock it has caused has already surpassed that of the financial crisis of 2007/8.

With strict social distancing measures imposing an enormous cost on world economies, governments are faced with the difficult task of determining how best to design policy response with a view of saving lives and minimizing economic loss alike. 

Against this backdrop, former UK chancellor of the exchequer Philip Hammond considers the economic implications for a world that has practically ground to a halt and provide his reflections on the future of the global economy.

With the IMF forecasting a 6.1% fall in advanced economy GDP in 2020 and world trade expected to contract by 11%, there is intense focus on the question of how and when to re-open economies currently in lockdown.

But no ‘opening up’ plan has a chance of succeeding unless it commands the confidence of all the main actors in the economy – employees, consumers, firms, investors and local authorities.

Without public confidence, these groups may follow official guidance only sporadically; consumers will preserve cash rather than spend it on goods and services; employees will delay returning to work wherever possible; businesses will face worsening bottlenecks as some parts of the economy open up while key suppliers remain closed; and firms will continue to delay many discretionary investment and hiring decisions.

Achieving public confidence

Taken together, these behaviours would substantially reduce the chances of a strong economic bounce-back even in the absence of a widespread second wave of infections. Five key steps are needed to achieve a high degree of public confidence in any reopening plan.

First, enough progress must be made in suppressing the virus and in building public health capacity so the public can be confident any new outbreak will be contained without reverting to another full-scale lockdown. Moreover, the general public needs to feel that the treatment capacity of the health system is at a level where the risk to life if someone does fall ill with the virus is at an acceptably low level.

Achieving this requires the government to demonstrate the necessary capabilities - testing, contact tracing, quarantine facilities, supplies of face masks and other forms of PPE (personal protective equipment) - are actually in place and can be sustained, rather than relying on future commitments. It also needs to be clear on the role to be played going forward by handwashing and other personal hygiene measures.

Second, the authorities need to set out clear priorities on which parts of the economy are to open first and why. This needs to take account of both supply side and demand side factors, such as the importance of a particular sector to delivering essential supplies, a sector’s ability to put in place effective protocols to protect its employees and customers, and its importance to the functioning of other parts of the economy. There is little point in opening a car assembly plant unless its SME suppliers are able to deliver the required parts.

Detailed planning of the phasing of specific relaxation measures is essential, as is close cooperation between business and the authorities. The government also needs to establish a centralised coordination function capable of dealing quickly with any unexpected supply chain glitches. And it must pay close attention to feedback from health experts on how the process of re-opening the economy sector-by-sector is affecting the rate of infection.  

Third, the government needs to state how the current financial and economic support measures for the economy will evolve as the re-opening process continues. It is critical to avoid removing support measures too soon, and some key measures may have to continue to operate even as firms restart their operations. It is important to show how - over time - the measures will evolve from a ‘life support’ system for businesses and individuals into a more conventional economic stimulus.

This transition strategy could initially be signalled through broad principles, but the government needs to follow through quickly by detailing specific measures. The transition strategy must target sectors where most damage has been done, including the SME sector in general and specific areas such as transport, leisure and retail. It needs to factor in the hard truth that some businesses will be no longer be viable after the crisis and set out how the government is going to support employees and entrepreneurs who suffer as a result.

The government must also explain how it intends to learn the lessons and capture the upsides from the crisis by building a more resilient economy over the longer term. Most importantly, it has to demonstrate continued commitment to tackling climate change – which is at least as big a threat to mankind’s future as pandemics.

Fourth, the authorities should explain how they plan to manage controls on movement of people across borders to minimise the risk of new infection outbreaks, but also to help sustain the opening-up measures. This needs to take account of the fact that different countries are at different stages in the progress of the pandemic and may have different strategies and trade-offs on the risks they are willing to take as they open up.

As a minimum, an effective border plan requires close cooperation with near neighbours as these are likely to be the most important economic counterparts for many countries. But ideally each country’s plan should be part of a wider global opening-up strategy coordinated by the G20. In the absence of a reliable antibody test, border control measures will have to rely on a combination of imperfect testing, quarantine, and new, shared data requirements for incoming and departing passengers.  

Fifth, the authorities must communicate the steps effectively to the public, in a manner that shows not only that this is a well thought-through plan, but also does not hide the extent of the uncertainties, or the likelihood that rapid modifications may be needed as the plan is implemented. In designing the communications, the authorities should develop specific measures to enable the public to track progress.

Such measures are vital to sustaining business, consumer and employee confidence. While some smaller advanced economies appear close to completing these steps, for many others there is still a long way to go. Waiting until they are achieved means higher economic costs in the short-term. But, in the long-term, they will deliver real net benefits.

Authorities are more likely to sustain these measures because key economic actors will actually follow the guidance given. Also, by instilling confidence, the plan will bring forward the consumer and business decision-making crucial to a strong recovery. In contrast, moving ahead without proper preparation risks turning an already severe economic recession into something much worse.