Lockdowns are being eased in many countries, but from different starting points in terms of prevalence of the virus, and with different near-term trade-offs between protecting life and easing constraints on economic activity.

The pressure to ease is understandable. The IMF estimates $10tn has been spent so far on official support measures worldwide, and forecasts global GDP will contract by an unprecedented 4.9% in 2020.

However, the WHO director general, Dr Tedros Adhanom Ghebreyesus, recently insisted that there is an ‘urgent responsibility to do everything we can with the tools we have now to suppress transmission and save lives’, even as research into vaccines and therapeutics continues.

Focusing on suppressing and eliminating the virus as quickly as possible is not just the best strategy for saving life, it also makes most sense in terms of minimising the long-term economic damage from the pandemic.

The alternatives remain uncertain

Neither a vaccine nor improved treatment are currently sufficiently certain to be the focal point for an economic recovery strategy. Despite optimism about vaccine development, there is no certainty of a decisive outcome by a given date. And, even if a vaccine proved effective, manufacturing and distributing it to 8bn people will present an unprecedented set of logistical and economic challenges and take many months, if not years.

In the meantime, although substantial progress has been made in reducing loss of life among those made seriously ill by the virus - and who have access to advanced medical facilities - it remains highly dangerous for a significant proportion of the population - around 20% in advanced economies.

An alternative containment strategy based on gradually reducing the prevalence of the virus in the population by maintaining an “R” number (replication coefficient) just below one will be both economically costly and highly risky when compared with a decisive push to eliminate the virus quickly.

With an R number just below one it is true the virus may eventually disappear, but only over a lengthy period, during which economically damaging social distancing measures will have to stay in place, dragging out the impact on both demand and supply.

Wage support measures to limit ‘economic scarring’ will have to be maintained, and kickstarting the economy with a conventional fiscal stimulus will be difficult, if not impossible, especially when the ability - or willingness - of consumers to spend is still heavily constrained either by social distancing measures or a lack of confidence.

There is also a major risk when the R number is close to one that the virus could suddenly take off again, leading to a complete failure of the strategy.

Benefits of suppress and eliminate

A successful policy focused on suppressing and eliminating the virus offers much better prospects. First, the government can then protect the vast bulk of the economy within its territory, even if it means continuing travel restrictions for some time vis-a-vis countries that are less committed to or less successful in eliminating the virus.

Some sectors - particularly long-haul air transport - will be hard hit, but other critical high value or employment intensive sectors - such as domestic hospitality, leisure and the arts - will be able to make a substantial recovery. To put it bluntly, the authorities may have to hold back some sectors to save others. Such a strategy would also ensure an economy can participate sustainably in free travel zones with other countries.

Second, a drive to suppress and eliminate the virus in the shortest possible timeframe, and then maintain that status, will help authorities communicate clearly to the public the overarching framework guiding the application of social distancing measures, and the nature of the ‘new normal’ economy that can be expected to emerge over the medium to long-term.

Achieving such clarity will enhance the public’s trust in the government’s strategy and hence responsiveness to government instructions. It will also minimise unnecessary and costly adaptations by business and increase its ability to target new opportunities arising from the genuine long-term changes brought about by the crisis.

In addition, a suppress and eliminate strategy is the only sure way to address the disproportionate impact of the virus on ethnic minorities and the poor, and to put an end to the isolation of the millions who currently have to shield themselves.

We know that suppressing the virus almost completely within a given territory is possible because some countries have already done it - notably New Zealand, South Korea, and Taiwan. Some which started with a serious epidemic, such as China, Spain and Italy, have also managed to reach a point where almost complete elimination within their territory can be envisaged.

Renewed outbreaks are likely to happen, particularly while the virus remains in active circulation globally. But this does not invalidate the underlying suppress and eliminate strategy.

Key policies to suppress and eliminate the virus include: a rapid and decisive national lockdown to reduce the disease to levels low enough for test, trace and quarantine systems to identify and suppress local outbreaks; social distancing measures for a limited period or in a specific locality to limit spread while, as far as possible, minimising economic impact; and effective quarantine and track systems applied at borders to prevent the disease from being re-introduced by non-essential travellers and returning nationals.

The precise form of these policies is evolving rapidly as we learn more about the virus. For example, if there is a need today to stop a rapidly escalating epidemic in a given territory, it won’t necessarily mean adopting exactly the same package of lock down measures across the board as were applied three months ago. Several activities had to cease then simply because the virus was spreading so fast there was no time to put in place effective mitigation measures. This does not have to be repeated.

In addition, the benefits of the widespread use of face masks are now much better understood. As is the value of deploying a battery of measures, each one only partially effective on its own but, in combination, with a decisive impact. Financial support measures may need to be adjusted or extended to underpin local lockdowns and, at any given point, the authorities will need to work within an overall budget for relaxation measures and prioritise - getting pupils back in school may mean holding back easing of restrictions elsewhere.

Choosing an effective strategy inevitably means making tough choices. Delaying short-term recovery measures, even by a matter of weeks in whole economies or specific localities, can make a decisive difference to delivering a long-term sustainable economic outcome. The authorities may also be forced to hold back some economic sectors, possibly even leading to permanent damage, as the price of a general recovery. But if we are not ready to make these choices, the economy may become permanently stuck in a halfway house between lockdown and recovery.

Even before the COVID-19 pandemic, it was clear that the world is undergoing a transition away from fossil fuels and carbon-intensive sectors, towards renewable energy and clean growth. The collapse of oil demand and prices have simply compounded the challenges that oil and gas producers already faced.

What happens next will have significant implications for Norway, as one of the world’s largest exporters of both energy and capital, and for the UK, as it plans its recovery and looks ahead to its hosting of the next major climate change summit in 2021 - COP26.

While the speed and scale of the transition has always been uncertain and contested, an accelerated transition with deep implications for future oil and gas demand looks plausible.

There has long been a debate over when global demand will peak, but what happens after demand has peaked is perhaps the more critical question. Now there is the additional uncertainty of how this post-peak demand might be affected by an oncoming global recession and potentially by the greening of recovery measures implemented in response to it. Will there be an extended plateau, a gentle decline or a sudden collapse?

The post-peak trend will impact oil producers and exporters to varying degrees, in terms of their vulnerability to reduced volumes and lower prices, and their ability to compete in a shrinking market. There is also growing scepticism over whether natural gas can act as a bridge between coal-fired power and renewables, as increasingly, renewables directly replace coal.  There is also significant uncertainty over extent to which hydrogen, either produced from fossil fuels or renewable energy, will play a significant role in a decarbonizing energy sector.

Even before the pandemic, there was growing public and political pressure in most EU member states for more ambitious action on climate change. More challenging climate targets now look certain as a growing number of governments and companies commit to becoming carbon-neutral by ever-earlier dates.

While market developments, such as the rate of change and the costs of technologies such as renewable energy and electric vehicles will heavily influence their deployment rates, policy interventions and large-scale investment in core infrastructure are still crucial to their scaling up. We are now seeing the EU refocus its Green Deal in support of post-COVID recovery, and scale its support for transition in coal-dependent and carbon-intensive regions with its €100bn Just Transition Mechanism.  

These developments have significant implications for fossil fuel producers and energy consumers both inside and outside the EU. It will particularly affect Norway, not only as a significant supplier of energy to the EU, but as a member of the European Economic Area, with likely pressure to adopt similarly binding domestic carbon reduction legislation. Similarly, as the UK forges new post-Brexit trading and regulatory relationships, it will need to align with European policies for efficiency.

As the host of the critical COP26 UN Climate Change Summit in Glasgow next year, the UK will also need to at least match the EU in terms of its ambition on national emissions reductions, and in placing decarbonization and sustainability at the heart of COVID-19 recovery measures. However, unfortunately, the early indications are that 'Project Speed' will focus on traditional infrastructure projects are less than promising.    

The UK and Norway face similar challenges, as oil and gas producers that recognize the importance of climate change, and will rightly face scrutiny where they reinvest in their oil and gas sectors. They are both outside, yet highly dependent on developments within the EU. However, they are also both, somewhat surprisingly, world leaders in different aspects of decarbonization, such as off-shore wind or electric vehicle deployment, in part due their offshore capabilities and advanced manufacturing capabilities. This presents an opportunity for both countries and their industries to place an accelerated energy transition at the heart of their economic recovery and their relationship with the EU.

There will of course be different opinions on how to do this. A new Chatham House paper – Expert Perspectives on Norway’s Energy Future – explores these issues in the Norwegian context, and draws upon the views of 15 international experts on energy transition and climate change, each interviewed in depth. While unsurprisingly there is little consensus, these views provide valuable background from which to consider the future of future of energy for Norway, and for its partners including the UK and the EU.

With all EU economies still reeling from COVID-19, the ongoing heated deliberations on the bloc’s next budget, which will determine the amount of money matching its priorities for the next seven years, have taken on an urgency rarely felt in Brussels.

Relying in part on an unprecedentedly large volume of jointly issued debt, the European Commission’s plan for a €750 billion coronavirus recovery instrument is embedded within a revamped proposal for the EU’s long-term budget, of €1.1 trillion for the 2021-27 period. 

Now the ball is in the member states’ court. All seem to agree that getting the EU budget right is crucial to fostering an economic recovery and ensuring the Union is on the right track towards its long-term pre-COVID objectives, from increasing its strategic autonomy to reaching climate neutrality by 2050. However, stark differences persist as to what that means in practice.

Most of the core divisions predate the pandemic’s outbreak. In a special European Council meeting in February, leaders failed to find common ground on the Union’s first post-Brexit budget. Net contributor countries, such as Austria, Denmark, Sweden and the Netherlands — the so-called ‘Frugal Four’— refused to agree to higher overall spending and instead advocated for cuts in the Common Agricultural Policy or cohesion funds, meeting the resistance of states like France and Portugal.

These early divisions foreshadowed the risk of a budget compromise that would leave little space for new policy priorities. The COVID-induced economic crisis has made a traditionally fraught political process even more difficult, putting the squeeze on what were previously priority areas of funding.

The Frugal Four agree on the need for the coronavirus recovery plan but vehemently oppose the volume of grants or the issuance of too much common debt in the proposed instrument, reflecting the unpopularity of these proposals with their domestic audiences. Hungary has also threatened to derail progress on the EU’s rescue plan if rule of law criteria are weaved into mechanisms for the allocation of EU funding.

As European leaders reconvene at the 17-18 July Council meeting, EU Council President Michel proposed a revised 'negotiating box' in preparation for the discussions. The document, which tries to bridge these intra-bloc divisions, bolts the demands for short-term recovery onto the EU’s longer-term ambitions. For instance, it sets an increased target of 30 per cent of funding to go toward climate-related projects, which is necessary for the Union’s green transformation. It also retains the link between the rule of law and EU funding — despite Budapest’s opposition — which is critical for the bloc’s internal accountability and transparency, and external credibility. Furthermore, it proposes a set of new mechanisms through which the EU can sustainably raise its own revenue, including a plastics levy as well as more controversial carbon border tax and digital levy.

Yet in several other critical ways, Michel’s proposals fall short. This is particularly true for some of the more ‘geopolitical’ goals of the Union, as previously expressed by Commission president Ursula von der Leyen, or the repeated calls by the Union’s high representative that the EU should learn to use the language of power.

For all the rhetoric around the EU’s need to boost its ability to act more autonomously in the field of security and defence, reductions in important thematic programmes in this domain could result in a critical loss of momentum, if confirmed. For instance, in Michel’s proposals, flagship defence initiatives such as the European defence fund and the military mobility plan are facing cuts of about 39 per cent and 74 per cent respectively (to some €7 billion for the former and €1.5 billion for the latter) compared with the initial Commission proposal of 2018.

Moreover, the tragic developments at the Greece-Turkey border in the beginning of the year might have brought migration back to the forefront of the EU’s attention, but the overall funding for migration and border management is also significantly lower compared to initial proposals. This serves as another example of a discrepancy between the figures on the table today and those that the EU commission had previously regarded as necessary to address the challenges the bloc faces.

Similarly, under the Council president’s latest proposal, the combined funding allocated for the EU’s external action (under the ‘Neighbourhood and the World’ heading) is lower than the figures in the Commission’s May announcements – from €118.2 billion to €113.9 billion overall. This represents an increase compared to the previous EU budget, but it is not in line with the elevated ambitions recognized by the Commission in May, which have only been made more compelling by the pandemic.

Brokering a deal in EU budget negotiations has always been a brutal affair, requiring sacrifices and compromise under the pressure of a ticking clock. 2020 was never likely to be an exception to this rule; but the pandemic has complicated the politics and raised the stakes.

The risk is that the budget negotiations lead to a compromise which, while delivering a historic coronavirus package, does not adequately support some of the key elements of the Union’s long-term agenda, especially its international ambitions.

For decades, the mantra of ‘economic diversification’ characterized attempts to reverse Nigeria’s dependence on oil with little real progress. Despite numerous reforms, international loans and restructuring programmes, 85 million Nigerians live in deteriorating conditions of poverty. The current coronavirus pandemic combined with mounting debt obligations and declining GDP gives new urgency to this issue.

The fall in international oil prices, which led government to slash its oil benchmark price from $57 to $30 a barrel and cut 20% of the capital budget, worsens these problems, but it is far from the only factor. Biomass, which drives household pollution and contributed to the death of 114,000 people in Nigeria in 2017, is the most dominant source of energy in Nigeria, amounting to more than 80% of the total energy mix, followed by fossil fuels (18%), and a negligible amount of renewable energy.

Although a diversified energy sector with a strong emphasis on renewables is known to reduce health and economic risks of combustion, there has been little emphasis on the role a diversified energy mix could play in ensuring sustainable development – even though the estimated potential of 427,000MW of solar power and photovoltaic generation means Nigeria has enormous renewable energy opportunities.

The global economy is also undergoing tectonic structural changes that will affect demand for Nigeria’s oil, leaving a fossil fuel-dependent economy more vulnerable. Improvements in global fuel efficiency, the ascent of electricity as a substitute for oil in the transport sector, and the falling prices of renewables and storage technologies all lead to a reduction in demand for fossil fuel products.

Creating structures for transition

This is not a ‘get out of oil’ prescription, and energy transition is complex. But it is inevitable. There are no universal strategies applicable to all countries; local contexts and political realities inform what is possible. Nigeria can take advantage of its abundant natural gas deposit as a ‘transition fuel’ to buy it time for putting the appropriate transition structures in place. The country has made progress in reducing the amount of gas flared, but much remains to be done for Nigeria to meet the 2030 global deadline to end flaring, after failing to meet its 2020 national target.

The first step to proper transition is to align Nigeria’s international obligations with its domestic policies and legislations - the distance between words and action must be bridged and the institutional capacity to implement raised. And, while they contain symbolic green gestures, the economic recovery and growth plan developed in response to the 2016 recession, and the post-COVID-19 economic sustainability plan, do not espouse green growth as a fundamental objective.

Nigeria must start looking inwards, investing its resources in designing and funding a green transition strategy. Its leadership role in floating Africa’s first Sovereign Green Bonds should be followed with non-debt funding options. Faced with a pandemic that has shattered the boundaries of what is politically possible, the Buhari government has overcome initial inertia to announce a halt in oil subsidy payments, although whether it will see through that policy is yet to be seen.

If it does, how it uses the savings will be significant. The money could provide support for Nigeria’s renewable sector to counteract the price disparity with fossil fuels and encourage rapid research and development. The Nigerian Ecological Fund — which is 3% of the Federation Account — should be reformed and expanded beyond its current scope of addressing ‘serious ecological problems’ to cover climate change with a strong emphasis on mitigation and resilience. That would increase Nigeria’s climate finance and minimize reliance on multilateral climate funds.

Beyond public investments in green infrastructure, the government can also incentivize the private sector to drive a green economy. As the largest purchaser of goods and services in the country, it can leverage purchasing power to green the procurement process. With the release of about $421 million to the Ministry of Works, the 2020 budgetary allocation for road projects has been fully disbursed to the Ministry, making procurement in the construction sector ripe for green reforms. The application of sustainable building techniques and materials could reduce Nigeria’s 17 million housing deficit and create more jobs.

But the task of greening the Nigerian economy is too important to be left to the federal government alone. It also requires mainstreaming climate change and sustainable development into the operations, governance, and budgets of government ministries, departments, and private entities at the sub-national and national levels.

There has been much focus on reviving agriculture, which is laudable, but agrarian practices have radically changed from the 1970s when the sector accounted for 57% of Nigeria’s GDP and generated 64.5% of export earnings. Beset by a loss of biodiversity, drought, and desertification, extreme weather events, rise in sea levels and variable rainfall, it is no longer smart for Nigeria to invest in this area without due regard for the significant climate risks. Any effort to revive agriculture and its export potential must be green-centred and integrate regenerative and climate-smart practices.

The right policy mix combined with aggressive funding can position the country as a renewable energy leader, both on the African continent and globally. And it will reap the benefits in technology development, foreign investment, decreased emissions, poverty reduction, and energy for the 80 million people currently without access to the national grid – all of which could ripple into millions of clean energy jobs in manufacturing and installation across the country.

The road to a green future must be paved with deliberate and consistent policies. Reforms hatched because oil prices have plunged should not be ditched when there is a boom. On the brink of a second recession in four years, Nigeria has learnt that the economic turmoil caused by COVID-19 is only the latest warning that pinning economic growth on a boom-bust market and the generosity of foreign donors and creditors is a failing strategy. There is another way and there is an opportunity for Nigeria to lead.

The virus of violence

According to the UN (para. 7) and the International Criminal Court (ICC, para. 279), conflict-related sexual violence (CRSV) is quite prevalent in hostilities-affected eastern Ukraine. Both sexes are subjected to sexualized torture, rape, forced nudity, prolonged detention in unsanitary conditions with members of the other sex and threats of sexual violence towards detainees or their relatives to force confessions. Men are castrated. Women additionally suffer from sexual slavery, enforced and survival prostitution, and other forms of sexual abuse. Women are more exposed to CRSV: in the hostilities-affected area, every third woman has experienced or witnessed CRSV as opposed to every fourth man.

COVID-19 has redirected funding priorities, affecting the availability of medical and psychological help for CRSV survivors worldwide. In Ukraine, the very reporting of such violence, stigmatized even before the pandemic, has been further undermined by the country-wide quarantine-induced restrictions on movement and the closure of checkpoints between the government-controlled and temporarily uncontrolled areas.

Addressing CRSV in Ukraine

The stigma of CRSV, the patchy domestic legislation, and the unpreparedness of the criminal justice system to deal with such cases prevent the authorities from properly helping those harmed in the ongoing Russia-Ukraine armed conflict.

CRSV is equally traumatizing yet different in nuance for men and women. Female victims often choose not to report the violence. Women avoid protracted proceedings likely to cause re-traumatization and the disclosure of their experience, which could be particularly excruciating in small communities where everybody knows everyone.

Men also struggle to provide their accounts of CRSV. Their suppressed pain and shame of genital mutilation and other CRSV result in sexual and other health disfunctions. Combined with the post-conflict mental health struggles, this has been shown to lead to increased domestic violence and even suicide.

The very investigation of CRSV in Ukraine is challenging. Certain tests and examinations need to be done straight after an assault, which in the context of detention and grey zones of hostilities is often impossible. Specialized medical and psychological support is lacking. Investigators and prosecutors are hardly trained to deal with CRSV to the point that they do not ask questions about it during the interviews. Burdened by trauma and stigma, survivors are inclined to report torture or inhuman treatment, but not the sexualized aspects thereof.

Seven years into the conflict, the state still has not criminalized the full spectrum of CRSV in its domestic law. Ukraine’s Criminal Code contains a brief list of the violations of the rules and customs of warfare in article 438. It prohibits the inhuman treatment of civilians and POWs but does not list any types of CRSV.

The article has an open-ended reference to Ukraine’s ratified international treaties, from which the responsibility for other armed conflict violations may be derived. For the more detailed norms on CRSV, Ukraine should refer at least to Geneva Convention IV protecting civilians and two additional protocols to the Geneva Conventions, to which it is a party.

However, the novelty of the war context for Ukrainian investigators, prosecutors and judges and their overcautiousness about the direct application of international conventions mean that in practice, observing the treaty or jurisprudential instruction on CRSV has been slow.

Use of the Criminal Code’s articles on sexual violence not related to an armed conflict is not viable. Such provisions fail to reflect the horrible variety and complexity of CRSV committed in hostilities. They also envisage lesser punishment than a war crime of sexual violence would entail. Cumulatively, this fails to account for the intention of a perpetrator, the gravity of the crime and the trauma of its victims.

The lack of public debate and state action on CRSV understates its magnitude. Ukraine should break its silence about CRSV in Donbas and make addressing this violence part of its actionable agenda - in law and in implementation.

Ukraine should incorporate all war crimes and crimes against humanity of CRSV in its domestic legislation; ensure a more gendered psychological and medical support for both sexes; establish rehabilitation and compensation programmes for CRSV survivors; create special victims and witness protection schemes; consider the different stigmatizing effects of CRSV on men and women in criminal proceedings and engage the professionals of the same sex as the victim; map CRSV in the bigger picture of other crimes in Donbas to better understand the motives of the perpetrators; submit more information about CRSV to the ICC and educate the public to destigmatize the CRSV survivors.

The drafters of Ukraine’s transitional justice roadmap should ensure that it highlights CRSV, adopts a gendered approach to it and endorses female participation as a crucial component of reconciliation and broader policymaking.

Embracive policymaking

Although ‘the discriminatory line almost inevitably hurts women,’ 'every gender discrimination is a two-edged sword’, Ruth Bader Ginsburg famously argued before the US Supreme Court. This could not be more relevant for Ukraine. The conflict - and lockdown-related violence has reverberated deeper within Ukrainian society, raising fundamental questions about the roles of both sexes and gender equality.

The failure to address CRSV and its different stigmas for both sexes mirrors the general lack of sustainable gender lenses in Ukraine's policymaking. It is no coincidence that a June 2020 proposal for gender parity in political parties coincided with another spike of sexist remarks by top officials. While women get access to more positions in the army, sexual harassment in the military is investigated slowly. Despite all the impressive female professionals, no woman made it to the first four-member consultative civic group in the Minsk process. Such lack of diversity sends an unfortunate message that women are not important for Ukraine’s peace process.

Ginsburg said, ‘women belong in all places where decisions are being made.’ CRSV against either sex won’t be addressed properly until both sexes contribute with their talents and their grievances to all pillars of Ukraine’s state governance and strategy. Ukraine should look to engage professional women - and there are plenty - to join its public service not just in numbers, but as the indispensable equal voices of a powerful choir.

Among the many unusual features of the pandemic-induced downturn is the disconnect between depressed real economies and buoyant financial markets. This is particularly evident in the US, where output fell 9.5% in the second quarter while the S&P 500 index rose by one-fifth.

This may suggest a huge financial bubble is in the making, or at least a highly optimistic view of a COVID-19 vaccine and treatments. Another possibility is that markets have a better grasp of the economic dynamics of a post-pandemic world than most nervous consumers and governments.

Certainly, markets have been helped by central bank largesse. In March, major central banks reacted forcefully to the possibility of a serious credit crunch with lending guarantees and bond purchases. Such liquidity interventions soothe troubled markets, but they also raise asset prices — potentially into bubble territory. This partly explains the markets’ strength. But it may not be the whole story.

A closer look at market performance suggests they may be on to something more interesting. Compare the US’s broad-based S&P 500 equity index with the tech-focused Nasdaq 100. Since the start of the year, the Nasdaq has risen 24% while the S&P is up just 5%. In the S&P itself, it has been the dramatic rise of the so-called Faang companies — Facebook, Amazon, Apple, Netflix and Google/Alphabet — that offset lesser performances by the other 495 companies. This sharp difference reflects two forces.

First, the COVID-19 crisis has had vastly different effects on different sectors. Lockdown brought a sudden increase in demand for the technology services that enable home learning (with school closures), homeworking (especially by office workers), home entertainment (instead of cinemas and theatres), home shopping (instead of physical shops), and home deliveries of almost everything else, including food. The Faang companies benefited disproportionally from this surge in demand as their production is scalable. Much of it could also be delivered by employees who themselves worked from home. The rise in their share prices reflects this.

Meanwhile, other sectors suffered massively. In the UK, the overall drop in gross domestic product of 20% in the second quarter was led by a fall of 87% in the accommodation and food services sector, which was severely affected by government restrictions. About one-quarter of the UK workforce, according to official figures, was also furloughed or temporarily off work without pay during lockdown. The fall in the share prices of hotels, restaurant franchises and airlines reflects such factors. 

The second driver of rising markets is that they are forward-looking while economic statistics reflect the past. For example, that UK GDP shrank during the second quarter is less interesting to a financial investor than the fact that during two months (May and June) GDP expanded by 2.4% and 8.7% respectively. In other words, output troughed in April but recovery began in May and accelerated in June as lockdown restrictions were eased. 

It is likely that rapid adaptations by companies and consumers to the pandemic-supercharged trends are already under way. In Britain, the share of retail sales (excluding fuel) made by ecommerce rose from around 7% in 2010 to 20% at the beginning of 2020 — it has since jumped to more than 30%. 

One-third of those officially working from home meanwhile say that they would like to do that permanently, according to the Centre for Economics and Business Research, and many large companies have offered their staff this choice.

Even in labour-intensive sectors such as healthcare and government services there has been a replacement of face-to-face delivery with digital booking and screen-based consultations.

Still, while this may help some companies in certain sectors, it does not imply a smooth recovery for the whole economy. Rather, it augurs a period of disruption as new companies, new business models and new job openings emerge. If the pandemic has ignited a Schumpeterian process of creative destruction, that is likely to continue whether or not effective vaccines and treatments ever come. 

Governments should ease the pain of this disruption with supportive fiscal and monetary policies, but they should not try to slow it down. The hopeful market message is that one lasting consequence of COVID-19 may be the rejuvenation of productivity growth that eventually spreads far beyond tech. 

This article was originally published in the Financial Times.

AI holds the potential to replace humans for tactical tasks in military operations beyond current applications such as navigation assistance. For example, in the US, the Defense Advanced Research Projects Agency (DARPA) recently held the final round of its AlphaDogfight Trials where an algorithm controlling a simulated F-16 fighter was pitted against an Air Force pilot in virtual aerial combat. The algorithm won by 5-0. So what does this mean for the future of military operations?

The agency’s deputy director remarked that these tools are now ‘ready for weapons systems designers to be in the toolbox’. At first glance, the dogfight shows that an AI-enabled air combat would provide tremendous military advantage including the lack of survival instincts inherent to humans, the ability to consistently operate with high acceleration stress beyond the limitations of the human body and high targeting precision.

The outcome of these trials, however, does not mean that this technology is ready for deployment in the battlefield. In fact, an array of considerations must be taken into account prior to their deployment and use – namely the ability to adapt in real-life combat situations, physical limitations and legal compliance.

Testing environment versus real-life applications

First, as with all technologies, the performance of an algorithm in its testing environment is bound to differ from real-life applications such as in the case of cluster munitions. For instance, Google Health developed an algorithm to help with diabetic retinopathy screening. While the algorithm’s accuracy rate in the lab was over 90 per cent, it did not perform well out of the lab because the algorithm was used to high-quality scans in its training, it rejected more than a fifth of the real-life scans which were deemed as being below the quality threshold required. As a result, the process ended up being as time-consuming and costly – if not more so – than traditional screening.

Similarly, virtual environments akin to the AlphaDogfight Trials do not reflect the extent of risks, hazards and unpredictability of real-life combat. In the dogfight exercise, for example, the algorithm had full situational awareness and was repeatedly trained to the rules, parameters and limitations of its operating environment. But, in a real-life dynamic and battlefield, the list of variables is long and will inevitably fluctuate: visibility may be poor, extreme weather could affect operations and the performance of aircraft and the behaviour and actions of adversaries will be unpredictable.

Every single eventuality would need to be programmed in line with the commander’s intent in an ever-changing situation or it would drastically affect the performance of algorithms including in target identification and firing precision.

Hardware limitations

Another consideration relates to the limitations of the hardware that AI systems depend on. Algorithms depend on hardware to operate equipment such as sensors and computer systems – each of which are constrained by physical limitations. These can be targeted by an adversary, for example, through electronic interference to disrupt the functioning of the computer systems which the algorithms are operating from.

Hardware may also be affected involuntarily. For instance, a ‘pilotless’ aircraft controlled by an algorithm can indeed undergo higher accelerations, and thus, higher g-force than the human body can endure. However, the aircraft in itself is also subject to physical limitations such as acceleration limits beyond which parts of the aircraft, such as its sensors, may be severely damaged which in turn affects the algorithm’s performance and, ultimately, mission success. It is critical that these physical limitations are factored into the equation when deploying these machines especially when they so heavily rely on sensors.

Legal compliance

Another major, and perhaps the greatest, consideration relates to the ability to rely on machines for legal compliance. The DARPA dogfight exclusively focused on the algorithm’s ability to successfully control the aircraft and counter the adversary, however, nothing indicates its ability to ensure that strikes remain within the boundaries of the law.

In an armed conflict, the deployment and use of such systems in the battlefield are not exempt from international humanitarian law (IHL) and most notably its customary principles of distinction, proportionality and precautions in attack. It would need to be able to differentiate between civilians, combatants and military objectives, calculate whether its attacks will be proportionate against the set military objective and live collateral damage estimates and take the necessary precautions to ensure the attacks remain within the boundaries of the law – including the ability to abort if necessary. This would also require the machine to have the ability to stay within the rules of engagement for that particular operation.

It is therefore critical to incorporate IHL considerations from the conception and throughout the development and testing phases of algorithms to ensure the machines are sufficiently reliable for legal compliance purposes.

It is also important that developers address the 'black box' issue whereby the algorithm’s calculations are so complex that it is impossible for humans to understand how it came to its results. It is not only necessary to address the algorithm’s opacity to improve the algorithm’s performance over time, it is also key for accountability and investigation purposes in cases of incidents and suspected violations of applicable laws.

Reliability, testing and experimentation

Algorithms are becoming increasingly powerful and there is no doubt that they will confer tremendous advantages to the military. Over-hype, however, must be avoided at the expense of the machine’s reliability on the technical front as well as for legal compliance purposes.

The testing and experimentation phases are key during which developers will have the ability to fine-tune the algorithms. Developers must, therefore, be held accountable for ensuring the reliability of machines by incorporating considerations pertaining to performance and accuracy, hardware limitations as well as legal compliance. This could help prevent incidents in real life that result from overestimating of the capabilities of AI in military operations. 

When Chancellor Angela Merkel offered to provide medical care for Navalny in Germany after he fell ill from suspected poisoning in Russia, she could have hardly expected her humanitarian gesture would trigger a crisis in her country’s relations with Russia.

Merkel has used uncharacteristically blunt words to condemn the apparent attempt on Navalny’s life, saying the use of novichok raises serious questions that only the Russian government could answer. She described Navalny as being the ‘victim of a crime’ which was a violation of the ‘basic values and basic rights’ that Germany and its allies were committed to. Her tone and body language certainly showed how strongly she felt about the issue.

Germany’s Social Democrat foreign minister Heiko Maas then followed up by suggesting Russia’s response might force Germany to change its position on the construction of the Nord Stream 2 pipeline which aims to double Germany’s direct gas imports from Russia under the Baltic Sea.

This is a dramatic change of position since his party has been a staunch supporter of the controversial project. Two Christian Democrat candidates for the Chancellorship called for a stop to the pipeline together with representatives from the Greens, who could be part of a government coalition after the 2021 federal election.

Claims of hostile provocation

The Russian foreign ministry shot back with a statement condemning Berlin’s ‘unsubstantiated accusations and ultimatums’ and claiming Germany was using Navalny’s hospitalisation to discredit Russia internationally. It demanded Germany share data and test results with the Russian Prosecutor’s Office, saying any failure to comply would be ‘a crude hostile provocation against Russia’ that risked consequences for the bilateral relationship as well as ‘serious complications in the international situation’.

Such strong language from Moscow towards Germany has not been seen for over 30 years, and is all the more remarkable as Putin has personally invested heavily in the relationship with Germany in view of its economic and political importance, and its strong desire for constructive ties with Russia. Until 2014, Russian analysts viewed Germany as Russia’s ‘lobbyist’ in Europe.

Berlin is now trying to downplay the situation, claiming the Navalny poisoning is not actually a Germany-Russia matter and referring it to the Organisation for the Prohibition of Chemical Weapons. By consulting with its EU and NATO allies, Berlin is further internationalising the issue to reduce impact on the bilateral relationship.

Such a forceful reaction to the poisoning reflects Germany’s increasing frustration with the Kremlin. The murder in broad daylight in Berlin in August 2019 of a Chechen wanted by the Russian authorities has been traced to the FSB. And the publication of a report in May 2020 into the hacking of the German parliament in 2015, including Merkel’s parliamentary office, was a further reminder of how far Russia had deviated from the course of partnership that Berlin believed the two countries had established in the 1990s.

Merkel described the cyberattack as ‘monstrous’, saying it was part of a strategy of hybrid warfare that includes ‘disorientation’ and ‘manipulation of facts’. Further tension has been added since the recent Belarus election as Moscow is supporting Lukashenka’s presidency whereas the EU does not recognise him as the legitimate president.

This accumulation of events is forcing German policymakers to recognise the Russian leadership is a menace to its own citizens, its neighbours and to Germany itself. Although Berlin abandoned several of its illusions about partnership with Russia in 2014 when it led the EU response to Russia’s annexation of Ukraine and destabilization of south-eastern Ukraine, it still hoped that the Kremlin would see reason and adjust its policies.

It combined sectoral economic sanctions with continuing dialogue and a joint effort to help settle the conflict in Donbas despite the obvious fact that Russia was a party to the conflict. It still believed that Moscow had an interest in finding a compromise. Instead, experience so far suggests Russia has a greater interest in keeping the conflict ‘semi-frozen’ as a way of forcing Ukraine to compromise.

Controversially, Germany also saw the need to expand energy relations with Russia in a bid to stabilise ties and draw Russia closer to Europe. The Nord Stream 2 pipeline initiated in September 2015 by Gazprom and five European companies – two of them German – is a monument to this policy.

Even though this project lacked an overall economic rationale, the German government supported it – much to the consternation of the Baltic States, Poland and others who objected to what they saw as Berlin’s insistence on a ‘Russia-first’ policy that undercut the interests of Ukraine. This was because the pipeline’s purpose is to re-route gas flows away from Ukraine, depriving it of transit revenues and a lever of influence in its relations with Moscow.

It now appears the German government is finally waking up to the fact that its attempts to encourage better Russian behaviour have failed. Policy looks set to become tougher and a moratorium on Nord Stream 2 now appears a real possibility if Russia fails to investigate the Navalny poisoning and provide adequate answers.

However, sanctioning the new pipeline is likely to provoke counter-measures against German business interests in Russia. If Berlin is determined to pursue this tougher line, it could end up facing an uncomfortable dilemma and being forced to consider alternative ways to signal displeasure at Russia’s criminal actions.