Oil prices began to rise as Donald Trump hinted at a possible negotiation between Russia and Saudi for reducing oil production. Earlier, in a meeting to cope with the slowing demand of oil due to Coronavirus, Russia and OPEC had disagreed on production cut and waged a price war that nearly halved oil prices. Complete Coverage: Coronavirus
Crux of the Matter
When Cuts Do More Good Brent Crude Prices were up on Thursday after US President Donald Trump announced that Russia and Saudi may sit to re-negotiate oil production cuts. He said that he expects a minimum supply cut of 10 million barrels per day (bpd) or more. Russian Energy Minister also indicated that Russia may enter talks with Saudi. Trump said that the price-war was bad for both Russia and Saudi. International Crude oil benchmark, Brent Crude was up by 21% at $29.94, whereas US benchmark, West Texas Intermediate (WTI) was up by nearly 25% at $25.32.
IHS Markit and Standard Charter estimate that oil demand could drop by as much as 10 million barrels per day in April – a 10% drop in demand. This estimated level, if true, would be seen the first time since 2012. To cope with this slow demand and balance oil prices, supply cuts have become inevitable.
Price War Oil Price War began in the second week of March after a deal to cut oil production did not work out between Russia and Saudi. Saudi, in retaliation to Russia, began offering oil at $8-$14 less and threatened to increase oil production by 13 million bpd. Thereafter, oil prices plunged 30%. Since then, global oil prices have been falling and hovering around $30 as compared to ~$70 at the beginning of the year.
It must be noted American Shale oil companies find it hard to survive in a market where oil prices are low. It is also in the vested interest of American companies to see a rise in oil prices. At a time when there is a tepid oil demand, low prices would benefit developing nations that can buy more oil at a cheaper rate.
Oil Production – Total world oil production in 2019 averaged 80,622,000 barrels per day. Approximately 68% came from the top ten countries, and an overlapping 44% came from the fourteen current OPEC members. The top three producers have in recent history been (alphabetically) Russia, Saudi Arabia, and the United States. Each of these countries experienced major production declines at different times in the past, but since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day. Saudi Arabia and Russia also top the list of oil exporting countries, while Russia is not a member of OPEC. The monthly U.S. oil production reached 10.07 million b/d in November 2017, the highest monthly level of crude oil production in U.S. history. In May of 2019, the country became a net oil and gas exporter, the first time since 1953.
Amidst the chaos, sorrow and outrage caused by the global Coronavirus Pandemic, people have started questioning some of the actions taken by the World Health Organisation as well as China’s notorious tendency to play things close to the chest. Looking back at the barrage of news reports through the lens of hindsight, could the WHO have done things differently? Had China been more forthcoming, could the magnitude of the tragedy have been smaller? Complete Coronavirus Coverage
Crux of the Matter
The Ongoing Pandemic It started off as a mysterious pneumonia like affliction in a central province of China called Hubei in December 2019. Three months on, it has engulfed the world in a pandemic of proportions not seen for a century. The novel Coronavirus disease has affected almost a million people worldwide and dealt painful choking death to more than 40 thousand people. As of 1st April, India has seen more than 1700 cases and 50+ deaths because of COVID-19.
China, where the virus first reared its ugly head, has seen close to 80,000 cases with 3,000 fatalities. These numbers have been stable since the past month, whereas the numbers have shot up in USA and Europe. The past week saw the cases in USA climb steeply to almost 200 thousand with 4000+ deaths. Italy and Spain have seen 12000+ and 9000+ deaths respectively. Worldwide, countries have had to resort to strict country-wide lockdowns to try to stem the spread of the contagion. The global economy has come to a grinding halt and the world has entered a recession.
Could WHO Have Done More? December 2019 saw the emergence of this virus in Wuhan in Hubei province of China. Doctors and researchers saw similarities with SARS. As it turned out, it was a new strain of the SARS causing coronavirus. Initially China, allegedly, tried to suppress the spread of information even as the Chinese government tried to come to grips with the entire situation. On 31st December, the Chinese authorities finally informed the WHO about the outbreak of the disease. At this time there were around 30 cases in China.
Early January saw the cases double every week. Wuhan is a central transport hub in China. This coupled with the upcoming Chinese New year related travels, saw the virus spread to other parts of China including Beijing and Shenzhen. On 10th January, WHO put out a general travel advisory for travelers in Wuhan. In hindsight, data shows that there may have been more than 6,000 patients impacted by 20th January.
Around this time, on 14th January, the WHO made a statement that there was “no clear case of human to human transmission” based on preliminary research by Chinese authorities. Notably, Taiwanese authorities had been warning of possible human to human transmission since 1st January.
13th January saw the first case outside China, in Thailand. On 20th January China confirmed human to human transmission had already happened.
On 24th January, WHO recommended entry and exit screenings at airports while advising against blanket travel restrictions. In 3 days it revised its stance and judged the potential global risk to be high and in another 3 days, on 30th January, declared it a a “Public Health Emergency of International Concern” (PHEIC). By then the world had already seen 10,000 cases.
A week earlier, on 23rd January, a WHO committee was divided on whether to declare a PHEIC, with chief Dr Tedros Adhanom Ghebreyesus taking a call to wait and watch – at that time the confirmed cases were around 1000.
On 2nd February, when the cases had doubled to 20,000, WHO chief Dr Adhanomurged countries not to close borders with China.
By 15th February there were already cases in Europe including in Italy, France and Spain – the global count had reached 70,000, mostly in China. On 24th February, when the global case count crossed 80,000 with more than 2500 fatalities, Dr Adhanom warned of a possibility of a global pandemic and WHO raised the global risk assessment to “very high” on 27th February.
The outbreak was declared a global pandemic on 11th March. By then the global cases had crossed 125,000. There were close to 5000 confirmed deaths, 3000 of which were from China. Two days later, and almost 3 months after the outbreak began, Europe was deemed the new epicentre. Within the next 3 weeks the case count would cross 900,000, the death toll would cross 40,000.
WHO Chief’s Chinese Connections? The coronavirus global crisis has brought the WHO chief Dr Tedros Adhanom into the global spotlight – not all of it is flattering. Dr Tedros of Ethiopia, happens to be the first non-medical Director-General of WHO – the Dr signifies his PhD.
He has previously been accused of covering up multiple cholera epidemics as health minister of Ethiopia. Reports suggest, Chinese diplomats had used influence and money to campaign for and beget Dr Tedros the post of Director-General of WHO. He had beaten UK’s Dr David Nabarro to the race. China had reportedly influenced a lot of developing countries’ representatives to vote for Dr Tedros. China has over the years been building a growing industrial presence in Africa and has been flexing its geopolitical muscle at the global scale in UN and its subsidiary bodies.
During the on-going pandemic, Dr Tedros has come out openly in praise of Beijing’s measures, actions and openness to share information even as the western world has accused China of silencing whistleblowers and critics. Other members of the WHO emergency committee have criticised China for obfuscation and delayed reporting of data. He has also seemingly delayed travel restrictions to China and defended China against accusations of opaqueness.
An online petition demanding his resignation has been supported by more than 600,000 people.
WHO Handled SARS-1 In 2003, a SARS outbreak had happened in China. This was caused by a previous version of the coronavirus. Back then, WHO chief Dr Brundtland was quick to put out travel restrictions on China. He had also been a sharp critic of China’s policy of trying to cover up the outbreak through media manipulation, news censoring and arresting whistleblowers. Back then China had delayed a WHO team from traveling to the epicentre in Guangdong province. The outbreak was effectively contained in a 6 month span, with death count of less than 1000.
WHO – The World Health Organization is a specialized agency of the United Nations responsible for international public health. It is part of the U.N. Sustainable Development Group. The WHO Constitution, which establishes the agency’s governing structure and principles, states its main objective as ensuring “the attainment by all peoples of the highest possible level of health.” It is headquartered in Geneva, Switzerland, with six semi-autonomous regional offices and 150 field offices worldwide. More Info
SARS Outbreak – The 2002–2004 SARS outbreak was an epidemic involving severe acute respiratory syndrome (SARS) caused by SARS-CoV. Prior to the 2019-20 coronavirus pandemic, the outbreak was first identified in Foshan, Guangdong, China in November 2002. Over 8,000 people from 29 different countries and territories were infected, and at least 774 died worldwide. The World Health Organization declared severe acute respiratory syndrome contained on 5 July 2003, however several SARS cases were reported until May 2004. More Info
Tedros Adhanom Ghebreyesus is an Ethiopian politician and academic who has been Director-General of the World Health Organization since 2017. He previously served in the Government of Ethiopia as Minister of Health from 2005 to 2012 and as Minister of Foreign Affairs from 2012 to 2016. More Info
The USA has declared a bounty of $55 million for information on connections of the President of Venezuela Nicolas Maduro and his associates in drug trafficking and narco-terrorism.
Crux of the Matter
Maduro has had topsy-turvy relations with the US since his re-election in the 2018 elections. The US accused Maduro of occupying the Presidential post unconstitutionally in the country. But Maduro, backed by Russia and China, continued serving as the President.
The US declared charges against Maduro after an investigation by US Federal services. The US said that strict steps are necessary to remove deeply rooted corruption in Venezuela that has resulted in the crippling of its democracy and democratic values. Allegations on Maduro are that he helped the Colombian revolutionary group, the FARC for drug trafficking and flooding the United States with Cocaine. He is also accused of facilitating drug trafficking routes through air and water via Venezuela along with running a drug cartel even though he is occupying a government office.
Thus amid escalating tension, US and US allies evacuated their embassies from Venezuela. Besides Maduro, the US has filed charges against more than a dozen others that include Venezuelan government and intelligence officials and members of the Colombian rebel group FARC.
Maduro defended himself by saying that Donald Trump is politically motivated to remove him from the office. He added that before the US Presidential election, such a move might give Donald Trump fame, and thus he is trying hard to make it more political. He further said that by hook or crook the US wants him to vacate his post.
Nicolás Maduro Moros is a Venezuelan politician serving as president of Venezuela since 2013. His presidency has been disputed by Juan Guaidó since January 2019. Beginning his working life as a bus driver, Maduro rose to become a trade union leader before being elected to the National Assembly in 2000. He was appointed to a number of positions under President Hugo Chávez and was described in 2012 by the Wall Street Journal as the “most capable administrator and politician of Chávez’s inner circle”. He served as Minister of Foreign Affairs from 2006 to 2013 and as vice president of Venezuela from 2012 to 2013 under Chávez. After Chávez’s death was announced on 5 March 2013, Maduro assumed the presidency.
Shortages in Venezuela and decreased living standards led to protests beginning in 2014 that escalated into daily marches nationwide, repression of dissent and a decline in Maduro’s popularity. According to The New York Times, Maduro’s administration was held “responsible for grossly mismanaging the economy and plunging the country into a deep humanitarian crisis” and attempting to “crush the opposition by jailing or exiling critics, and using lethal force against anti-government protesters”. An opposition-led National Assembly was elected in 2015 and a movement toward recalling Maduro began in 2016. Maduro called for a rewrite of the constitution, and the Constituent Assembly of Venezuela was elected in 2017, under what many—including Venezuela’s chief prosecutor Luisa Ortega and Smartmatic, the company that ran the voting machines—considered irregular voting conditions; the majority of its members were pro-Maduro. On 20 May 2018, presidential elections were called prematurely, opposition leaders had been jailed, exiled or forbidden to run, there was no international observation, and tactics to suggest voters could lose their jobs or social welfare if they did not vote for Maduro were used. Multiple nations did not recognize the Constituent Assembly election or the validity of Maduro’s 2018 reelection;the Canadian, Panamanian, and the United States governments sanctioned Maduro. More Info
In the Budget session of the Parliament, the Cabinet approved two schemes associated with electronics manufacturing in India. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing and Modified Electronics Manufacturing Clusters (EMC2.0) schemes were passed in the parliament.
Crux of the Matter
EMC2.0 as the Support System Through the development of infrastructure and common amenities, this scheme would help in the development of the Electronics System Design and Manufacturing (ESDM) sector and an entrepreneurial environment in electronics manufacturing.
It will aid in setting up Electronics Manufacturing Clusters in certain geographical areas, and Common Facility Centre (CFC) in industrial parks, etc at a cost of ₹3,762.25 crores. The following benefits can be yielded out of the Scheme:
It will create a robust infrastructure with Plug & Play offices.
It will bring new investment in the electronics sector.
It will create new job opportunities in the electronics manufacturing sector.
It will generate revenue, in the form of taxes, for the government as well.
“Assemble in India for the World” PLI scheme is aimed at boosting domestic manufacturing and investment in specified electronic components including ATMP (Assembly, Testing, Marking, and Packaging) units and mobile production. It will achieve this through a production linked incentive in which it will extend a 4-6% incentive on incremental sales of Indian-made goods over a period of 5 years. It is likely to benefit 5-6 global players and a few domestic electronics manufacturers.
The government has set aside a sum of ₹40,995 crores for this scheme. It is estimated that the scheme will generate 2 lakh direct jobs. India produced ₹1.70 lakh crores worth mobile phones in 2018-19. With the conflux of this ‘Assemble in India for the World’ and ‘Make in India’, India aims to boost its electronic production.
New World Leader Coronavirus may have hampered the growth of Chinese manufacturing as many world nations are mulling over sanctioning China. After the USA-China Trade War, now Coronavirus may have a lasting impact on the Chinese industry. India’s production boost, especially in the electronics and mobile manufacturing, can put India abreast of China. India can see this as an opportunity to become a manufacturing hub for multinationals, besides definitely encouraging domestic production.
The electronics industry in China grew rapidly after the liberalization of the economy under the national strategic policy of accelerating the “informatization” of its industrial development. Manufacturing was the sector that grew the fastest. Major Chinese electronics companies include BOE, Changhong, Haier, Hisense, Huawei, Konka, Lenovo, Panda Electronics, Skyworth, SVA, TCL, Xiaomi, Oppo, DJI and ZTE. China’s production recorded the largest world market share for its electronics exports in 2016. It also recorded high volume outputs across a wide spectrum of consumer electronics; between 2014 and 2015—according to China Daily—286.2 million personal computers (90.6% of the global supply), 1.77 billion phones (70.6% of global supply of smartphones) and 109 million units (80% of global supply of air conditioners) were produced. More Info
The number of Coronavirus cases in the US has been rising exponentially over the last few days. There are already more than 50,000 infected people in the US and it seems that it might overtake Italy if the virus is not stemmed. Despite a low number of deaths in the US (less than 1000) the World Health Organization (WHO) thinks that the US might become another hotspot for the pandemic. Complete Coverage: Coronavirus
Crux of the Matter
No One Wants to Rank Higher in This Game In a span of two weeks, US has seen a spike in the number of COVID-19 cases. The situation, that very much feels like Italy, could make the US the next epicenter of the pandemic, says WHO. US’s most densely populated city New York has seen a massive surge in the number of cases. With more than 26,000 cases, it constitutes nearly 45% of cases in US.
As of 25th March 2020, the US has more than 55,000 cases as compared to 1,301 cases on 11th March 2020 – a 4200% rise in two weeks! Italy is nearing 70,000 cases and has the highest fatality rate from COVID-19 of nearly 10%. As per WHO, Coronavirus epicentre shifted first from China to Europe, specifically Italy, and now it is shifting to the US.
Complacent US Government US government was among the first nations to announce interest rate cuts and fiscal stimulus package to combat the impact of Coronavirus. However, the rising number of cases in New York has required hospital beds three times more than what is available. Meanwhile, Prez Trump was seen making an announcement that he wants targeted lockdowns only and does not want to hurt businesses unnecessarily. Trump said he would open the country by mid-April around Easter.
If you ask the American people to choose between public health and the economy, then it’s no contest. No American is going to say accelerate the economy at the cost of human life.
– Andrew Cuomo, New York Governor
In 2009, Swine Flu had emerged from the US, and during Week 16 it was much less spread and fatal than COVID-19. The doubling rate of Coronavirus is higher than that of Swine Flu. Therefore, before the complacent behavior of the US takes many lives of its citizens, strong measures to contain the virus would be necessary.
Coronavirus in Italy An ongoing worldwide pandemic of coronavirus disease 2019 was first confirmed to have spread to Italy on 31 January 2020, when two Chinese tourists in Rome tested positive for the virus. One week later an Italian man repatriated back to Italy from the city of Wuhan, China, was hospitalised and confirmed as the third case in Italy. A cluster of cases was later detected, starting with 16 confirmed cases in Lombardy on 21 February, and 60 additional cases and first deaths on 22 February. By the beginning of March, the virus had spread to all regions of Italy.
On 22 February, the government established a lockdown for eleven municipalities in Lombardy and Veneto. On 7 March, the government prepared to extend until 3 April the restricted zone to all of Lombardy, plus fourteen other provinces. The lockdown affects over 16 million people, roughly a quarter of Italy’s total population, and prevents people from entering or leaving the zone, except “for proven occupational needs or situations of need or for health reasons”, under threat of fines. The pandemic provoked large economic damage to the Italian economy. The sectors of tourism, accommodation and food services were among the hardest hit by foreign countries’ limitations to travel to Italy, and by the nationwide lockdown imposed by the government on 8 March. Multiple factories, like Fiat Chrysler, halted production in some of their plants. On 12 March, the Italian stock market was among the worst hit during Black Thursday, when the FTSE MIB index lost 17% of its value in one day. More Info