Police in Madrid hand out face masks in the metro on Monday
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The insidious path of COVID-19 across the planet is a reminder of how small the world has become. Worldcrunch is delivering daily updates on this crisis from the best, most trusted international news sources — regardless of language or geography. To receive the daily Coronavirus Global Brief in your inbox, sign up here.

SPOTLIGHT: WHEN WILL WE OPEN UP? AND HOW?

National shutdowns across the West are moving toward Month Two, and the prevailing urgency has shifted from avoiding massive loss of life to taking the first small steps to resuming our daily business — and restarting our economies. Beyond the predictions and financial modeling about the fate of the global economy are more prosaic, though thorny questions facing leaders in each country: When? How? And how much...will we open up? And this is only the beginning.


Leading the way right now is Spain, which just two weeks ago was making world headlines for surpassing Italy with the highest number of deaths per day, is well ahead of other European countries in reopening of some sectors of its economy this week. El Pais reports that police were set to hand out up to 10 million masks in metro stations and other public places as part of a national plan to limit further contagion.

Elsewhere, other countries not as hard hit, were also relaxing their restrictions: In Denmark and Norway, kindergartens and elementary schools are set to open later this week; while in Austria, small shops opened Monday, with all commerce to be permitted beginning May 1.

Predictably, such decisions have spurred criticism in some quarters, including the World Health Organization, which issued a sharp warning that premature easing of countermeasures could mean a "deadly resurgence" of the coronavirus, perhaps with its mind on China, Singapore and Taiwan where new cases have recently flared up after quarantines were lifted.


Comparisons and coordination will be useful, though most acknowledge that there will be no one-model-fits-all exit schedule. Indeed, what might work in Denmark — a small country with a strong and flexible economy — might mean catastrophe in Spain, where more than three million people were unemployed before the coronavirus hit.

Robin Wigglesworth of The Financial Times quotes a fresh report from Morgan Stanley. The investment bank's own internal head of biotech research cautions on the U.S. economy in light of how difficult it will be to truly return to normal, so long as there is no vaccine: "While we understand the desire for optimism, we also caution that the US outbreak is far from over. Recovering from this acute period in the outbreak is just the beginning and not the end. We believe the path to re-opening the economy is going to be long."

We are still very much in the dark about how this crisis will play out. But one thing is certain, countries can only sustain economic hibernation periods for so long, and while some general spirit of compromise has to guide us out of the lockdowns, reviving our economies in the years to come will require both more national decisiveness and international collaboration than we have seen in generations.

— Carl-Johan Karlsson

THE SITUATION: 7 THINGS TO KNOW RIGHT NOW


"Thinking About the World After" — Le Monde


THE ECONOMY: HOW BAD WILL IT GET? As the gears of the modern world grind to a halt, there's no debating that we are in for a long, hard haul. But as the world slowly edges closer to the only viable exit strategies — herd immunity or an approved vaccine — the question of how to safeguard the health of people and the health of the economy becomes increasingly pressing.

  • American crash: Goldman Sachs forecasts that U.S. GDP will shrink 24% next quarter amid the coronavirus pandemic, which would be 2.5 times bigger than any decline in history. Frederick Kempe, president and CEO of the Atlantic Council, says unemployment could spike to 30%. For the moment, markets paint a less depressing picture, with consistent recovery after crashing more than 30% as the reality of COVID-19 sank in. One explanation is that financial markets don't reflect the current situation — or even "pricing in" the next three months — but, quite the opposite, they look beyond the economic damage of the next three to six months.

  • Chinese damage: Economic data from the first two months of the year shows the damage done to China's finances and with a negative growth forecast for Q1 2020, this may be the first time since 1976 that the country experiences a shrinking economy. Year-over-year change during January and February shows a decline in Investment in fixed assets of 24.5%; retail sales 20.5%; value of exports 15.9% and a slump in industrial production of 13.5%.

  • Trade: Similarly, the World Trade Organization says a rebound in trade will depend on whether businesses and consumers view the pandemic as temporary or if uncertainty is prolonged, stating in a press release that world trade will fall by between 13% and 32% in 2020, exceeding the trade slump brought on by the global financial crisis of 2008‑09. Under an optimistic scenario, WTO predicts a strong-enough recovery to bring trade close to its pre-pandemic trend, while a more pessimistic scenario envisages a partial recovery never fully returning to prior levels.

  • Inequality: French economist Thomas Piketty, writing in Le Monde, says the measures being taken by governments to slow the spread are a danger of their own: "Shutdowns applied in fragile ecosystems may turn out to be utterly ill-equipped. In the absence of a minimum revenue, the poor must quickly go out and look for work, which could reignite the contagion." Still, Picketty, a leading voice among left-leaning economists, says recovering from the global health crisis is a unique opportunity to confront the ills of economic inequality: "This crisis can be the occasion to consider the appropriation of funds to support minimal health and education for all the inhabitants of the planet, financed by a universal right of all countries levied on the wealthiest economic actors: large corporations, highest-revenue individuals (top1%)."

LET'S ALSO THANK THE ROBOTS: We've been hearing for years how robots, for better or worse, were going to change our lives. Now in the battle against the highly contagious COVID-19, we're seeing them in a whole new light. Of course it all begins with the fact that, no, robots can't get infected. Winks aside, these artificially-intelligent machines are allowing people to avoid physical contact and maintain social distancing, easing the burden on health providers, helping police officers to implement lockdowns, and allowing people to better face life under quarantine.

  • Health: The most urgent need robots are filling is as healthcare assistants. In Italy, hospitals are turning to robots to replace doctors and nurses and keep them safe from the virus. A child-size robot named Tommy allows care providers to avoid direct contact with patients and limit the use of masks, able to monitor the equipment's parameters in a room and record messages from patients, to transfer them to the staff.

  • Law & Order: The interior ministry in Tunisia has deployed a police robot in the country's capital Tunis to make sure its inhabitants are observing the coronavirus lockdown, reports Jeune Afrique. The four-wheeled robot is equipped with a camera and controlled remotely by officers, in order to check pedestrian's ID or other papers. Drones have also been used in several countries to reinforce patrolling of certains areas. According to Le Monde, in France for instance, police officers used drones to scan beaches where people were still taking walks despite the lockdown, or to broadcast social distancing guidelines.

  • Being there: Robots have also undertaken unexpected social roles during the crisis, allowing people to be present at big life events. With the help of "Newme" avatar robots, the Business Breakthrough University in Tokyo, Japan, was able to hold a virtual graduation ceremony. The remotely controlled robots were equipped with a tablet that used video-conferencing tool Zoom and were dressed in graduation caps and gowns. This allowed students to experience the celebration of walking on the stage to accept their diplomas.

These scavengers come to feed off a society that is ailing, threatened or defenseless.

—from Buenos Aires daily Clarin article (in English via Worldcrunch) Coronavirus Profiteers: With The Virus Come The Vultures

PLASTIC COMEBACK: There is an ecological flipside to the good news of pollution dropping in locked-down regions of the world: a hygiene-inspired boom in single-use plastic. Encouraged by medical advice on how to slow the spread of coronavirus, millions are ditching their reusable bags and asking for their oil-derived alternatives. The Associated Press reports that several U.S. states and cities have put on hold recently passed bans on single-us plastic. In Europe, European Plastics Converters has written an open letter to the European Commission praising plastic's benefits in a time of pandemic and asking for ban policies to be held back.



  • Cartoonist Sanouni Imad notes that, even before, we were already in "virtual" quarantine.

  • For Easter worshipers shut out of mass because of social distancing, here's a memorable view of Christ the Redeemer in Rio de Janeiro, honoring healthcare workers around the world.

  • If you don't yet know him, please meet Grandpa Joe. He's your everyday 87-year-old TikTok star!


To receive the daily Coronavirus Global Brief in your inbox, sign up here.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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