In Other News – March 27, 2020

The U.S. government indicted Venezuelan President Nicolás Maduro on narco-trafficking conspiracy charges this week. U.S. federal prosecutors charged Maduro with leading a violent drug cartel that has flooded the United States with cocaine for decades. U.S. Attorney General William Barr said that Maduro’s government is “plagued by criminality and corruption,” and the State Department announced a $15 million reward for information leading to Maduro’s arrest. The indictment of a head of state is an escalation of the Trump administration’s efforts to oust Maduro from power, following a year-long effort to squeeze the regime by imposing oil sanctions and recognizing opposition leader Juan Guaidó as the legitimate president.

The U.S. has cut $1 billion in aid to Afghanistan and threatened to cut another $1 billion next year, citing Afghan leaders’ inability to resolve a political dispute that would lay the groundwork for a peace deal with the Taliban that allows U.S. forces to withdraw from the country. The U.S. provides Afghanistan with around $4 billion in security aid and $500 million in civilian aid annually. Two competing politicians – Ashraf Ghani and Abdullah Abdullah – have both declared themselves president, threatening the future of a Taliban deal. Secretary of State Pompeo traveled to Kabul on Tuesday but was unable to facilitate a resolution. Afghan sources have suggested that Afghanistan’s political factions are already seeking to align themselves with Russia or Iran in advance of a U.S. withdrawal.

North Korea launched two projectiles, believed to be short-range ballistic missiles, toward the Sea of Japan on Saturday. The Japanese Coast Guard confirmed that a missile landed in water outside of its exclusive economic zone. The launch comes as the country’s two closest neighbors, South Korea and China, have both been focused on managing Covid-19 outbreaks among their populations. North Korea claims to have no cases, but quarantined 380 foreigners in the country for around 30 days ending in early March, and President Trump wrote to North Korean leader Kim Jong Un to offer assistance with the virus. Health experts say that proximity to China and South Korea would suggest that there are at least a few cases of the virus in North Korea.

Russian President Vladimir Putin has suspended an April 22 referendum on a constitutional change to presidential term limits that would allow him to remain in power until 2036, citing the need to focus on the pandemic. Meanwhile, security experts warn that Putin may be using the cover of Covid-19 to further Russia’s campaign to legitimize its incursion into Crimea. Ukraine agreed a few weeks ago to enter into direct negotiations to resolve the conflict – a dramatic change from its previous stance – and representatives of the two sides met via video conference this week to create an additional formal negotiating platform. But Ukraine effectively postponed further movement on the talks, claiming that signing a document would be “physically impossible by videoconference”.

Public health measures to reduce the spread of Covid-19 have given governments cover to impose restrictions on political activities essential to a functioning democracy and rule of law. Bolivia’s government has postponed planned elections; Hong Kong, India, and Russia have banned demonstrations; Israeli Prime Minister Benjamin Netanyahu has managed to postpone his arraignment on corruption charges and temporarily derailed the formation of a new Israeli government, which could have passed legislation preventing indicted individuals from becoming Prime Minister; and Hungarian Prime Minister Viktor Orban’s government has extended an emergency law that can be used to silence critical press coverage under the guise of “false information”.

The Department of Homeland Security has warned that terrorists may exploit global leaders’ focus on Covid-19, stepping up attacks around the globe. There have been at least three attacks so far this week, killing more than 150, and attacks may further accelerate. ISIS seized control of a Sikh religious facility in Kabul on Wednesday, killing at least 25 before Afghan forces were able to locate and neutralize the assailants. A Boko Haram raid in Chad, also Wednesday, killed 92 Chadian soldiers, and another Boko Haram ambush in Nigeria on Tuesday killed 50 Nigerian soldiers. In slightly more uplifting news, Germany convicted eight far-right extremists from a group called Revolution Chemnitz who had been plotting to overthrow the government. Germany’s right wing Alternative for Germany party has vowed to dissolve a far-right faction, known as “The Wing”, owing to monitoring from Germany’s intelligence services, but intelligence experts warn it could be a cosmetic change to avoid scrutiny. The FBI announced on Wednesday that it had killed a Kansas City man who had been the subject of a domestic terrorism investigation. The bureau attempted to serve a warrant on the man, whom they suspected of planning to bomb an area hospital using an improvised explosive device. The suspect was armed at the time.

Alternative theories about the origin of Covid-19 continue to bubble up from unlikely sources, hinting at the use of the virus to further ongoing misinformation campaigns. Theories about the real origins of Covid-19 have come from unlikely sources – a Chinese Ministry of Foreign Affairs spokesperson, anti-vaccination groups, Iran’s Ayatollah Ali Khamenei. Like the appearance of SARS in humans in 2002, the novel coronavirus is understood by public health experts to have jumped from a wild animal to humans, this time in a “wet market” in Wuhan, the epicenter of the first outbreak. But there is no shortage of other explanations – that it was engineered in a Russian laboratory, that it was brought to China by a U.S. military delegation, that it actually doesn’t exist at all. FEMA has created a “rumor control” page on its website seeking to address misinformation, like the rumor that the U.S. would be under “national lockdown” for two weeks, which the Department of Homeland Security has attributed to a foreign government, possibly Russia.

The Russian-Saudi oil price war and demand hit from the Covid-19-related drop-off of economic activity have already triggered two major energy sector developments: massive layoffs in the U.S. shale patch and coal’s surprise status as the world’s most expensive fossil fuel. The U.S. shale sector has laid off thousands of workers just as Covid-19 prevention measures shut down hubs of economic activity nationwide, which will further weaken energy demand. Places like Texas, Montana, and Pennsylvania will likely be hit particularly hard. Meanwhile, the massive drop in oil prices of the past few weeks made coal – at least temporarily – more expensive on an energy-equivalent basis than a barrel of oil. While cheap oil is negatively impacting America’s energy sector, if prices stay low, that will be one less headwind for economic recovery as we emerge from the Covid-19 crisis.

In Other News – Friday, 3/20/2019

With COVID-19 dominating headlines – from infection rates to border closures to economic fallout and bailout – important stories that would have once been front-page news have been pushed to the bottom half of A6. Here is a roundup of some significant global developments you may have missed this week:

Joe Biden has emerged as the presumptive Democratic nominee for president after winning the Florida, Arizona, and Illinois primaries this week. He now has 1,171 of 1,991 delegates required to secure the nomination, and Bernie Sanders, with just 877, will be hard-pressed to catch up. Whoever wins the 2020 presidential election will be contending with a dire economic situation as activity grinds to a halt across the country. On top of bad economic news, we face other growing problems, including a sharp escalation of tensions with China, state-sponsored disinformation campaigns, economic espionage, and an escalating conflict with Iran.

A foreign government carried out a cyber-attack on U.S. Department of Health and Human Services as the U.S. confronts the spreading coronavirus outbreak, say U.S. officials. The attack, which did not penetrate the HHS, attempted to overload the agency’s servers to slow the functioning of its computer systems. While the suspected foreign government involved has not been identified, the attempt has been described as part of a broader disinformation campaign related to the virus in the U.S., including a tweet disseminated on Sunday night warning that the president would order a two-week, nationwide mandatory quarantine. An internal EU document shared with media this week alleges that Russia and pro-Kremlin outfits have been linked to a coronavirus misinformation campaign seeking to generate anxiety and discord in western countries.

China has expelled most American journalists working for the Wall Street Journal, Washington Post, and New York Times in China, and demanded these outlets, Time magazine and Voice of America provide detailed information on staff, finances, real estate, and operations in the country. The expelled journalists will also be barred from reporting from Hong Kong and Macau. The U.S. and China have been locked in a series of tit-for-tat journalist expulsions that began after the U.S. classified five Chinese state-run media outlets as official government entities on February 18. China expelled three Wall Street Journal reporters the next day – the first expulsion of multiple journalists simultaneously since Mao was in power – and the U.S. followed up by expelling 60 of the 160 employees working at Chinese state-run media outlets in the U.S.

The U.S. and Iran trade fire in Iraq. On Thursday, March 12, U.S. forces bombed five facilities that were believed to be weapons depots for Kata’ib Hezbollah, an Iranian-backed militia operating in Iraq. The bombing was retaliation for a Kata’ib Hezbollah rocket attack the previous day that had killed two Americans and one British national. It was just this type of rocket attack that in December killed an American contractor and brought the U.S. and Iran to the brink of war. Experts expect retaliatory strikes between the U.S. and Iran and its proxies to continue unless the two sides reach some sort of agreement, which seems unlikely with Washington placing a new round of sanctions on Iran as it struggles to contain a severe coronavirus outbreak that has sickened more than 18,000 and killed more than 1,200.

Two American prisoners – one in Iran and the other in Lebanon – have been released. Michael R. White had been serving a 13-year sentence in an Iranian prison since July 2018 for insulting Iran’s supreme leader and posting private photographs on social media. White was freed for medical reasons but must remain in Iran, where he will undergo medical evaluation at the Swiss Embassy. Lebanese-born Amer Fakhoury, a former member of the South Lebanon Army, has been accused of running a prison where inmates were tortured during the Israeli occupation of southern Lebanon in the 1980’s and 1990’s. He is battling lymphoma and was freed after a Lebanese judge ordered him to be released.

Market analysts warn that oil prices could fall to $20.00/barrel or lower – as the Saudi-Russia oil price war rages on. Oil prices dipped below $30/barrel in the U.S. this week, and traders are renting storage space on crude oil tankers to hold supply until they can sell later at higher prices. But neither Saudi Arabia nor Russia appears ready to slow production to try to bring prices back up to sustainable levels, with Russia in particular showing strong determination to wait out this period of low prices to force less competitive firms, specifically those operating in U.S. shale, out of the market.

U.S. and Mexico agree to close border to non-essential traffic. Mexican President Andrés Manuel López Obrador’s response to COVID-19 has been criticized as too lax, as he continues to hold rallies, shake hands, and kiss babies. Meanwhile, the Credit Suisse forecast GDP contraction of 4% will not be helped by the partial closing of the U.S.-Mexico border. With $600 billion in annual cross-border trade at stake,even a partial closing is no small decision and will have economic impacts throughout North America. The U.S.-Canadian border has already closed to non-essential traffic this week, allowing for goods like food, medicine, and fuel to cross. Determining what is “essential” at both borders will no doubt cause additional confusion.