foreignpolicy--2020-02-24--Get Ready for Closed Borders and Crashing Markets

Get Ready for Closed Borders and Crashing Markets Global stock markets dropped steeply on Monday amid fears that the coronavirus could be having wider economic impact than thought .
Meanwhile the World Health Organization ( WHO ) announced Monday morning that a global pandemic of the coronavirus hasn ’ t yet arrived—but is highly possible .
That ’ s an opinion increasingly shared by epidemiologists , especially as outbreaks struck multiple countries over the past week : South Korea , Iran , and Italy .
Cases of transmission with no traceable link to the origin of COVID-19 in China are @ @ @ @ @ @ @ are emerging in countries with few reported cases , suggesting a much wider undetected pattern of infection .
If this happens , no other story will be more important in 2020 .
It ’ s been many years since the world faced outbreaks of this scale .
The Hong Kong flu outbreak of 1968 killed approximately 1 million people worldwide , and appears to have been considerably less lethal than the coronavirus .
It ’ s not yet certain what the virus ’ case fatality rate—the percentage of those infected who die—is , @ @ @ @ @ @ @ level of the Spanish flu in 1918 , which killed more than 50 million people .
Medical technology has come a long way since then—but so has globalization and population growth .
China was first to be hit , so it gives the rest of the world some idea of what might be coming .
What does that look like ?
After putting more than 700 million people under travel restrictions , 150 million of them under complete lockdown at home , China is now trying to ease limitations in order to get @ @ @ @ @ @ @ crumples in on itself like a failed soufflé .
But the messaging has been distinctly mixed , with attempts to end the cordon sanitaire around Wuhan lasting just three hours—and the streets of Beijing and Shanghai are still deserted .
The economic effects of the shutdown in China are already beginning to bite—which is one reason the leadership is pushing for factories to reopen .
China ’ s small firms are already on the brink of collapse , while sales have crumbled .
Ships are leaving China ’ s ports 90 percent empty @ @ @ @ @ @ @ it won ’ t just be China hurting .
One wing of the global economy is already on fire .
Foreign firms are already scrambling to replace broken links in supply chains , some of which are threatening critical sectors .
Despite the fall today , markets may not yet be pricing in the risk in full , and further tumbles should be expected if the lack of containment becomes clear .
( China ’ s rigged stock market , on the other hand , is rising thanks to government efforts . )
@ @ @ @ @ @ @ worsened by the virus ’ s breakout just before the Lunar New Year , which left hundreds of millions of people stranded away from their workplace—but office and factory shutdowns are still very likely .
In theory , remote work can replace some of this , but Chinese demand is already causing key systems to crash for lack of capability .
That ’ s a taste of what ’ s to come for the rest of the world .
True , democratic countries may not resort to the absolutism of China internally—look at @ @ @ @ @ @ @ where compliance with a “ special zone ” is voluntary and largely followed .
Italy ’ s new “ red zone ” is stricter than South Korea ’ s , but not of the same scale or fierceness .
Even countries that have already normalized restricting their own citizens , such as India , may not have the capability to do so .
Public events , however , are going to be severely threatened—potentially including critical elections .
But when it comes to international travel , there ’ s little to restrain the @ @ @ @ @ @ @ end of most other nations ’ flights to China has shown .
That will come despite the near universal consensus from experts that such measures don ’ t work .
It ’ ll be easier the more isolated the country is already—Iran is already an easier target than South Korea or Italy because existing links are smaller .
As the virus spreads , however , expect international travel to become difficult to impossible for weeks or months .
Any event that involves people coming from all corners of the world is also likely @ @ @ @ @ @ @ has already happened with conferences with a significant East Asian component .
Shortages have not been as bad as feared in China , with produce and water reaching even the worst-stricken areas—in large part thanks to the heroic work of delivery personnel .
But Hong Kong , despite only a small number of cases , has seen empty shelves in many stores for weeks as residents rush to buy staples such as toilet paper .
Supermarkets have been ransacked by panicky buyers in Italy .
Worldwide , masks and other medical equipment are @ @ @ @ @ @ @ will replicate as worries spread—especially in areas , like Hong Kong and Italy , where trust in the government ’ s ability to deliver is small .
In Hong Kong ’ s case , that ’ s because of the continuing protests against authorities believed to be in China ’ s pocket ; in Italy ’ s , it ’ s a persistent mistrust in incompetent officialdom , especially when disasters are involved .
As supply chains snap , panic buying is likely to be worsened by real shortages .
Even when the @ @ @ @ @ @ @ anti-Asian racism still grew worldwide .
That ranged from indiscriminate bans against Chinese passport holders to street attacks to threatened pogroms and “ patrols ” by far-right groups in some countries .
In China , persecution has centered around people from Hubei province , the virus ’ s epicenter .
In China ’ s neighboring countries , it has been focused on Chinese diaspora groups .
And in Europe and America , every Asian-appearing person has become a potential target .
Natural disasters sometimes have a way of bringing countries together—such as the @ @ @ @ @ @ @ role of WHO and other disease control organizations has been a bright spot in international cooperation , even if that historically involved putting the West before the rest .
But there ’ s been little of that following the coronavirus , where conspiracy theories have dominated media in many countries—whether aimed at China or at the United States .
The Chinese government , meanwhile , has turned down offers of aid from the United States and doubled down on nationalist , anti-American rhetoric .
On WeChat , conspiracy theories claiming the virus originated @ @ @ @ @ @ @ by censors , while nationalistic troll Zhao Lijian recently took up his role as spokesperson for the Ministry of Foreign Affairs .
The further spread of the virus will also sharpen attitudes toward China .
For existing sycophants like Cambodian Prime Minister Hun Sen or Pakistani Prime Minister Imran Khan , it ’ s been a chance to cozy up further to Beijing .
For aspiring authoritarians , China ’ s supposed efficiency—regardless of statistical doubts—will be cited as a model .
And for those distrustful of China or fearful of its rise @ @ @ @ @ @ @ time to spread will be enough to pin the blame for the outbreak squarely on the Communist Party .
All of these scenarios play into and worsen each other .
Shutdowns spur fear .
Fear distorts markets and wrecks productivity .
Division harms international cooperation and prompts travel bans .
The most dangerous scenarios are those where the impact of the virus causes entire systems to collapse .
The world has already seen what that looks like in Wuhan , where the virus has totally overwhelmed an already fragile health care system .
@ @ @ @ @ @ @ of excess deaths not caused by the virus itself but by the lack of hospital beds , resources , or ambulances to deal with other health issues .
And although China is still relatively poor per capita , the country has enormous reserves of wealth and manpower .
Nations such as India or Indonesia , with huge populations and considerably fewer resources , may have an even harder time .
If ordinary services , from health care to banking , break down , the knock-on effects will be calamitous .
None of this @ @ @ @ @ @ @ , adaptive , and cooperative in times of crisis .
Vaccines may come sooner than expected , and the arrival of summer may help slow the virus ’ s spread .
The case fatality rate is far higher in overwhelmed Wuhan than in cases outside of the immediate disaster zone , and even lower outside China itself .
Public education can do even more to fight the virus than quarantines and restrictions can — if the world ’ s leaders step up and treat the risks involved seriously .
And that ’ s @ @ @ @

Global stock markets dropped steeply on Monday amid fears that the coronavirus could be having wider economic impact than thought. Meanwhile the World Health Organization (WHO) announced Monday morning that a global pandemic of the coronavirus hasn’t yet arrived—but is highly possible. That’s an opinion increasingly shared by epidemiologists, especially as outbreaks struck multiple countries over the past week: South Korea, Iran, and Italy. Cases of transmission with no traceable link to the origin of COVID-19 in China are becoming more common. Frighteningly, deaths are emerging in countries with few reported cases, suggesting a much wider undetected pattern of infection.
Global stock markets dropped steeply on Monday amid fears that the coronavirus could be having wider economic impact than thought. Meanwhile the World Health Organization (WHO) announced Monday morning that a global pandemic of the coronavirus hasn’t yet arrived—but is highly possible. That’s an opinion increasingly shared by epidemiologists, especially as outbreaks struck multiple countries over the past week: South Korea, Iran, and Italy. Cases of transmission with no traceable link to the origin of COVID-19 in China are becoming more common. Frighteningly, deaths are emerging in countries with few reported cases, suggesting a much wider undetected pattern of infection.
If this happens, no other story will be more important in 2020. It’s been many years since the world faced outbreaks of this scale. The Hong Kong flu outbreak of 1968 killed approximately 1 million people worldwide, and appears to have been considerably less lethal than the coronavirus. It’s not yet certain what the virus’ case fatality rate—the percentage of those infected who die—is, but it looks to be at the level of the Spanish flu in 1918, which killed more than 50 million people. Medical technology has come a long way since then—but so has globalization and population growth.
China was first to be hit, so it gives the rest of the world some idea of what might be coming. What does that look like?
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1. A shutdown world
After putting more than 700 million people under travel restrictions, 150 million of them under complete lockdown at home, China is now trying to ease limitations in order to get people back to work before the economy crumples in on itself like a failed soufflé. But the messaging has been distinctly mixed, with attempts to end the cordon sanitaire around Wuhan lasting just three hours—and the streets of Beijing and Shanghai are still deserted.
The economic effects of the shutdown in China are already beginning to bite—which is one reason the leadership is pushing for factories to reopen. China’s small firms are already on the brink of collapse, while sales have crumbled. Ships are leaving China’s ports 90 percent empty.
All this will get much worse—and it won’t just be China hurting. One wing of the global economy is already on fire. Foreign firms are already scrambling to replace broken links in supply chains, some of which are threatening critical sectors. Despite the fall today, markets may not yet be pricing in the risk in full, and further tumbles should be expected if the lack of containment becomes clear. (China’s rigged stock market, on the other hand, is rising thanks to government efforts.)
The economic devastation wrought in China was worsened by the virus’s breakout just before the Lunar New Year, which left hundreds of millions of people stranded away from their workplace—but office and factory shutdowns are still very likely. In theory, remote work can replace some of this, but Chinese demand is already causing key systems to crash for lack of capability.
That’s a taste of what’s to come for the rest of the world. True, democratic countries may not resort to the absolutism of China internally—look at the South Korean city of Daegu, where compliance with a “special zone” is voluntary and largely followed. Italy’s new “red zone” is stricter than South Korea’s, but not of the same scale or fierceness. Even countries that have already normalized restricting their own citizens, such as India, may not have the capability to do so. Public events, however, are going to be severely threatened—potentially including critical elections.
But when it comes to international travel, there’s little to restrain the impulse to shut down potential threats—as the end of most other nations’ flights to China has shown. That will come despite the near universal consensus from experts that such measures don’t work. It’ll be easier the more isolated the country is already—Iran is already an easier target than South Korea or Italy because existing links are smaller. As the virus spreads, however, expect international travel to become difficult to impossible for weeks or months. Any event that involves people coming from all corners of the world is also likely to be postponed or canceled, as has already happened with conferences with a significant East Asian component.
2. Panic buying
Shortages have not been as bad as feared in China, with produce and water reaching even the worst-stricken areas—in large part thanks to the heroic work of delivery personnel. But Hong Kong, despite only a small number of cases, has seen empty shelves in many stores for weeks as residents rush to buy staples such as toilet paper. Supermarkets have been ransacked by panicky buyers in Italy. Worldwide, masks and other medical equipment are in increasingly short supply.
That pattern will replicate as worries spread—especially in areas, like Hong Kong and Italy, where trust in the government’s ability to deliver is small. In Hong Kong’s case, that’s because of the continuing protests against authorities believed to be in China’s pocket; in Italy’s, it’s a persistent mistrust in incompetent officialdom, especially when disasters are involved. As supply chains snap, panic buying is likely to be worsened by real shortages.
3. Racism and division
Even when the coronavirus was primarily confined to China, anti-Asian racism still grew worldwide. That ranged from indiscriminate bans against Chinese passport holders to street attacks to threatened pogroms and “patrols” by far-right groups in some countries. In China, persecution has centered around people from Hubei province, the virus’s epicenter. In China’s neighboring countries, it has been focused on Chinese diaspora groups. And in Europe and America, every Asian-appearing person has become a potential target.
Natural disasters sometimes have a way of bringing countries together—such as the Greek-Turkish earthquake diplomacy of 1999. The role of WHO and other disease control organizations has been a bright spot in international cooperation, even if that historically involved putting the West before the rest. But there’s been little of that following the coronavirus, where conspiracy theories have dominated media in many countries—whether aimed at China or at the United States. The Chinese government, meanwhile, has turned down offers of aid from the United States and doubled down on nationalist, anti-American rhetoric. On WeChat, conspiracy theories claiming the virus originated in the United States are going undeleted by censors, while nationalistic troll Zhao Lijian recently took up his role as spokesperson for the Ministry of Foreign Affairs.
The further spread of the virus will also sharpen attitudes toward China. For existing sycophants like Cambodian Prime Minister Hun Sen or Pakistani Prime Minister Imran Khan, it’s been a chance to cozy up further to Beijing. For aspiring authoritarians, China’s supposed efficiency—regardless of statistical doubts—will be cited as a model. And for those distrustful of China or fearful of its rise, the cover-up that gave the virus time to spread will be enough to pin the blame for the outbreak squarely on the Communist Party.
4. Systematic failure
All of these scenarios play into and worsen each other. Shutdowns spur fear. Fear distorts markets and wrecks productivity. Division harms international cooperation and prompts travel bans. The most dangerous scenarios are those where the impact of the virus causes entire systems to collapse.
The world has already seen what that looks like in Wuhan, where the virus has totally overwhelmed an already fragile health care system. That’s producing an unknown number of excess deaths not caused by the virus itself but by the lack of hospital beds, resources, or ambulances to deal with other health issues.
And although China is still relatively poor per capita, the country has enormous reserves of wealth and manpower. Nations such as India or Indonesia, with huge populations and considerably fewer resources, may have an even harder time. If ordinary services, from health care to banking, break down, the knock-on effects will be calamitous.
None of this is inevitable. People are remarkably resilient, adaptive, and cooperative in times of crisis. Vaccines may come sooner than expected, and the arrival of summer may help slow the virus’s spread. The case fatality rate is far higher in overwhelmed Wuhan than in cases outside of the immediate disaster zone, and even lower outside China itself. Public education can do even more to fight the virus than quarantines and restrictions can — if the world’s leaders step up and treat the risks involved seriously. And that’s a big if.


foreignpolicy--2020-02-24--The West Is About to Fail the Coronavirus Test

The West Is About to Fail the Coronavirus Test When an authoritarian accumulates power by eliminating political opponents and building a cult of personality around his leadership , the downside is that when things go wrong , often everybody blames him .
Chinese President Xi Jinping has kept a low profile in this epidemic , which has killed more than 2,500 people in China as of Monday .
The crisis has become as great a strain on the country ’ s political leadership as it has on its medical workers .
Stunningly , the system itself has acknowledged this , @ @ @ @ @ @ @ led by Xi saying the coronavirus is “ a major test of China ’ s system and capacity for governance.
” Meanwhile , at ground zero in Wuhan , doctors don diapers because they have no time for breaks , while cancer patients complain of neglect .
How China manages COVID-19 is being closely scrutinized and widely criticized .
But with global health specialists cautioning the current outbreak may not wane like the regular flu with the arrival of spring , and one epidemiologist at Harvard University even estimating a pandemic infecting 40 @ @ @ @ @ @ @ , including democracies , will be tested and judged on how they respond and how they treat people .
And the signs are that many—including members of the G-7—will disappoint , in some cases calamitously .
Japan ’ s mishandling of the cruise ship quarantine of the Diamond Princess and the inadequate care it provided captive passengers show how even rich and open societies can bungle responses .
The United States has been keeping Americans , including some who tested negative for the virus , on military bases .
Meanwhile , the body @ @ @ @ @ @ @ , the World Health Organization ( WHO ) , lacks both the financial and political heft to manage a pandemic .
The response to the outbreak has been discouraging .
The main tool has been brute isolation and quarantine .
In China , that has meant restrictions on the movement of 760 million people , or more than half its population .
South Korea announced it will lock down cities as necessary .
Its fourth-largest city , Daegu , already looks like a ghost town .
Countries from Australia to Russia have announced @ @ @ @ @ @ @ who have spent time in China .
While the epidemiology of the virus is not fully understood and very different from Ebola , the Ebola outbreak of 2014 should have brought critical lessons—but these have not been heeded .
After that devastating outbreak , the WHO strengthened its emergency response capacity , but it depends on member states to support its mandate .
Unfortunately , the organization continues to operate on a budget equivalent to that of a large hospital in the United States , because member states won ’ t pay up—crippling @ @ @ @ @ @ @ fight against the new and emerging disease .
A review of quarantine and isolation policies from the Ebola outbreak had also concluded that any measures taken should be based on science , rather than fear .
But fear has not only infected medical responses to the current outbreak—it has come at a time when fear has already defined politics in many places .
The rise of far-right populist movements , led by stand-alone demagogues who question the international rules-based system , hampers country cooperation .
Those same politicians and their supporters spread misinformation @ @ @ @ @ @ @ current climate—a new disinformation campaign linked to Russia promotes the conspiracy theory that the United States unleashed the virus .
The world is about to witness the fracturing of the global health policy space and what happens when countries do not work together .
Look at the MS Westerdam cruise ship that was turned away at multiple ports , from Japan to Thailand , before finally being allowed to dock in Cambodia .
Countries with a poor track record of human rights will absolutely suffer , but countries with civil liberties might not @ @ @ @ @ @ @ hoped .
In theory , the United States should not have a problem handling the coronavirus .
The Centers for Disease Control and Prevention is one of the most trusted federal agencies among citizens , and that is key : Trust in government influences behaviors and allows for the effective implementation of policy .
In 2014 , Ebola came to the United States .
One of us , Melissa Chan , was there , reporting outside Texas Health Presbyterian Hospital Dallas , where medical staff treated Thomas Eric Duncan , a Liberian visiting @ @ @ @ @ @ @ Subsequently , two nurses who cared for him also contracted the disease .
People panicked , and demanded a travel ban against Ebola-plagued countries in West Africa .
Despite tremendous pressure from Republicans but also from some members of his own party , then President Barack Obama did not give in to hysteria .
“ We have to remember the basic facts , ” he said .
“ Trying to seal off an entire region of the world—if that were even possible—could actually make the situation worse.
” It is impossible to imagine @ @ @ @ @ @ @ Trump making a similar call should another panic ensue today .
A leader more comfortable causing panic than assuaging it , a pandemic would test this administration s judgment and ability to govern , if not to the degree seen in China , at least enough to shake some of our beliefs about what we expect from our government .
Trump has already expressed displeasure over the transfer of sick Americans back to U.S. soil .
On Sunday , Alabama Sen. Richard Shelby declared victory after he convinced the president to scuttle plans @ @ @ @ @ @ @ in his state .
If large numbers of Americans start falling ill , will “ America First ” mean one that serves healthy Americans while detaining the sick ?
In Europe , Italy has locked down several cities and far-right politician Matteo Salvini has said the country should close its borders and suspend the Schengen treaty , which keeps the European Union ’ s borders open across the continent .
Race-based attacks and discrimination against Chinese have escalated there .
Many African countries have ignored appeals for help from their citizens living in @ @ @ @ @ @ @ to the continent .
Even in countries where health authorities have maintained level heads , attention and resources on the coronavirus may be disproportionate to its threat .
Doctors are asking patients whether they have recently visited China or been in contact with anyone who has—all while the regular flu , which has a vaccine many opt not to take , is estimated to kill anywhere from 16,000 to 41,000 people this season in the United States alone and infect tens of millions more .
Some epidemiologists have pointed out that once the @ @ @ @ @ @ @ , it may have a similar mortality rate to a bad flu season .
It could also , of course , be much worse .
But as countries start tallying deaths , leaders may succumb to pressure from the public to take more action , regardless of whether decisions infringe on the free movement of people and human rights .
The tragedy in all this is that on a technical level , the world is more capable than ever of handling emerging diseases .
Outbreak planning has advanced since the Ebola epidemic .
@ @ @ @ @ @ @ study new viruses , and we have mechanisms in place to speed up research and create new vaccines and treatments .
But the politics of fear have gripped the world , counter to public-health best practices .
Fear hid the initial outbreak in China and allowed it to spread .
Fear has guided decisions in Asia , Europe , and elsewhere .
Unless governments choose to strengthen global health coordination and enact evidence-based policies , the result , in both authoritarian and democratic states alike , will be a man-made disaster as much @ @ @ @ @

When an authoritarian accumulates power by eliminating political opponents and building a cult of personality around his leadership, the downside is that when things go wrong, often everybody blames him. Chinese President Xi Jinping has kept a low profile in this epidemic, which has killed more than 2,500 people in China as of Monday.
When an authoritarian accumulates power by eliminating political opponents and building a cult of personality around his leadership, the downside is that when things go wrong, often everybody blames him. Chinese President Xi Jinping has kept a low profile in this epidemic, which has killed more than 2,500 people in China as of Monday.
The crisis has become as great a strain on the country’s political leadership as it has on its medical workers. Stunningly, the system itself has acknowledged this, with the official account of one meeting led by Xi saying the coronavirus is “a major test of China’s system and capacity for governance.” Meanwhile, at ground zero in Wuhan, doctors don diapers because they have no time for breaks, while cancer patients complain of neglect.
How China manages COVID-19 is being closely scrutinized and widely criticized. But with global health specialists cautioning the current outbreak may not wane like the regular flu with the arrival of spring, and one epidemiologist at Harvard University even estimating a pandemic infecting 40 to 70 percent of the world—countries everywhere, including democracies, will be tested and judged on how they respond and how they treat people. And the signs are that many—including members of the G-7—will disappoint, in some cases calamitously.
Japan’s mishandling of the cruise ship quarantine of the Diamond Princess and the inadequate care it provided captive passengers show how even rich and open societies can bungle responses. The United States has been keeping Americans, including some who tested negative for the virus, on military bases. Meanwhile, the body that should be leading the global fight, the World Health Organization (WHO), lacks both the financial and political heft to manage a pandemic.
The response to the outbreak has been discouraging. The main tool has been brute isolation and quarantine. In China, that has meant restrictions on the movement of 760 million people, or more than half its population. South Korea announced it will lock down cities as necessary. Its fourth-largest city, Daegu, already looks like a ghost town. Countries from Australia to Russia have announced travel bans against Chinese citizens or those who have spent time in China.
The world is about to witness the fracturing of the global health policy space and what happens when countries do not work together.
While the epidemiology of the virus is not fully understood and very different from Ebola, the Ebola outbreak of 2014 should have brought critical lessons—but these have not been heeded. After that devastating outbreak, the WHO strengthened its emergency response capacity, but it depends on member states to support its mandate. Unfortunately, the organization continues to operate on a budget equivalent to that of a large hospital in the United States, because member states won’t pay up—crippling its ability to truly lead any global fight against the new and emerging disease.
A review of quarantine and isolation policies from the Ebola outbreak had also concluded that any measures taken should be based on science, rather than fear.
But fear has not only infected medical responses to the current outbreak—it has come at a time when fear has already defined politics in many places. The rise of far-right populist movements, led by stand-alone demagogues who question the international rules-based system, hampers country cooperation. Those same politicians and their supporters spread misinformation. Still others are capitalizing on the current climate—a new disinformation campaign linked to Russia promotes the conspiracy theory that the United States unleashed the virus.
The world is about to witness the fracturing of the global health policy space and what happens when countries do not work together. Look at the MS Westerdam cruise ship that was turned away at multiple ports, from Japan to Thailand, before finally being allowed to dock in Cambodia. Countries with a poor track record of human rights will absolutely suffer, but countries with civil liberties might not acquit themselves as well as might be hoped.
In theory, the United States should not have a problem handling the coronavirus. The Centers for Disease Control and Prevention is one of the most trusted federal agencies among citizens, and that is key: Trust in government influences behaviors and allows for the effective implementation of policy.
In 2014, Ebola came to the United States. One of us, Melissa Chan, was there, reporting outside Texas Health Presbyterian Hospital Dallas, where medical staff treated Thomas Eric Duncan, a Liberian visiting the United States. He died. Subsequently, two nurses who cared for him also contracted the disease. People panicked, and demanded a travel ban against Ebola-plagued countries in West Africa.
Despite tremendous pressure from Republicans but also from some members of his own party, then President Barack Obama did not give in to hysteria. “We have to remember the basic facts,” he said. “Trying to seal off an entire region of the world—if that were even possible—could actually make the situation worse.”
It is impossible to imagine Muslim-banning, wall-building, fact-defying President Donald Trump making a similar call should another panic ensue today. A leader more comfortable causing panic than assuaging it, a pandemic would test this administration ’ s judgment and ability to govern, if not to the degree seen in China, at least enough to shake some of our beliefs about what we expect from our government.
Trump has already expressed displeasure over the transfer of sick Americans back to U.S. soil. On Sunday, Alabama Sen. Richard Shelby declared victory after he convinced the president to scuttle plans to move coronavirus patients to a facility in his state. If large numbers of Americans start falling ill, will “America First” mean one that serves healthy Americans while detaining the sick?
In Europe, Italy has locked down several cities and far-right politician Matteo Salvini has said the country should close its borders and suspend the Schengen treaty, which keeps the European Union’s borders open across the continent. Race-based attacks and discrimination against Chinese have escalated there. Many African countries have ignored appeals for help from their citizens living in China, afraid of bringing the virus to the continent.
Even in countries where health authorities have maintained level heads, attention and resources on the coronavirus may be disproportionate to its threat. Doctors are asking patients whether they have recently visited China or been in contact with anyone who has—all while the regular flu, which has a vaccine many opt not to take, is estimated to kill anywhere from 16,000 to 41,000 people this season in the United States alone and infect tens of millions more.
Some epidemiologists have pointed out that once the full extent of the coronavirus is known, it may have a similar mortality rate to a bad flu season. It could also, of course, be much worse. But as countries start tallying deaths, leaders may succumb to pressure from the public to take more action, regardless of whether decisions infringe on the free movement of people and human rights.
The tragedy in all this is that on a technical level, the world is more capable than ever of handling emerging diseases. Outbreak planning has advanced since the Ebola epidemic. Organizations can now quickly deploy researchers to study new viruses, and we have mechanisms in place to speed up research and create new vaccines and treatments. But the politics of fear have gripped the world, counter to public-health best practices. Fear hid the initial outbreak in China and allowed it to spread. Fear has guided decisions in Asia, Europe, and elsewhere. Unless governments choose to strengthen global health coordination and enact evidence-based policies, the result, in both authoritarian and democratic states alike, will be a man-made disaster as much as a natural one.


foreignpolicy--2020-02-24--Emmanuel Macron’s War on Islamism Is Europe’s Future

“ We must never accept that the laws of religion can be superior to those of the Republic.
” With these words , delivered in a landmark speech in the eastern city of Mulhouse on Feb. 18 , French President Emmanuel Macron launched his government ’ s strategy against political Islam .
“ Islamist separatism is incompatible with freedom and equality , ” he stated , “ incompatible with the indivisibility of the Republic and the necessary unity of the nation.
” The Mulhouse speech , and its harsh language , came as no surprise to anybody who has followed @ @ @ @ @ @ @ last few years .
Terms such as “ Islamist separatism , ” “ communitarianism , ” and “ Islamist supremacism ” —which in previous years constituted the vocabulary almost exclusively of the National Front ( now National Rally , Marine Le Pen ’ s far-right party ) —have become ubiquitous .
The term “ fréro-salafiste ” has also become mainstream .
It covers the two Islamist trends critics accuse of promoting separatism in the country : the Muslim Brotherhood ( Fréres musulmans in French ) , with its moderate façade but divisive agenda @ @ @ @ @ @ @ firm rejection of French society .
“ We are talking , ” Macron said in another speech last April , “ about a secession that is sometimes insidiously installed because the Republic has deserted or has not kept its promises .
We are talking about people who , in the name of a religion , are pursuing a political project , that of a political Islam that wants to secede from our Republic.
” The trigger for France ’ s heightened concerns about Islamism has unquestionably been terrorism .
Since the Charlie Hebdo @ @ @ @ @ @ @ , the country has been in an almost constant state of alert .
It has experienced massive attacks , like the November 2015 Paris attacks and the July 2016 Nice truck ramming , and an almost monthly slew of low-intensity acts of violence often perpetrated by individuals linked to or simply inspired by the Islamic State .
It is also the European country with the dubious honor of having contributed the largest contingent of foreign fighters in Syria—some 2,000 .
The assessment among many experts inside and outside the government is that the @ @ @ @ @ @ @ ” as areas where government control is weak and where crime and Islamism thrive have come to be referred to in some quarters , were the perfect breeding grounds for this phenomenon .
Two recent books by Hugo Micheron and Bernard Rougier , which have received huge coverage , have clearly shown that while marginalization , crime , and unemployment were important factors in causing France ’ s radicalization wave , even more crucial was the separatist environment created by the so-called fréro-salafistes .
In substance , they argue , nonviolent Islamists provide @ @ @ @ @ @ @ efforts of jihadi groups—a position , to be sure , that is not universally accepted .
But France ’ s concerns about Islamism go well beyond terrorism .
Critics argue that nonviolent Islamist groups , while largely operating within the boundaries of the law , propagate an interpretation of Islam that drives a wedge between Muslims and non-Muslims , contributing to polarization and harming integration .
Europeans are concerned about the growing sway of Islamist groups that seek to push members of local Muslim communities to detach from mainstream society—mostly through preaching but @ @ @ @ @ @ @ , intimidation and , occasionally , violence— and resort to alternative legal , educational , and social systems .
“ In the Republic , ” Macron said in Mulhouse , “ we can not accept that we refuse to shake hands with a woman because she is a woman .
In the Republic , we can not accept that someone refuses to be treated or educated by someone because she is a woman .
In the Republic , one can not accept school dropouts for religious or belief reasons .
In the Republic @ @ @ @ @ @ @ virginity to marry.
” Macron is a staunch foe of populism , but he is also a good reader of his nation ’ s collective psyche .
That Macron , a staunch foe of populism but , at the same time , a good reader of his nation ’ s collective psyche , would highlight the negative impact of Islamism on French society is also indicative of a trend that can be observed throughout Europe .
The debate on nonviolent Islamism has often taken a back seat to that on the violent manifestations @ @ @ @ @ @ @ , terrorist attacks get all the attention from policymakers , security services , and the media .
The activities of nonviolent Islamists , on the other hand , tend to be ignored : They are mostly legal , rarely flare up in dramatic incidents , and often bring ( sometimes justified , sometimes not ) charges of racism and Islamophobia to those who highlight them .
Yet now , throughout Europe , the debate over Islamism is taking place with increasing openness and nuance .
A 2018 report by the security services of @ @ @ @ @ @ @ populous state , encapsulated these new debates by arguing that “ in the long run , the threat posed by legalistic Islamism to the liberal democratic system is greater than that of jihadism … They aspire to an Islamist order , but are prepared to allow certain democratic elements within that framework .
For this reason , their extremism is often barely recognizable at first glance.
” These concerns are not new , but what is noteworthy is that they are no longer expressed almost exclusively by those on the right of the @ @ @ @ @ @ @ than in the past , by politicians and commentators of all political persuasions—not to mention security services .
No European country has adopted an even remotely cohesive approach to challenge Islamism , a task rendered particularly complex by the fact that most activities of nonviolent Islamists fall within the bounds of the law .
Various countries have adopted measures aimed at tackling certain aspects : banning foreign funding ( as Austria did ) or limiting it ( as the Netherlands is discussing ) ; training imams ( as Germany does ) and deporting @ @ @ @ @ @ @ than any other country ) ; and cutting public funding to organizations connected to Islamist networks for religious , social , pro-integration , anti-Islamophobia , or radicalization prevention activities ( as Sweden recently did for a Muslim Brotherhood youth group that did not “ fulfill the democracy requirement ” necessary to receive aid ) .
While indicative of a trend , these measures hardly represent a comprehensive approach .
Even Macron ’ s strategy covers only a few aspects .
It aims to end the system of teaching of languages from the pupils @ @ @ @ @ @ @ the phenomenon of “ detached imams ” sent from abroad , replacing them with clerical leaders trained in France .
It also calls for more stringent scrutiny over the funding of places of worship .
( Macron ’ s speech was not coincidentally delivered in Mulhouse , the site of a mega-mosque whose Qatari funding has been the source of a national controversy . )
The implementation of some measures will also be problematic , particularly in a country that makes the separation of religion and state ( the concept of laïcité ) @ @ @ @ @ @ @ if they were enacted , they hardly constitute a multipronged , generational , socio-cultural grand strategy that many believe is necessary to counter Islamism , whether in France or elsewhere .
Despite the feebleness of the measures Macron announced , his speech is important because it shows where the conversation in Europe is headed .
While each European country ’ s debate has its own dynamics and degree of intensity , there are continentwide commonalities .
The debate in all countries features the vocal and problematic presence of two extremes : foaming-at-the-mouth anti-Islamist @ @ @ @ @ @ @ activists on the right and willfully blind leftists who tend to dismiss any accusation against Islamists as preposterous fabrications motivated by Islamophobia .
Macron exemplifies the rise of a middle-of-the-road approach—a combination of concern and healthy skepticism of Islamism that does not degenerate into paranoia or conflate Islamist ideology with Islam .

“We must never accept that the laws of religion can be superior to those of the Republic.”
“We must never accept that the laws of religion can be superior to those of the Republic.”
With these words, delivered in a landmark speech in the eastern city of Mulhouse on Feb. 18, French President Emmanuel Macron launched his government’s strategy against political Islam. “Islamist separatism is incompatible with freedom and equality,” he stated, “incompatible with the indivisibility of the Republic and the necessary unity of the nation.”
The Mulhouse speech, and its harsh language, came as no surprise to anybody who has followed the French debate on Islamism over the last few years. Terms such as “Islamist separatism,” “communitarianism,” and “Islamist supremacism”—which in previous years constituted the vocabulary almost exclusively of the National Front (now National Rally, Marine Le Pen’s far-right party)—have become ubiquitous.
The term “fréro-salafiste” has also become mainstream. It covers the two Islamist trends critics accuse of promoting separatism in the country: the Muslim Brotherhood (Fréres musulmans in French), with its moderate façade but divisive agenda, and the Salafists, with their firm rejection of French society.
“We are talking,” Macron said in another speech last April, “about a secession that is sometimes insidiously installed because the Republic has deserted or has not kept its promises. We are talking about people who, in the name of a religion, are pursuing a political project, that of a political Islam that wants to secede from our Republic.”
The trigger for France’s heightened concerns about Islamism has unquestionably been terrorism. Since the Charlie Hebdo attacks in January 2015, in fact, the country has been in an almost constant state of alert. It has experienced massive attacks, like the November 2015 Paris attacks and the July 2016 Nice truck ramming, and an almost monthly slew of low-intensity acts of violence often perpetrated by individuals linked to or simply inspired by the Islamic State. It is also the European country with the dubious honor of having contributed the largest contingent of foreign fighters in Syria—some 2,000.
The assessment among many experts inside and outside the government is that the “lost territories of the Republic,” as areas where government control is weak and where crime and Islamism thrive have come to be referred to in some quarters, were the perfect breeding grounds for this phenomenon. Two recent books by Hugo Micheron and Bernard Rougier, which have received huge coverage, have clearly shown that while marginalization, crime, and unemployment were important factors in causing France’s radicalization wave, even more crucial was the separatist environment created by the so-called fréro-salafistes. In substance, they argue, nonviolent Islamists provide a conducive ecosystem that aids the recruitment efforts of jihadi groups—a position, to be sure, that is not universally accepted.
But France’s concerns about Islamism go well beyond terrorism. Critics argue that nonviolent Islamist groups, while largely operating within the boundaries of the law, propagate an interpretation of Islam that drives a wedge between Muslims and non-Muslims, contributing to polarization and harming integration. Europeans are concerned about the growing sway of Islamist groups that seek to push members of local Muslim communities to detach from mainstream society—mostly through preaching but also through various forms of social pressure, intimidation and, occasionally, violence— and resort to alternative legal, educational, and social systems.
“In the Republic,” Macron said in Mulhouse, “we cannot accept that we refuse to shake hands with a woman because she is a woman. In the Republic, we cannot accept that someone refuses to be treated or educated by someone because she is a woman. In the Republic, one cannot accept school dropouts for religious or belief reasons. In the Republic, one cannot require certificates of virginity to marry.”
Macron is a staunch foe of populism, but he is also a good reader of his nation’s collective psyche.
That Macron, a staunch foe of populism but, at the same time, a good reader of his nation’s collective psyche, would highlight the negative impact of Islamism on French society is also indicative of a trend that can be observed throughout Europe. The debate on nonviolent Islamism has often taken a back seat to that on the violent manifestations of the ideology.
For obvious reasons, terrorist attacks get all the attention from policymakers, security services, and the media. The activities of nonviolent Islamists, on the other hand, tend to be ignored: They are mostly legal, rarely flare up in dramatic incidents, and often bring (sometimes justified, sometimes not) charges of racism and Islamophobia to those who highlight them.
Yet now, throughout Europe, the debate over Islamism is taking place with increasing openness and nuance. A 2018 report by the security services of North Rhine-Westphalia, Germany’s most populous state, encapsulated these new debates by arguing that “in the long run, the threat posed by legalistic Islamism to the liberal democratic system is greater than that of jihadism … They aspire to an Islamist order, but are prepared to allow certain democratic elements within that framework. For this reason, their extremism is often barely recognizable at first glance.”
These concerns are not new, but what is noteworthy is that they are no longer expressed almost exclusively by those on the right of the political spectrum but, much more frequently than in the past, by politicians and commentators of all political persuasions—not to mention security services.
No European country has adopted an even remotely cohesive approach to challenge Islamism, a task rendered particularly complex by the fact that most activities of nonviolent Islamists fall within the bounds of the law. Various countries have adopted measures aimed at tackling certain aspects: banning foreign funding (as Austria did) or limiting it (as the Netherlands is discussing); training imams (as Germany does) and deporting radical ones (Italy does this more than any other country); and cutting public funding to organizations connected to Islamist networks for religious, social, pro-integration, anti-Islamophobia, or radicalization prevention activities (as Sweden recently did for a Muslim Brotherhood youth group that did not “fulfill the democracy requirement” necessary to receive aid).
While indicative of a trend, these measures hardly represent a comprehensive approach. Even Macron’s strategy covers only a few aspects. It aims to end the system of teaching of languages from the pupils’ countries of origins in school and the phenomenon of “detached imams” sent from abroad, replacing them with clerical leaders trained in France. It also calls for more stringent scrutiny over the funding of places of worship. (Macron’s speech was not coincidentally delivered in Mulhouse, the site of a mega-mosque whose Qatari funding has been the source of a national controversy.)
The implementation of some measures will also be problematic, particularly in a country that makes the separation of religion and state (the concept of laïcité) one of its cornerstones. But even if they were enacted, they hardly constitute a multipronged, generational, socio-cultural grand strategy that many believe is necessary to counter Islamism, whether in France or elsewhere.
Despite the feebleness of the measures Macron announced, his speech is important because it shows where the conversation in Europe is headed. While each European country’s debate has its own dynamics and degree of intensity, there are continentwide commonalities.
The debate in all countries features the vocal and problematic presence of two extremes: foaming-at-the-mouth anti-Islamist (and, often, anti-Islam) activists on the right and willfully blind leftists who tend to dismiss any accusation against Islamists as preposterous fabrications motivated by Islamophobia.
Macron exemplifies the rise of a middle-of-the-road approach—a combination of concern and healthy skepticism of Islamism that does not degenerate into paranoia or conflate Islamist ideology with Islam.


foreignpolicy--2020-02-24--What Trump Really Doesn’t Get About Trade

What Trump Really Doesn ’ t Get About Trade U.S. President Donald Trump has , since 30 years before day one in office , been obsessed with trade balances , viewing the difference between a country ’ s imports and exports as something like the balance sheet of a business—more outflows than inflows must be the road to bankruptcy ( something Trump is intimately familiar with ) , so the only path to solvency must be to balance the books by importing less and exporting more .
During Trump ’ s first two years in office , that metric—his own—got @ @ @ @ @ @ @ steadily widening .
Last year , it shrank a bit to $ 616 billion—a bit better than in 2018 but still a wider gap than when he took office .
But the fact is , the myopia around the trade balance has in fact colored every aspect of the administration ’ s approach with every single major trading partner : the trade war with China , the browbeating of Japan and South Korea , the renegotiation of the North American Free Trade Agreement , the vilification of India and Vietnam , and , @ @ @ @ @ @ @ Europe ’ s “ unfair ” trade due to the size of that bloc ’ s trade surplus , especially Germany ’ s role in the surplus .
Just what do Trump and his administration get so wrong about trade deficits , and why does that mistaken diagnosis hamper so badly America ’ s efforts not just to deepen strategic ties with allies but to make any progress on trade at all ?
Trump and his trade officials argue that the trade balance is a good indicator of whether America is able to @ @ @ @ @ @ @ getting “ ripped off.
” That sounds like common sense .
The overall trade balance , whether a deficit ( like the United States ) or a surplus ( like Germany ) , isn ’ t a very good indicator of overall economic health , for starters .
In recent years , there has been an almost inverse relationship between domestic growth rates and unemployment and the size of the trade deficit : It ballooned during the go-go years of the first George W. Bush administration , and when the U.S. trade deficit @ @ @ @ @ @ @ , that was because of the sudden and catastrophic damage of the financial crisis .
More to the point , a trade balance—oddly enough—doesn ’ t say very much about the health of a country ’ s trading relationships .
That ’ s because the trade balance is simply part of a broader accounting measure known as the current account balance , and that is actually determined by a country ’ s domestic savings rate and investment habits—not by trade barriers to U.S. trucks , nuts , and beef or by a U.S. @ @ @ @ @ @ @ .
“ Foreign import barriers and exports subsidies are not the reason for the US trade deficit , ” Martin Feldstein , the former chief economic advisor to Ronald Reagan , explained in 2017 .
“ The real reason is that Americans are spending more than they produce.
” If a country , like the United States , spends more money than all the households , businesses , and government can cobble together , the difference has to come from overseas .
The current account balance is simply the reckoning of all the @ @ @ @ @ @ @ flow in and out of any given country in any given year .
“ In other words , saving minus investment equals exports minus imports—a fundamental accounting identity that is true for every country in every year , ” Feldstein wrote .
That has been particularly evident as Trump keeps signing off on huge annual budget deficits , now approaching $ 1 trillion , which must be financed with money from abroad .
That doesn ’ t by itself mean that the U.S. trade deficit is a sign that the United States is @ @ @ @ @ @ @ , nor would an overall trade surplus be a sign that the economy is a powerhouse .
“ The trade/current account deficit tells you nothing about an economy ’ s strength , weakness , or purchasing power , ” Barry Eichengreen , a professor of economics at the University of California , Berkeley , told Foreign Policy .
But Trump seems to think that countries with a trade surplus , like Japan most of the time or Germany , are savvier traders or somehow taking advantage of other countries .
Why can ’ @ @ @ @ @ @ @ ?
As long as the United States spends more than it makes and continues to run up huge deficits and more debt , it would be very hard-pressed to run a trade surplus .
But the issue for the United States is even more central : It could copy Germany ’ s model only if it wants to give up the primacy of the U.S. dollar and complete dominance of the international financial system—the very primacy that lets the Trump administration slap sanctions on whomever it likes , forcing even close allies like @ @ @ @ @ @ @ .
Any normal country—one whose money is not the global reserve currency—that ran budget deficits decade after decade would eventually face a comeuppance .
That fiscal profligacy would lead to higher interest rates and a weaker currency over time .
And that , in turn , would mean fewer imports and more exports—tending to balance out the trade deficit naturally .
But the dollar is the global reserve currency , and U.S. debt is the global safe investment ; that means there is a virtually unlimited appetite for U.S. dollars and U.S. debt @ @ @ @ @ @ @ the budget seems from year to year .
That means the self-correcting mechanism of higher interest rates , a weaker currency , and a more balanced trade picture never gets going .
In exchange for those seemingly permanent trade deficits , the United States gets to play financial policeman all around the world , using the central role of the dollar and the U.S. financial system to advance its own agenda in almost everything , from trade with Venezuela and North Korea to Europe ’ s dealings with Iran .
OK , but @ @ @ @ @ @ @ specific countries , like China or Mexico .
And Shea was talking about the goods trade deficit with Europe—surely a bilateral trade deficit is a clear indicator that a given trade relationship is out of whack ?
Bilateral trade deficits are an even more worthless metric to judge the health of a trade relationship .
Or as Eichengreen put it : “ A particular bilateral trade deficit or surplus is totally devoid of economic meaning.
” First , they ’ re not very accurate .
With supply chains for businesses now snaking all @ @ @ @ @ @ @ across borders , it is very difficult to say with accuracy what value of what goods came from which country ; take the famous example of the iPhone .
On paper , each smartphone counts as an import worth hundreds of dollars from China , but in reality China provides only a few dollars ’ worth of value , with the rest coming from U.S. inventions and other Asian suppliers .
Yet in the trade ledger , it all counts as a U.S. import from China .
More broadly , any given bilateral @ @ @ @ @ @ @ goods deficit with Europe that so riles U.S officials—is simply a slice of the overall trade balance , which is determined by savings and investment .
Forcing open any given market to allow for more exports of U.S. agricultural products , or raising tariffs to cut down imports from any given country , could make some difference for any one bilateral trade balance .
But , like squeezing a balloon or playing whack-a-mole , the underlying problem will just crop up elsewhere .
Take the United States .
In 2019 , it reduced @ @ @ @ @ @ @ $ 346 billion from $ 419 billion the year before , a seeming victory for Trump ’ s blend of tariffs and coerced exports .
( And he has hopes that the “ phase one ” deal signed last month will mean even more U.S. exports to shave that deficit further , though the outbreak of the coronavirus makes that unlikely . )
But an uptick with one country did almost nothing to solve the underlying problem .
The U.S. goods deficit with nearly every other trading partner—Europe , Mexico , Canada , @ @ @ @ @ @ @ Japan , Taiwan , and India—increased to make up nearly all the difference .
But Trump did manage to shrink his own growing trade deficit last year .
Maybe the combination of tariffs and forcing more market access overseas is paying off ?
No .
The trade deficit shrank by about 1.5 percent not because of a boom in U.S. exports but because Americans bought even fewer imported goods .
More to the point , Trump ’ s policies are almost the worst imaginable if the goal , which few economists actually share @ @ @ @ @ @ @ .
He has run massive budget deficits , which by definition skew the current account balance toward the negative .
And huge tax cuts , which helped drive the huge deficits , also prompted a couple of years of sugar-high economic growth—another factor that tends to boost imports and widen the trade deficit , especially when there ’ s little spare productive slack in the domestic economy to provide more goods to buy and consume .
Finally , his use of tariffs on imports , all else being equal , tends to push @ @ @ @ @ @ @ , making imports relatively cheaper and exports relatively more expensive—again , widening the trade deficit .
If the idea were actually , for some reason , to shrink the trade deficit , the remedy would be pretty much the opposite : much smaller deficits , fewer or no tariffs ( which would alleviate one cause of a rising dollar ) , and slower growth that would mean less consumer spending on coveted foreign goods .
But that ’ s hardly a recipe for election-year success .

When Deputy U.S. Trade Representative Dennis Shea tore into the European Union last week, attacking the $178 billion goods trade deficit the United States runs with the EU and acknowledging that the deficit “colors” every aspect of America’s approach to trade with Europe, it was hardly a departure for anyone in the administration.
When Deputy U.S. Trade Representative Dennis Shea tore into the European Union last week, attacking the $178 billion goods trade deficit the United States runs with the EU and acknowledging that the deficit “colors” every aspect of America’s approach to trade with Europe, it was hardly a departure for anyone in the administration.
U.S. President Donald Trump has, since 30 years before day one in office, been obsessed with trade balances, viewing the difference between a country’s imports and exports as something like the balance sheet of a business—more outflows than inflows must be the road to bankruptcy (something Trump is intimately familiar with), so the only path to solvency must be to balance the books by importing less and exporting more.
During Trump’s first two years in office, that metric—his own—got worse, with the U.S. trade deficit steadily widening. Last year, it shrank a bit to $616 billion—a bit better than in 2018 but still a wider gap than when he took office.
But the fact is, the myopia around the trade balance has in fact colored every aspect of the administration’s approach with every single major trading partner: the trade war with China, the browbeating of Japan and South Korea, the renegotiation of the North American Free Trade Agreement, the vilification of India and Vietnam, and, of course, the repeated broadsides about Europe’s “unfair” trade due to the size of that bloc’s trade surplus, especially Germany’s role in the surplus.
Just what do Trump and his administration get so wrong about trade deficits, and why does that mistaken diagnosis hamper so badly America’s efforts not just to deepen strategic ties with allies but to make any progress on trade at all?
Trump and his trade officials argue that the trade balance is a good indicator of whether America is able to trade fairly or if it’s getting “ripped off.” That sounds like common sense.
The overall trade balance, whether a deficit (like the United States) or a surplus (like Germany), isn’t a very good indicator of overall economic health, for starters. In recent years, there has been an almost inverse relationship between domestic growth rates and unemployment and the size of the trade deficit: It ballooned during the go-go years of the first George W. Bush administration, and when the U.S. trade deficit did shrink dramatically between 2008 and 2010, that was because of the sudden and catastrophic damage of the financial crisis.
More to the point, a trade balance—oddly enough—doesn’t say very much about the health of a country’s trading relationships. That’s because the trade balance is simply part of a broader accounting measure known as the current account balance, and that is actually determined by a country’s domestic savings rate and investment habits—not by trade barriers to U.S. trucks, nuts, and beef or by a U.S. penchant for French wines and German cars.
“Foreign import barriers and exports subsidies are not the reason for the US trade deficit,” Martin Feldstein, the former chief economic advisor to Ronald Reagan, explained in 2017. “The real reason is that Americans are spending more than they produce.”
If a country, like the United States, spends more money than all the households, businesses, and government can cobble together, the difference has to come from overseas. The current account balance is simply the reckoning of all the goods, services, and money that flow in and out of any given country in any given year. “In other words, saving minus investment equals exports minus imports—a fundamental accounting identity that is true for every country in every year,” Feldstein wrote.
That has been particularly evident as Trump keeps signing off on huge annual budget deficits, now approaching $1 trillion, which must be financed with money from abroad. That doesn’t by itself mean that the U.S. trade deficit is a sign that the United States is getting ripped off by its trading partners, nor would an overall trade surplus be a sign that the economy is a powerhouse.
“The trade/current account deficit tells you nothing about an economy’s strength, weakness, or purchasing power,” Barry Eichengreen, a professor of economics at the University of California, Berkeley, told Foreign Policy.
But Trump seems to think that countries with a trade surplus, like Japan most of the time or Germany, are savvier traders or somehow taking advantage of other countries. Why can’t the United States just copy them?
As long as the United States spends more than it makes and continues to run up huge deficits and more debt, it would be very hard-pressed to run a trade surplus. But the issue for the United States is even more central: It could copy Germany’s model only if it wants to give up the primacy of the U.S. dollar and complete dominance of the international financial system—the very primacy that lets the Trump administration slap sanctions on whomever it likes, forcing even close allies like Europe to jettison their own foreign-policy priorities.
Any normal country—one whose money is not the global reserve currency—that ran budget deficits decade after decade would eventually face a comeuppance. That fiscal profligacy would lead to higher interest rates and a weaker currency over time. And that, in turn, would mean fewer imports and more exports—tending to balance out the trade deficit naturally.
But the dollar is the global reserve currency, and U.S. debt is the global safe investment; that means there is a virtually unlimited appetite for U.S. dollars and U.S. debt, no matter how out of whack the budget seems from year to year. That means the self-correcting mechanism of higher interest rates, a weaker currency, and a more balanced trade picture never gets going.
In exchange for those seemingly permanent trade deficits, the United States gets to play financial policeman all around the world, using the central role of the dollar and the U.S. financial system to advance its own agenda in almost everything, from trade with Venezuela and North Korea to Europe’s dealings with Iran.
OK, but Trump rails about the trade deficit with specific countries, like China or Mexico. And Shea was talking about the goods trade deficit with Europe—surely a bilateral trade deficit is a clear indicator that a given trade relationship is out of whack?
Bilateral trade deficits are an even more worthless metric to judge the health of a trade relationship. Or as Eichengreen put it: “A particular bilateral trade deficit or surplus is totally devoid of economic meaning.”
First, they’re not very accurate. With supply chains for businesses now snaking all over the world and back and forth across borders, it is very difficult to say with accuracy what value of what goods came from which country; take the famous example of the iPhone. On paper, each smartphone counts as an import worth hundreds of dollars from China, but in reality China provides only a few dollars’ worth of value, with the rest coming from U.S. inventions and other Asian suppliers. Yet in the trade ledger, it all counts as a U.S. import from China.
More broadly, any given bilateral trade balance—such as the $178 billion goods deficit with Europe that so riles U.S officials—is simply a slice of the overall trade balance, which is determined by savings and investment. Forcing open any given market to allow for more exports of U.S. agricultural products, or raising tariffs to cut down imports from any given country, could make some difference for any one bilateral trade balance. But, like squeezing a balloon or playing whack-a-mole, the underlying problem will just crop up elsewhere.
Take the United States. In 2019, it reduced the bilateral goods deficit with China to $346 billion from $419 billion the year before, a seeming victory for Trump’s blend of tariffs and coerced exports. (And he has hopes that the “phase one” deal signed last month will mean even more U.S. exports to shave that deficit further, though the outbreak of the coronavirus makes that unlikely.)
But an uptick with one country did almost nothing to solve the underlying problem. The U.S. goods deficit with nearly every other trading partner—Europe, Mexico, Canada, Switzerland, South Korea, Malaysia, Japan, Taiwan, and India—increased to make up nearly all the difference.
But Trump did manage to shrink his own growing trade deficit last year. Maybe the combination of tariffs and forcing more market access overseas is paying off?
No. The trade deficit shrank by about 1.5 percent not because of a boom in U.S. exports but because Americans bought even fewer imported goods.
More to the point, Trump’s policies are almost the worst imaginable if the goal, which few economists actually share, is to shrink the trade deficit. He has run massive budget deficits, which by definition skew the current account balance toward the negative. And huge tax cuts, which helped drive the huge deficits, also prompted a couple of years of sugar-high economic growth—another factor that tends to boost imports and widen the trade deficit, especially when there’s little spare productive slack in the domestic economy to provide more goods to buy and consume. Finally, his use of tariffs on imports, all else being equal, tends to push up the value of the U.S. dollar, making imports relatively cheaper and exports relatively more expensive—again, widening the trade deficit.
If the idea were actually, for some reason, to shrink the trade deficit, the remedy would be pretty much the opposite: much smaller deficits, fewer or no tariffs (which would alleviate one cause of a rising dollar), and slower growth that would mean less consumer spending on coveted foreign goods. But that’s hardly a recipe for election-year success.


foreignpolicy--2020-02-24--Beyond Deutsche: U.S. Banks Also Implicated in Dubious Partnerships Abroad

Beyond Deutsche : U.S. Banks Also Implicated in Dubious Partnerships Abroad Evgeny , a retiree from the Russian city of Vladimir , always believed that the U.S. financial system had integrity .
In particular Citibank , to him , was no Deutsche Bank , a bank known for getting in bed with dubious investors .
And that belief , Evgeny says , may have led to his financial ruin .
The 63-year-old worked for years as a manager in the construction industry , and eventually he became a member of Russia ’ s minuscule middle class .
He planned to @ @ @ @ @ @ @ in savings , the product of a lifetime of toil .
For almost a decade he deposited his savings in one of Russia ’ s largest and most reputable financial institutions : Promsvyazbank .
Evgeny was one of the bank ’ s top-tier clients , and he believed that he was on a path to financial stability for himself and his family .
Then one day in August 2017 , he said , a bank manager approached him with an idea .
She suggested that he trade his bank deposit for fixed-rate loan @ @ @ @ @ @ @ bank ’ s owners , the billionaire brothers Alexei and Dmitry Ananyev , would personally guarantee the notes .
The bank manager said the notes were as safe as a bank deposit , but they had the added benefit of earning a high interest rate , around 5.75 percent .
Evgeny ( who requested that his last name be withheld ) was skeptical , but he was reassured when the deal was presented as a safe bet involving U.S. financial institutions .
Evgeny was shown a presentation that named Citibank as a trustee @ @ @ @ @ @ @ firm White & Case drew up all of the legal documents .
The involvement of reputable Western institutions gave the scheme a veneer of legitimacy .
Convinced that the loan notes were safe , Evgeny jumped at the chance to make some extra money and exchanged his life savings for the fixed-rate notes .
A few months later , all of his money was gone .
Financial experts say the loan notes were part of a scheme to allow the bank ’ s owners to milk Promsvyazbank as much as possible before it @ @ @ @ @ @ @ owners allegedly used deposits from their top customers to shore up the failing bank as it was experiencing a liquidity crisis .
But eventually Promsvyazbank became insolvent , and the Russian Central Bank took control of it in December 2017 .
By then , the Ananyev brothers had allegedly used U.S. financial institutions to funnel money out of Russia into various offshore accounts .
They fled the country days before the bank collapsed , leaving Evgeny and dozens of other clients with worthless fixed-rate loan notes .
Experts say that the case is @ @ @ @ @ @ @ Western financial institutions to their advantage .
In recent years , Germany ’ s Deutsche Bank has been the headlines over a series of questionable dealings .
Most famously , Deutsche helped Russian customers funnel their money out of the country by purchasing stocks in rubles and then immediately reselling them in dollars , British pounds , or euros , using a type of transaction known as mirror trading .
Deutsche Bank was charged with failing to do adequate background checks on the individuals carrying out the transactions and continued to earn fees @ @ @ @ @ @ @ bank has admitted publicly to failing to tackle money laundering adequately .
Eventually , the U.S. Justice Department and regulators in Germany and the United Kingdom began investigating whether billions of dollars of potentially dubious origin were filtered out of Russia via Deutsche Bank .
The company ’ s then-CEOs were forced to resign , and the bank ’ s Moscow branch was promptly shut down .
The United States and the United Kingdom fined Deutsche Bank $ 630 million for failing to prevent money laundering .
Last April , Congress subpoenaed Deutsche @ @ @ @ @ @ @ President Donald Trump and his family business .
Analysts say the bank loaned billions of dollars to Trump when no other financial institution thought he was a safe investment .
But Deutsche Bank is only one example , investigators say .
Western banks often lend legitimacy to corrupt schemes and enable the flow of illicit money by failing to do adequate background checks on their customers .
Even the financial crisis that ravaged U.S. and global markets in 2008 has been linked to a lack of due diligence and failure to manage risks @ @ @ @ @ @ @ the big banks still haven ’ t learned their lesson .
Operating on the assumption that a risky deal was better than no deal at all , government-sponsored enterprises began issuing mortgages to people with low credit ratings by devising complicated payment schemes that allowed them to access loans and inflate housing prices .
Citibank ’ s involvement with the Ananyevs may have involved a similar logic .
“ Citibank should have done comprehensive due diligence on the brothers and the personal guarantee , their net worth , any litigation .
But often @ @ @ @ @ @ @ banks on large transactions is lacking , ” L. Burke Files , the head of an international investigative firm specializing in asset recovery and anti-money laundering , told Foreign Policy .
“ They have an obligation to do due diligence , but that doesn ’ t mean they do it .
Being deficient in your homework is much more common than you might realize , ” he added .
A Citibank spokesman declined to comment on this story despite multiple requests from Foreign Policy , and it is unclear whether or not the @ @ @ @ @ @ @ brothers before acting as a trustee .
In September 2019 , a court in Moscow ordered that both brothers be arrested in absentia for embezzling around $ 1.6 billion .
But by then it was too late .
The brothers are believed to be living in Cyprus .
Alexei and Dmitry Ananyev did not respond to requests for comment .
Evgeny , meanwhile , had to go back to work to support his family .
He blames U.S. financial institutions for legitimizing a corrupt scheme and for ruining his retirement .
“ I @ @ @ @ @ @ @ due diligence , that they would know their customer before they acted as a trustee , ” Evgeny told Foreign Policy .
“ That made me calm , and that was why I invested in these loan notes.
” Files argues that there are numerous cases of Western institutions pursuing financial deals instead of doing their due diligence .
The Zurich-based investment bank Credit Suisse , for example , allegedly ignored the bank ’ s own managers when they warned against lending around $ 2 billion to Mozambique ’ s government , according @ @ @ @ @ @ @ that the loans were used to enrich corrupt government officials , and the bank is embroiled in lawsuits .
Credit Suisse has denied knowledge of the activities perpetrated by the three former employees .
Blaming the scandal on three bad apples , a company representative said that Credit Suisse has since upgraded its compliance and control frameworks .
Denmark ’ s Danske Bank came under scrutiny similar to that of Deutsche for allowing hundreds of billions of euros from Russia to be laundered through its branch in Estonia .
Internal correspondence viewed by @ @ @ @ @ @ @ bank official in charge of anti-money laundering efforts at Danske Bank did not know how to screen customers to ensure they hadn ’ t been blacklisted for suspicious activities .
Former U.S. Attorney Bud Cummins of Arkansas argues that the U.S. Treasury Department should take a more proactive role in ensuring that financial fraud isn ’ t perpetrated using U.S. banks , either to launder money or to lend legitimacy to corrupt schemes .
Cummins wrote a letter in January to the director of the Financial Crimes Enforcement Network , Kenneth Blanco , @ @ @ @ @ @ @ of Foreign Assets Control , Andrea Gacki , arguing that the Treasury Department should investigate the alleged global fraud perpetrated by the Ananyev brothers .
“ The Ananyev Brothers allegedly lured investors to exchange their deposits in Promsvyaz Bank for fraudulent loan notes and then ran off with the assets in a complicated global scheme that included multiple shell companies in several countries and transactions that flowed through correspondent U.S. banks accounts at JPMorgan Chase Bank , Bank of New York Mellon , and Citibank N.A.
, ” the letter reads .
The @ @ @ @ @ @ @ for comment .
JPMorgan Chase Bank and Bank of New York Mellon also declined to comment .
“ I am concerned that U.S. authorities may not be paying adequate attention to the case of the Ananyev brothers , who may have been abusing the U.S. financial system for decades , ” Cummins told Foreign Policy .
“ I recognize that movement of money through U.S. bank accounts is not a crime by itself .
And , furthermore , that the ability to move large amounts of money in the world ’ s most @ @ @ @ @ @ @ the U.S. financial system .
However , it can certainly be abused , especially when moving money to and from jurisdictions known for corruption , like Cyprus , and by people accused of embezzling billions , like the Ananyev brothers , ” he added .
In his first interview with Western media since fleeing Russia , published by the Guardian earlier in February , Dmitry Ananyev argued that his bank was seized because the Russian government wanted to use it to lend to the Russian military .
Experts note that it is sometimes @ @ @ @ @ @ @ U.S. banks flag suspicious activities from emerging economies like Russia .
“ U.S .
financial institutions have a responsibility to flag suspicious activity to the U.S. Treasury through the suspicious activity reporting regime .
But they file around 55,000 a day collectively , so there ’ s a huge amount of data flowing into the U.S. Treasury , ” said Nate Sibley , a research fellow for the Hudson Institute ’ s Kleptocracy Initiative .
“ Some of it is used , but a lot of it isn ’ t. ” Today , @ @ @ @ @ @ @ assess Citibank ’ s role in the scheme .
Files , the due diligence expert , argues that the company ’ s role as a trustee helped establish the authenticity of the loan notes , thus opening it up to potential liability .
But that issue will likely be decided in court .
“ We continue to investigate how Citibank initially became involved in the loan note venture with the brothers as well as what due diligence , if any , the banks carried out regarding their dealings with the brothers , ” @ @ @ @ @ @ @ dozen of the aggrieved Promsvyazbank depositors , told Foreign Policy .
Back in Russia , the Promsvyazbank depositors are trying to piece their lives back together .
Alexander , a 73-year-old retiree from Moscow , said he is struggling to support his family after losing over $ 400,000 .
“ We had to cut back on spending , ” said Alexander , who like Evgeny did not want his last name used .
“ I ’ m thankful that we ’ re not completely bankrupt and we still have something to eat .
@

Evgeny, a retiree from the Russian city of Vladimir, always believed that the U.S. financial system had integrity. In particular Citibank, to him, was no Deutsche Bank, a bank known for getting in bed with dubious investors. And that belief, Evgeny says, may have led to his financial ruin.
Evgeny, a retiree from the Russian city of Vladimir, always believed that the U.S. financial system had integrity. In particular Citibank, to him, was no Deutsche Bank, a bank known for getting in bed with dubious investors. And that belief, Evgeny says, may have led to his financial ruin.
The 63-year-old worked for years as a manager in the construction industry, and eventually he became a member of Russia’s minuscule middle class. He planned to retire in 2018 with roughly $100,000 in savings, the product of a lifetime of toil. For almost a decade he deposited his savings in one of Russia’s largest and most reputable financial institutions: Promsvyazbank. Evgeny was one of the bank’s top-tier clients, and he believed that he was on a path to financial stability for himself and his family.
Then one day in August 2017, he said, a bank manager approached him with an idea. She suggested that he trade his bank deposit for fixed-rate loan notes, and she pledged that the bank’s owners, the billionaire brothers Alexei and Dmitry Ananyev, would personally guarantee the notes. The bank manager said the notes were as safe as a bank deposit, but they had the added benefit of earning a high interest rate, around 5.75 percent.
Evgeny (who requested that his last name be withheld) was skeptical, but he was reassured when the deal was presented as a safe bet involving U.S. financial institutions. Evgeny was shown a presentation that named Citibank as a trustee for the notes. The U.S. law firm White & Case drew up all of the legal documents. The involvement of reputable Western institutions gave the scheme a veneer of legitimacy. Convinced that the loan notes were safe, Evgeny jumped at the chance to make some extra money and exchanged his life savings for the fixed-rate notes.
A few months later, all of his money was gone.
Financial experts say the loan notes were part of a scheme to allow the bank’s owners to milk Promsvyazbank as much as possible before it went under. The bank’s owners allegedly used deposits from their top customers to shore up the failing bank as it was experiencing a liquidity crisis. But eventually Promsvyazbank became insolvent, and the Russian Central Bank took control of it in December 2017. By then, the Ananyev brothers had allegedly used U.S. financial institutions to funnel money out of Russia into various offshore accounts. They fled the country days before the bank collapsed, leaving Evgeny and dozens of other clients with worthless fixed-rate loan notes.
Experts say that the case is emblematic of the way foreign criminals use Western financial institutions to their advantage. In recent years, Germany’s Deutsche Bank has been the headlines over a series of questionable dealings. Most famously, Deutsche helped Russian customers funnel their money out of the country by purchasing stocks in rubles and then immediately reselling them in dollars, British pounds, or euros, using a type of transaction known as mirror trading.
Deutsche Bank was charged with failing to do adequate background checks on the individuals carrying out the transactions and continued to earn fees from mirror trading until 2015. The bank has admitted publicly to failing to tackle money laundering adequately. Eventually, the U.S. Justice Department and regulators in Germany and the United Kingdom began investigating whether billions of dollars of potentially dubious origin were filtered out of Russia via Deutsche Bank. The company’s then-CEOs were forced to resign, and the bank’s Moscow branch was promptly shut down. The United States and the United Kingdom fined Deutsche Bank $630 million for failing to prevent money laundering. Last April, Congress subpoenaed Deutsche Bank for its records related to U.S. President Donald Trump and his family business. Analysts say the bank loaned billions of dollars to Trump when no other financial institution thought he was a safe investment.
But Deutsche Bank is only one example, investigators say. Western banks often lend legitimacy to corrupt schemes and enable the flow of illicit money by failing to do adequate background checks on their customers.
Even the financial crisis that ravaged U.S. and global markets in 2008 has been linked to a lack of due diligence and failure to manage risks, and some investigators and experts say the big banks still haven’t learned their lesson. Operating on the assumption that a risky deal was better than no deal at all, government-sponsored enterprises began issuing mortgages to people with low credit ratings by devising complicated payment schemes that allowed them to access loans and inflate housing prices.
Citibank’s involvement with the Ananyevs may have involved a similar logic.
“Citibank should have done comprehensive due diligence on the brothers and the personal guarantee, their net worth, any litigation. But often the due diligence level of these big banks on large transactions is lacking,” L. Burke Files, the head of an international investigative firm specializing in asset recovery and anti-money laundering, told Foreign Policy.
“They have an obligation to do due diligence, but that doesn’t mean they do it. Being deficient in your homework is much more common than you might realize,” he added.
A Citibank spokesman declined to comment on this story despite multiple requests from Foreign Policy, and it is unclear whether or not the bank did due diligence on the Ananyev brothers before acting as a trustee.
In September 2019, a court in Moscow ordered that both brothers be arrested in absentia for embezzling around $1.6 billion. But by then it was too late. The brothers are believed to be living in Cyprus. Alexei and Dmitry Ananyev did not respond to requests for comment.
Evgeny, meanwhile, had to go back to work to support his family. He blames U.S. financial institutions for legitimizing a corrupt scheme and for ruining his retirement. “I assumed that Citibank would have done their due diligence, that they would know their customer before they acted as a trustee,” Evgeny told Foreign Policy. “That made me calm, and that was why I invested in these loan notes.”
Files argues that there are numerous cases of Western institutions pursuing financial deals instead of doing their due diligence. The Zurich-based investment bank Credit Suisse, for example, allegedly ignored the bank’s own managers when they warned against lending around $2 billion to Mozambique’s government, according to indictments. U.S. prosecutors now allege that the loans were used to enrich corrupt government officials, and the bank is embroiled in lawsuits. Credit Suisse has denied knowledge of the activities perpetrated by the three former employees. Blaming the scandal on three bad apples, a company representative said that Credit Suisse has since upgraded its compliance and control frameworks.
Denmark’s Danske Bank came under scrutiny similar to that of Deutsche for allowing hundreds of billions of euros from Russia to be laundered through its branch in Estonia. Internal correspondence viewed by Foreign Policy demonstrates that at least one bank official in charge of anti-money laundering efforts at Danske Bank did not know how to screen customers to ensure they hadn’t been blacklisted for suspicious activities.
Former U.S. Attorney Bud Cummins of Arkansas argues that the U.S. Treasury Department should take a more proactive role in ensuring that financial fraud isn’t perpetrated using U.S. banks, either to launder money or to lend legitimacy to corrupt schemes.
Cummins wrote a letter in January to the director of the Financial Crimes Enforcement Network, Kenneth Blanco, and to the director of the Office of Foreign Assets Control, Andrea Gacki, arguing that the Treasury Department should investigate the alleged global fraud perpetrated by the Ananyev brothers.
“The Ananyev Brothers allegedly lured investors to exchange their deposits in Promsvyaz Bank for fraudulent loan notes and then ran off with the assets in a complicated global scheme that included multiple shell companies in several countries and transactions that flowed through correspondent U.S. banks accounts at JPMorgan Chase Bank, Bank of New York Mellon, and Citibank N.A.,” the letter reads.
The Treasury Department did not respond to requests for comment. JPMorgan Chase Bank and Bank of New York Mellon also declined to comment.
“I am concerned that U.S. authorities may not be paying adequate attention to the case of the Ananyev brothers, who may have been abusing the U.S. financial system for decades,” Cummins told Foreign Policy.
“I recognize that movement of money through U.S. bank accounts is not a crime by itself. And, furthermore, that the ability to move large amounts of money in the world’s most valuable currency—the U.S. dollar—is a strength of the U.S. financial system. However, it can certainly be abused, especially when moving money to and from jurisdictions known for corruption, like Cyprus, and by people accused of embezzling billions, like the Ananyev brothers,” he added.
In his first interview with Western media since fleeing Russia, published by the Guardian earlier in February, Dmitry Ananyev argued that his bank was seized because the Russian government wanted to use it to lend to the Russian military.
Experts note that it is sometimes unclear how the Treasury Department responds when U.S. banks flag suspicious activities from emerging economies like Russia. “U.S. financial institutions have a responsibility to flag suspicious activity to the U.S. Treasury through the suspicious activity reporting regime. But they file around 55,000 a day collectively, so there’s a huge amount of data flowing into the U.S. Treasury,” said Nate Sibley, a research fellow for the Hudson Institute’s Kleptocracy Initiative. “Some of it is used, but a lot of it isn’t.”
Today, Evgeny’s lawyers are trying to assess Citibank’s role in the scheme. Files, the due diligence expert, argues that the company’s role as a trustee helped establish the authenticity of the loan notes, thus opening it up to potential liability. But that issue will likely be decided in court.
“We continue to investigate how Citibank initially became involved in the loan note venture with the brothers as well as what due diligence, if any, the banks carried out regarding their dealings with the brothers,” Vlad Lender, a consultant representing several dozen of the aggrieved Promsvyazbank depositors, told Foreign Policy.
Back in Russia, the Promsvyazbank depositors are trying to piece their lives back together. Alexander, a 73-year-old retiree from Moscow, said he is struggling to support his family after losing over $400,000. “We had to cut back on spending,” said Alexander, who like Evgeny did not want his last name used. “I’m thankful that we’re not completely bankrupt and we still have something to eat.”
Feb. 26: This story was updated to correct that Vlad Lender is a consultant, not a lawyer, representing depositors.