South Asia’s Looming Disaster

BY RAVI AGRAWAL
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Welcome to Foreign Policy’s South Asia Brief, a weekly look at the most important news from Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka—a region that comprises a quarter of the world’s population. Given the severity of the coronavirus crisis, this week we’re focusing almost entirely on how the region is coping with COVID-19 and what happens next.

If you would like to receive South Asia Brief in your inbox every Tuesday, please sign up here.

Community Spread Has Begun

Most South Asian countries locked their borders down last week or even earlier, but the number of confirmed coronavirus cases keep rising, particularly in Pakistan and India. This trend suggests that the region has likely moved from phase two of the virus outbreak, when transmission is traced to people who have arrived from foreign countries, to phase three, when the disease is spreading more widely among communities.

Bangladesh’s Leader Urges All Citizens to Stay at Home to Slow Virus Spread

By Julhas Alam

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In this March 23, 3030 photo, a policeman urges residents not to come out of their homes as residents stand behind a gate, hours after the second death from COVID-19 was confirmed from the area, in Dhaka, Bangladesh.Credit: AP Photo/Al-emrun Garjon

Bangladesh Prime Minister Sheikh Hasina appealed on Wednesday to all citizens to stay at home and avoid any gatherings to slow the transmission of the coronavirus.

In particular, she urged hundreds of thousands of Bangladeshis who worked abroad and recently returned to the country from virus-hit countries to isolate themselves at home for 14 days.

“It is essential to follow the directives to save the lives of your family members, neighbors, and ultimately all of your countrymen,” she said in a televised address. “Do not leave home unless it’s an emergency.”

Experts say there is a high risk that people who returned in recent weeks and attended social gatherings will spread the virus.

What’s Behind the Rising India-France Maritime Activity in the Indo-Pacific?

By Rajeswari Pillai Rajagopalan

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Despite growing fears of the global coronavirus pandemic, India and France held a joint exercise in the Indian Ocean. While dealing with this and other challenges, both countries understand that they share broader strategic interests including the implications China’s rise in the Indo-Pacific and beyond.

In a first, the two navies conducted joint patrols from Reunion Island, the French naval base in the Indian Ocean. The Commander of the Indian Navy P-8I, which was part of the joint patrols, is reported to have said that that such joint security operations “make it possible to maintain the security of international maritime routes for trade and communications.”

These engagements are not without significance. India has so far generally conducted Coordinated Patrols (CORPAT) only with its maritime neighbors. Currently, the Indian Navy has Joint Exclusive Economic Zone surveillance exercises with the Maldives, Seychelles and Mauritius and CORPAT series are undertaken with the navies of Bangladesh, Myanmar, Thailand and Indonesia. The United States had earlier made an offer to India to carry out CORPAT but India rejected it.

Resolving the Ghani-Abdullah impasse in Afghanistan

John Allen and Michael E. O’Hanlon

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Secretary of State Mike Pompeo has just returned from an emergency trip to Afghanistan. His mission there did not center on the war against the Taliban, the peace process with the Taliban, or even the global coronavirus pandemic. Rather, his visit was intended to resolve a major dilemma within the Afghan government itself—the fact that the Afghan government now exists in two versions in the aftermath of last fall’s disputed presidential elections. President Ashraf Ghani, the previous incumbent, claims to have won reelection by a comfortable margin, a result confirmed by the Independent Electoral Commission in Afghanistan. He held an inauguration ceremony earlier this month, attended by U.S. officials, to begin his second term. Simultaneously, Dr. Abdullah Abdullah, now a three-time presidential runner-up at least according to official tallies, claimed victory in a vote that he said was fraudulent—and held his own inauguration. Secretary Pompeo was unsuccessful in getting the two men to agree to a power-sharing arrangement, so upon his departure he stated that the Trump administration would cut $1 billion out of the several billion dollars in aid that, in addition to its military presence there, the United States now provides to the government of Afghanistan.

We have not been supporters of President Trump’s often off-the-cuff dismissiveness of the importance of the Afghanistan mission to U.S. security, or of his frequent threats to radically curtail or end the U.S./NATO mission there. However, this time, Pompeo’s threats are commensurate with the strategic situation as well as the stakes at hand. The American taxpayer cannot be expected to support duplicative—or even competing—Afghan governments that will have no realistic chance of bringing peace to that country. As Abraham Lincoln rightly said, a house divided against itself cannot stand. Pompeo, who stopped by Doha, Qatar, on his way home from Afghanistan to have an amicable conversation with Taliban negotiators, should be careful not to overdo his friendliness toward our longstanding adversary in this conflict, even as a tactic to pressure Ghani and Abdullah. But it remains true that the Taliban will benefit from any enduring weakening of the Afghan government that results from this impasse.

Afghanistan is Drifting Toward Civil War. The Coronavirus Pandemic Makes One More Likely.

by Arif Rafiq
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America has finally laid down the law in Afghanistan, where Ashraf Ghani and Dr. Abdullah remain mired in a dispute over last September’s presidential elections. On Monday, Secretary of State Mike Pompeo made an unannounced visit to Afghanistan as part of a bid to broker a deal between the Afghan leaders. Pompeo’s intervention failed. He then left the country announcing the reduction of U.S. aid to the country by $1 billion and threatening another $1 billion reduction the next year.

For over a year, the wily Ghani has played America like a fiddle. He has also outsmarted his political rivals and the Taliban. Ghani obtained international support for the ill-advised move to go forward with presidential elections. Then he not only rigged those polls in his favor, but also eventually moved forward with his presidential inauguration, leaving world powers with little choice but to recognize his government. And he has stifled multiple efforts at initiating an intra-Afghan dialogue process that would deny his government a lead role.

But like the Aesopian fox, Ghani has been too clever by half.

Without Mass Testing, the Coronavirus Pandemic Will Keep Spreading

BY DEVI SRIDHAR
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When a patient arrived at a Chinese hospital with acute respiratory distress in mid-December 2019, there was uncertainty about what was causing these symptoms. Known pathogens were quickly ruled out: It was not SARS, MERS, or influenza—and, quickly, a novel coronavirus was detected. When doctors tried to raise the alarm, police threatened them, and health officials initially said they had no clear evidence of human-to-human transmission.

When China finally informed the World Health Organization of the outbreak through its China office on Dec. 31, 2019, it was clear the government was privately worried that it was not going to be easy to contain or manage.

By Jan. 23, China had 571 cases and a death toll of 17. Infectious disease specialists who create predictive models of epidemics immediately sounded the alarm about the new coronavirus disease—known as COVID-19—noting that China could experience 100,000 new infections per day with hundreds of millions of people becoming infected. By the following day, the central government of China had imposed a lockdown in Wuhan and other cities in Hubei province affecting 56 million people.

Pandemic Panic: Can Governments Protect Jobs and Markets?

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The COVID-19 virus has infected populations around the world and slammed the global economy. While it is unclear where the coronavirus pandemic is headed, experts believe that it will lead to a worldwide recession.

Mauro Guillen, professor of international management at Wharton and the creator of an online course on the coronavirus crisis that the school plans to launch on March 25, believes that the challenge on the economic front is whether policy makers can find a way to prevent firms from laying off workers and if they can help calm panicky markets.

As more state governments in the U.S. have adopted a shelter-in-place strategy in recent weeks to contain the pandemic’s spread, media reports suggest that the Trump administration might be cooling off on the idea. Predictions that unemployment in the U.S. could jump to more than 20% and a Goldman Sachs forecast that GDP could shrink by 24% in the second quarter is believed to have prompted rethinking about social distancing. Guillen, however, believes that the U.S. could learn from China’s experience in this regard. “The Chinese experience indicates that social distancing and shelter in place work,” he says. 

What It Will Take to Save Economies From the Coronavirus Pandemic

Daniel McDowell 

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Editor’s Note: WPR has made this article, as well as a selection of others from our COVID-19 coverage that we consider to be in the public interest, freely available. You can find all of our coverage of the coronavirus pandemic here. If you would like to help support our work, please consider taking advantage of our subscription offer here.

In 1873, Walter Bagehot, a prominent businessman in British high society and a journalist who served for 16 years as editor-in-chief of The Economist, wrote a treatise on banking and finance in which he left his most enduring mark on the world. In “Lombard Street: A Description of the Money Market,” he laid out a playbook for policymakers facing an unfolding economic and financial crisis. When up against such a challenge, Bagehot asserted, leaders must enact a policy response that is both swift and large. “By that policy,” he argued, “they allay the panic; by every other policy they intensify it.”

Economic policymakers around the world today find themselves facing an incredible challenge. As the novel coronavirus spreads, governments are swiftly implementing drastic measures to limit the scope of the pandemic, including banning public gatherings, closing national borders and shuttering all non-essential businesses.

How to Think About China

SULMAAN WASIF KHAN

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Analyses of China’s rise and future were important before the global pandemic—now, even more so. Three current volumes offer a mixed bag of insights and missed opportunities.

In the acknowledgments to his new book, the Singaporean diplomat turned academic Kishore Mahbubani confesses that he “knew that it would be a challenge to find an American publisher.” This struck me as quite incredible. The appetite for books on China in this country shows no sign of being slaked. Alarmism sells: think titles like The Hundred Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower or China’s Vision of Victory. The coronavirus outbreak and the morally reprehensible finger-pointing it has inspired in Washington and Beijing bode well for the sales of future books on China. We already have articles on the need for decoupling and China’s use of the pandemic to reshape the global order. Savvy publishers are probably soliciting book-length versions right now, and I glumly expect to be reviewing a title like China’s Coronavirus: How Beijing Won a year or two hence. So it is unsurprising that PublicAffairs snapped up Mahbubani’s Has China Won?: The Chinese Challenge to American Primacy and, given all that has happened over the last couple of months, it will be unsurprising if the book sells even better than expected.

China’s Defense Spending Is Larger Than It Looks

BY FREDERICO BARTELS

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Accounting for true purchasing power, Beijing’s military budget is about 87% of America’s.

An early lesson emerging from China’s handling of the COVID-19 emergency is that Beijing still manipulates data to fit its desired narrative. This has long been the case in China’s defense budget, where the party-government omits and withholds data to project a non-threatening image of its People’s Liberation Army. However, there are ways to cut through some of the mangled information.

If you account for differences in reporting structure, purchasing power, and labor costs, you find that China’s 2017 defense budget provided 87 percent of the purchasing power of American’s 2017 defense budget. 

This runs counter to the conventional wisdom that the United States spends more on its military than the next 12 countries combined or that China lags annual U.S. military spending by close to $400 billion. Those misleading comparisons are based on simply converting Beijing’s reported defense budget from yuan to dollars by applying a market exchange rate. That produces a distorted picture. We must take into consideration several key factors to arrive at an accurate understanding of just how much Beijing is investing in its military.

Where is the US government getting all the money it’s spending in the coronavirus crisis?

Louise Sheiner and David Wessel

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The U.S. government and its counterparts all over the world are spending trillions of dollars in response to the COVID-19 crisis, borrowing trillions of dollars to do so. Here are some answers to questions we’ve been hearing and discussing.

Where is all the money the U.S. is spending coming from?

Savings: The world has been and still appears to be awash in savings, one big reason interest rates on U.S. Treasury debt–and debt of many foreign governments–were so low before COVID-19 hit. This suggests that there is ample room to increase borrowing now at a relatively low cost.

Portfolio shifts into U.S. Treasury debt: People and institutions with savings are particularly eager to invest the money in U.S. Treasury debt right now. At times of crisis, institutions, individuals, and foreign governments often prefer the safety of Treasuries instead of putting their money into the stock market, corporate bonds, or real estate. For instance, billions of dollars have moved from money market mutual funds that invest in corporate short-term IOUs to money market funds that invest solely in U.S. government debt. This makes it easier for the U.S. Treasury to borrow more without being forced to pay much higher interest rates.

The PLA Insight: 46: PLA & the Virus; PAP in HK; PLA & US Universities; SCS’s Escalation Ladder; China’s “World-Class” Forces; Space Power, and more

BY SUYASH DESAI

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The Big Story: PLA: Xi’s Comrade against the Virus

Xi Jinping ordered the Chinese military to join the race for developing the world’s first vaccine for Covid-19. Major General Chen Wei, a top medical virologist with the Academy of Military Science, was authorised to start clinical trials last week. The Chinese scientists are working on the nine possible treatments, and Tianjin-based CanSino biologics are the frontrunners in China for developing the vaccine. Chen is credited with helping develop treatments during the 2014-16 Ebola outbreak and a nasal spray to protect medical workers during the 2002-03 Severe Acute Respiratory Syndrome (SARs) outbreak.

The PLA has also been at the forefront of the logistical supply in Hubei and surrounding provinces since January 23. More than 10,000 personnel are deployed in Hubei province since then, and their job is to control the supply of the medicines and essential commodities. The effort is primarily led by the PLA’s newly formed Joint Logistics Support Force (JLSF). But despite being in the epicentre of the outbreak since the past two months, the PLA claims that not a single army personnel is infected by the virus. This seems rather absurd and highly unlikely. Hong Kong’s Ming Pao Daily claims that a group of 200 PLA soldiers attached with the PLA’s airborne Corp in Xiaogan city near Wuhan, and 300 personnel from the PLAN’s submarine unit in Sanya were quarantined.

Eye on China is a weekly bulletin offering news and analysis related to the Middle Kingdom from an Indian interests perspective.

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I. Tricky Recovery & Narrative Contest

Once again, there are multiple strands to the Covid-19 outbreak story from China. There’s official reports of no new domestic cases; steps at reviving the economy; international outreach and propaganda; and much more.

Official Case Data: Caixin reports that Chinese health authorities reported no new confirmed or suspected cases in the outbreak epicenter of Hubei for the second straight day on Friday. A total of 39 new infections were reported Thursday on the mainland, all imported from overseas, bringing the total number of imported cases to 228. What’s more the death toll in Italy now has surpassed the death toll in China. Yet that doesn’t mean that the things are all clear in China. For instance, Shao Yiming, a prominent virologist who is chief HIV/AIDS expert at the Chinese Center for Disease Control and Prevention, says that “Covid-19 is ‘smarter’ than SARS and MERS, with a relatively low fatality rate, more mild cases and a longer incubation period. It also has a very important characteristic ― high infectivity…” this along with other features “means it’s difficult to eradicate at once and may come back seasonally.”

Saving Our Own: COVID-19 Presents Challenges and Opportunities in Technology

Rohan Seth, Shambhavi Naik

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Passengers wear face masks as a precaution against COVID-19 at the Secunderabad Railway Station in Hyderabad on March 21, 2020. (AP Photo/Mahesh Kumar A.)

The unprecedented spread of the COVID-19 outbreak is overwhelming healthcare systems across the world. In less than three months, the virus has impacted 177 countries or territories (including cruise ships) infecting over 2,30,000 people and killing over 11,000. The rapidity of community spread has left policymakers and bureaucrats scrambling for ways to bolster an overworked healthcare system. Another impending concern is of people who are struggling to adjust to a self-isolation way of life.

With the pandemic existing at this scale, state capacity alone may not be enough to respond effectively. Struggling in the face of an invisible threat, states have to co-opt technology to augment their arsenal for a long haul fight against coronavirus.

There are three phases in which technology can be effective - one in the detection of COVID-19 positive individuals; second in enforcing quarantine conditions and finally on facilitating the non-infected individuals to stay-at-home.

Why Germany's Coronavirus Death Rate Is Far Lower Than In Other Countries

ROB SCHMITZ

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Young people gather in the Volkspark am Friedrichshain in Berlin on March 18. Germany's fatality rate so far — just 0.5% — is the world's lowest, by a long shot.Markus Schreiber/AP

As confirmed cases of the coronavirus in Germany soared past 10,000 last week, hundreds of Berliners crowded Volkspark am Friedrichshain to play soccer and basketball, and to let their kids loose on the park's many jungle gyms.

The conditions seemed ideal for the spread of a virus that has killed thousands. Indeed, as of Wednesday, Germany had the fifth-highest number of cases.

Yet Germany's fatality rate so far — just 0.5% — is the world's lowest, by a long shot.

"I believe that we are just testing much more than in other countries, and we are detecting our outbreak early," said Christian Drosten, director of the institute of virology at Berlin's Charité hospital.

As Europe has become the epicenter of the global coronavirus pandemic, Italy's fatality rate hovers around 10%. France's is around 5%. Yet Germany's fatality rate from COVID-19 has remained remarkably low since cases started showing up there more than a month ago. As of March 25, there were 175 deaths and 34,055 cases.

Combating COVID-19 Without China

By Bonnie Girard

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As China charges the United States military with creating the coronavirus COVID-19 and seeding a global pandemic, Washington is leading its own efforts to unite scientific communities in the rest of the world to share information and resources in a race to halt the spread of the novel coronavirus and develop a vaccine to prevent it in the future.

In the United States, that collaboration is being headed by the White House Office of Science and Technology Policy (OSTP). Calling its efforts “Scientific Diplomacy,” the OSTP is coordinating with science leaders and advisers in countries around the globe to focus scientifically-based solutions on the fight against the COVID-19 pandemic.

Leading the effort for the White House is the president’s science adviser, Director of OSTP Dr. Kelvin Droegemeier. Droegemeier is a member of President Donald Trump’s White House Coronavirus Task Force.

According to the OSTP, Australia, Brazil, Canada, India, Japan, New Zealand, South Korea, Singapore, the United Kingdom, and several member nations of the EU have all engaged in teleconferences with the United States this month, seeking to ensure that maximum resources are mined for information on the novel coronavirus, and then directed at combating the illness and its spread.

‘Just Say No’ Is Not a Strategy for Supply Chain Security

By David Forscey, Herb Lin 

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Editor's note: This article is part of a series of short articles by analysts involved in the Cyberspace Solarium Commission, among others, highlighting and commenting upon aspects of the commission's findings and conclusion.

On Feb. 12, White House National Security Adviser Robert O’Brien announced that the U.S. government has “evidence that Huawei has the capability secretly to access sensitive and personal information in systems it maintains and sells around the world.” This represents the latest attempt by the Trump administration to support an argument that allied governments—and the businesses they oversee—should purge certain telecommunications networks of Huawei equipment. The position reflects the preferred approach in the United States, which is to issue outright bans against select companies (including Huawei) that meet an as-yet-unknown threshold of risk to national security.

Globalized information and communications technology (ICT) supply chains mean that nations generally do not produce ICT systems at scale solely from indigenous sources. It is well known that many “Western” companies are heavily dependent on components originating in non-Western nations. Thus, one supply chain risk arises from the possibility of security compromises in components before they are integrated into a final product or service that is made available to an end-user customer.

Quarantined: China’s Online Education in the Pandemic

By Ekaterina Kologrivaya and Emma Shleifer

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Beijing, 8 a.m. — Sitting at her desk, Wang Yao checks in with her class online. She reviews the PowerPoints sent by her teacher for the day and sets to work, checking her classmates’ WeChat messages. It’s been two months since she last went to school. “We had the holidays, and then the virus happened,” she explains over Zoom.

Many businesses in China could say the same. Central banks have rushed to plug the gushing wound in the country’s economy, supporting manufacturers and small- and medium-sized enterprises with injection packages aimed at lowering their borrowing costs and protecting their loan applications. At a time when SMEs, which contribute 60 percent of China’s GDP, are being rescued left and right, one industry has bucked the trend: online education.

Even before the quarantine measures forced several million people indoors, China’s online education was doing uniquely well, holding steady amidst the sharp drop in China’s venture capital last year. With the world’s largest student population of the 176 million K-12 students competing fiercely – particularly in the gruelingly difficult college entrance exam, which sees only 40 percent securing a place at university every year — every extra push matters. Online education tools have been a natural progression for China, as over 800 million Chinese citizens are internet users, with impressive fiber, broadband, and internet coverage even in many remote regions. STEAM education (science, technology, engineering, art, mathematics) constitutes, along with K-12 education, the largest segments of China’s EdTech market, which in 2018 reached $300 billion in revenues. Investors have not failed to notice this opportunity. HolonIQ reports that between 2014-2018, investment in Chinese educational companies was one-and-a-half times greater than the total amount of money spent in the United States, the European Union, and India combined.

COVID-19 Pandemic: Lessons From Lee Kuan Yew – Analysis

By Han Fook Kwang*

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Singapore’s founding Prime Minister Lee Kuan Yew faced many crises in his lifetime, regional and global. Were he alive, he would have a lot to say about the present COVID-19 pandemic and how to deal with it. What lessons can Singapore and the rest of the world learn from his experience?

The fifth anniversary of the death of Singapore’s founding prime minister Lee Kuan Yew passed quietly on 23 March 2020. The uneventful day was hardly surprising in a world brought almost to a standstill by the ravages of the COVID-19 pandemic. It is a time of unprecedented crisis, testing the mettle of leadership in every country and the resilience of its people.

If he were alive, Mr Lee would have quite a bit to say about leaders and their people in such trying times. He had experienced many such periods in his 35 years as prime minister. What lessons can Singaporeans draw from the way he faced those challenges that might be relevant today? I can think of three.

#1: Singapore’s Vulnerability: Myth or Reality?

The relationship between Iraq and the US is in danger of collapse. That can’t happen

Michael E. O’Hanlon and Sara Allawi

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Writing in USA Today, Sara Allawi and Michael O'Hanlon argue that as a new Iraqi government settles into power, both Americans and Iraqis need to take a deep breath and realize that, even if the last years and decades have been tough, we are much better together than apart.

Do the United States and Iraq, joined at the hip in tragic and mistake-prone war for most of the past 17 years, have a future together? As Iraq seeks to form a new government, its parliament is on record recommending that U.S. forces be expelled in the aftermath of the early January killing of Iranian terror mastermind Qassam Soleimani. Those tensions could again be inflamed by the Amerian and allied retaliation, early on March 13, for recent rocket barrages against foreign forces in Iraq by Iranian-backed militias that killed two Americans and a Brit. Over the following weekend, another round of barrages occurred, with the potential for yet more American retaliation. The partnership appears to be in peril.

It would a tragic shame if it ended. For Iraqis, the American presence is hugely beneficial as a counterweight to Iran and ISIS. Americans are also helpful with Iraqi internal politics—especially in regard to sectarian divisions in the security forces. Kurds, Shia and Sunni Iraqis may all have their issues with the United States. But few view Washington as inherently biased against them.

The Death of American Competence

BY STEPHEN M. WALT

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No matter how the federal government responded, the United States was never going to escape COVID-19 entirely. Even Singapore, whose response to the virus seems to be the gold standard thus far, has several hundred confirmed cases. Nonetheless, U.S. President Donald Trump’s administration’s belated, self-centered, haphazard, and tone-deaf response will end up costing Americans trillions of dollars and thousands of otherwise preventable deaths. Even if the view that the dangers may have been exaggerated due to a lack of accurate data turns out to be correct, Trump’s entire approach to governing and the administration’s erratic response squandered public confidence and made a more measured reaction untenable. Despite his denials, he is still responsible for where the country is today.

But that’s not the only damage the United States will suffer. Far from making “America great again,” this epic policy failure will further tarnish the United States’ reputation as a country that knows how to do things effectively.

How the Pandemic Will End

Joan Wong
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Three months ago, no one knew that SARS-CoV-2 existed. Now the virus has spread to almost every country, infecting at least 446,000 people whom we know about, and many more whom we do not. It has crashed economies and broken health-care systems, filled hospitals and emptied public spaces. It has separated people from their workplaces and their friends. It has disrupted modern society on a scale that most living people have never witnessed. Soon, most everyone in the United States will know someone who has been infected. Like World War II or the 9/11 attacks, this pandemic has already imprinted itself upon the nation’s psyche.

A global pandemic of this scale was inevitable. In recent years, hundreds of health experts have written books, white papers, and op-eds warning of the possibility. Bill Gates has been telling anyone who would listen, including the 18 million viewers of his TED Talk. In 2018, I wrote a story for The Atlantic arguing that America was not ready for the pandemic that would eventually come. In October, the Johns Hopkins Center for Health Security war-gamed what might happen if a new coronavirus swept the globe. And then one did. Hypotheticals became reality. “What if?” became “Now what?”

$10 a Barrel Oil Is Possible: Can American Energy Independence Survive the 2020 Oil War?

by Anthony Fensom
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President Trump has suggested America still has “a lot of power over the situation” and could yet find a middle ground. The U.S. leader will need all his famed dealmaking ability and more though to pull off what could be a deal of the century with Saudi Arabia, to keep U.S. energy independence and the shale industry alive.

“Trust me, this will be a regrettable day.”

The declaration by the Saudi energy minister, Prince Abbdelaziz Bin Salman, at the March 6 “Black Friday” OPEC plus meeting has proven accurate as the world’s energy giants engage in a war over the black gold, causing prices to crash and sparking bankruptcy fears for the entire U.S. shale industry.

With America’s energy independence under threat, can the nation’s oil and gas industry survive the fallout?

‘No Plan B’

After restraining supply since 2017 to support prices, the fateful meeting in Vienna had seen the OPEC oil cartel seek additional production cuts of 1.5 million barrels per day (bpd) from April.

Russians Grapple With Oil Price War at a Time of Pandemic

By: Margarita Assenova

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The timing could not have been worse for Russia to provoke a spat with Saudi Arabia over oil production quotas in early March. Moscow’s decision to withdraw from the OPEC+ agreement restricting oil production in order to maintain higher oil prices triggered a harsh reaction by Riyadh that sent oil prices spiraling down to below $25 per barrel in the midst of the coronavirus pandemic (Oilprice.com, March 24). The price of Russian Urals oil dipped even lower, under $19 on March 18, which will deprive the Russian budget of some $3 billion a month (Vedomosti, March 19).

The Russian economy is likely to suffer the most devastating consequences of the oil price war—just as it bore the heaviest impact of low global oil prices five years ago. This time around, however, the injury is self-inflicted, as an angry Saudi Arabia not only decided to ramp up production but also moved to grab Russia’s oil market share around the world (see EDM, March 19, 23).

On March 6, Russia’s Energy Minister Aleksandr Novak declined to accept new oil production quotas after April 1 when the current OPEC+ deal expires (Oilcapital.ru, March 10). The move targeted primarily debt-burdened U.S. shale oil companies, which were already under pressure by the advancing COVID-19 pandemic. Moscow has long resented that the U.S. oil sector has continued growing unobstructed by cartel policies and has steadily overtaken Russia and Saudi Arabia as the world’s leading oil producer. Russian energy officials took advantage of the coronavirus spread globally to deal a blow to indebted American shale oil producers who need an oil price above $40 a barrel to remain solvent (Asia Times, March 18).

Naval War College Review, Spring 2020, v. 73, no. 2

Leadership and Decision—From Accountability to Punishment

The Utility of Narrative Matrix Games—A Baltic Example

The “Indo” in the “Indo-Pacific”—An Indian View

Operation Earnest Will—The U.S. Foreign Policy behind U.S. Naval Operations in the Persian Gulf 1987–89; A Curious Case

“Improbable Allies”—The North Korean Downing of a U.S. Navy EC-121 and U.S.-Soviet Cooperation during the Cold War

Sir John Orde and the Trafalgar Campaign—A Failure of Information Sharing

Reflections on Reading

Unlearn