29 April 2020

The public policy dilemma: There is indeed tension between lives and livelihoods

by Bibek Debroy
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No country has done universal testing for a proper random sample either. The ICMR has told us more than 75 per cent of Indian patients will be asymptomatic. Who do we test? Those who show symptoms, those who have been in contact with confirmed patients and those who suffer from severe respiratory diseases. Most countries do something similar.

There is risk and there is uncertainty. Since the days of Frank Knight, economists have differentiated between the two. Risk has a known probability distribution. For uncertainty, the probability distribution is unknown. COVID-19 makes us confront uncertainty, not risk. In either event, agents maximise expected payoffs. For risk, there is a given probability distribution that can be used by everyone. For uncertainty, there is a subjective probability distribution, which can, and does, vary from individual to individual.

How do I devise this subjective probability distribution? Through information and experience I already possess. There are various rationality assumptions used by economists. They are often violated. Otherwise, behavioural economics wouldn’t have taken off. Typically, given a situation, when your decision doesn’t agree with mine, I say you are irrational. However, with uncertainty, the problem may not be with rationality assumptions, but with differences in subjective probability distributions. Because of COVID-19, there is a certain risk of getting infected. Let’s call this the infection rate — total infections divided by the total population. Do I know what this infection rate is, for India, or for any other country for that matter? I don’t. I am not being pedantic. To the best of my knowledge, no country has done universal testing.

Coronavirus lockdown has given us a blank slate. We can write a new world when it lifts


Confronted with the finality of this statement, your instinctive reaction is likely to be: “We will miss those days!” Yet, in the very next breath, you are sure to realise that you don’t miss everything about ‘those days’ as there were things you wished would change. Alongside all the dislocation and the untold suffering, the coronavirus pandemic is thus an opportunity to create a new normal that is better than the old one.

As a society we will have to deal with the most demanding challenges of the here and the now: of containing the spread of the coronavirus; of having to protect hundreds of millions of people whose livelihoods are tenuous; of reviving an economy that has taken a historic battering; of rebuilding a fraying social harmony; and of negotiating the balance between individual liberty and the power of the state. We have no choice but to confront these challenges — with a Stoic mindset, as I wrote two weeks ago — but we also have an unprecedented opportunity in shaping the neighbourhood, village, city, country and the world we want to live in.

No, COVID-19 Isn’t Turning Europe Pro-China (Yet)

By Erik Brattberg and Philippe Le Corre

Ever since the World Health Organization declared Europe the new epicenter of the coronavirus pandemic on March 13, China has seized the opportunity to provide relief to some of the worst-hit European countries as part of a concerted PR offensive aiming at polishing up the Communist Party’s image internationally and — above all — domestically. Although China’s aid offers have generally been welcomed by those leaders struggling to contain the outbreak, it is still far too early to conclude that Beijing is actually winning over any European hearts and minds. As Chinese diplomacy in Europe is becoming more brazen — and in some cases even aggressive — the opposite may well turn out to be true.

Already dubbed by some “mask diplomacy,” the fast Chinese response to the coronavirus outbreak in Europe is an undeniable fact. Since mid-March, planeloads of Chinese medical teams, masks, and ventilators have arrived at European airports. For example, on March 13, only two days after the number of confirmed coronavirus cases in Italy reached 10,000, a team of Chinese medical staff from the Chinese Red Cross landed in Rome. Also on board the plane were 30 tons worth of coveted face masks and respirators in boxes draped with the Chinese flag.

COVID-19’s Other Virus: Targeting the Financial System


“The COVID-19 pandemic provides criminal opportunities on a scale likely to dwarf anything seen before. The speed at which criminals are devising and executing their schemes is truly breathtaking,” officials from the U.S. Secret Service and the FBI warned on April 14, 2020.

A day later, the U.S. government specifically declared that North Korea’s “malicious cyber activities threaten the United States and the broader international community and, in particular, pose a significant threat to the integrity and stability of the international financial system.”

Alarm bells should go off in capitals around the world as governments free up vast amounts of money to tackle the economic crisis triggered by the coronavirus pandemic. The EU has dedicated €3.2 trillion, the U.S. Congress passed a $2 trillion stimulus package, and Japan is spending nearly $1 trillion.

Financial institutions are the distribution network to get funds to companies and citizens, but during the pandemic lockdown they are particularly vulnerable and present an even juicier target not just for North Korea but for cyber criminals in general.

State Department cables warned of safety issues at Wuhan lab studying bat coronaviruses

Josh Rogin

Two years before the novel coronavirus pandemic upended the world, U.S. Embassy officials visited a Chinese research facility in the city of Wuhan several times and sent two official warnings back to Washington about inadequate safety at the lab, which was conducting risky studies on coronaviruses from bats. The cables have fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus — even though conclusive proof has yet to emerge.

Do Pandemics Promote Peace?

Barry R. Posen

As the novel coronavirus infects the globe, states compete for scientific and medical supplies and blame one another for the pandemic’s spread. Policy analysts have started asking whether such tensions could eventually erupt into military conflict. Has the pandemic increased or decreased the motive and opportunity of states to wage war?

War is a risky business, with potentially very high costs. The historian Geoffrey Blainey argued in The Causes of War that most wars share a common characteristic at their outset: optimism. The belligerents usually start out sanguine about their odds of military success. When elites on both or all sides are confident, they are more willing to take the plunge—and less likely to negotiate, because they think they will come out better by fighting. Peace, by contrast, is served by pessimism. Even one party’s pessimism can be helpful: that party will be more inclined to negotiate and even accept an unfavorable bargain in order to avoid war.

When one side gains a sudden and pronounced advantage, however, this de-escalatory logic can break down: the optimistic side will increase its demands faster than the pessimistic side can appease. Some analysts worry that something like this could happen in U.S.-Chinese relations as a result of the new coronavirus. The United States is experiencing a moment of domestic crisis. China, some fear, might see the pandemic as playing to its advantage and be tempted to throw its military weight around in the western Pacific.

It’s Time for an Independent Coronavirus Review

By Thomas J. Bollyky and David P. Fidler

The coronavirus pandemic is perhaps the defining struggle of our era, but the global response to it has stalled over a question of scheduling. The United States and Australia want accountability now: for whoever originated the virus, for China’s initial attempts to cover up the outbreak, and for the World Health Organization’s controversial handling of the pandemic. U.S. President Donald Trump is withholding funds from the already resource-strapped WHO, pending a review of the UN agency’s conduct during the crisis. This week, his administration even blocked a joint commitment by the G-20 to strengthen the WHO’s mandate and arm it with additional resources to coordinate the international fight against the disease.

China, the United Nations, and the WHO all favor accountability later. “Once we have finally turned the page on this epidemic, there must be a time to look back fully to understand how such a disease emerged and spread its devastation so quickly across the globe, and how all those involved reacted to the crisis,” UN Secretary-General António Guterres said in a statement on April 14. China’s Foreign Ministry echoed that sentiment a few days later, tweeting that nations facing a pandemic “should assist each other in solidarity and coordination instead of pointing fingers or holding anyone accountable.” WHO Director-General Tedros Adhanom Ghebreyesus has welcomed a review of his agency’s performance “in due course” but emphasized that the focus now must be on staying united, saving lives, and stopping COVID-19. 

Will post-coronavirus world bring chill to Israel-China relations?

Ksenia Svetlova
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Ksenia Svetlova, a former Knesset member for Hatnua, is currently a fellow at the Interdisciplinary Center Herzliya and director of the program on Israel-Mideast relations at Mitvim. She previously worked as a senior analyst and reporter on Middle East affairs for Israel's Channel 9. She covered Gaza and the West Bank and also reported from Egypt, Lebanon, Libya, Syria, Tunisia and other Arab countries. She is an expert on Middle Eastern affairs and is fluent in Arabic, Russian, Hebrew and English. On Twitter: @KseniaSvetlova

Israelis have not yet seen an increase in coronavirus testing in any significant way despite repeated promises from Prime Minister Benjamin Netanyahu and the heads of Israel's health care system. Testing certainly hasn’t reached the numbers that the prime minister spoke about only three weeks ago, when he aimed for 20,000 and as many as 30,000 tests a day.

Apparently, Netanyahu was basing his numbers on the expectation that Israel would begin cooperating with the Chinese firm BGI by early April. BGI and its subsidiaries together comprise the largest DNA and genetics company in the world. The problem is that the road to real cooperation with the Chinese behemoth was strewn with obstacles. Chief among them was sharp criticism from senior figures in the defense establishment and specialists in Israel and around the world, who expressed concerns that cooperation of this kind would require exposing sensitive Israeli databases to the Chinese corporation.

How Will China Respond to New Coronavirus Outbreaks?

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Welcome to Foreign Policy’s weekly China Brief. The highlights this week: A city in the far north responds to a cluster of new coronavirus cases, a new poll reveals worsening U.S. attitudes toward China, and China’s GDP officially contracts.

If you would like to receive China Brief in your inbox every Wednesday, please sign up here.

Northeastern China Tightens Restrictions

The city of Harbin, in China’s far north, has tightened its coronavirus measures this week, after a small outbreak—52 positive cases—prompted fears that the coronavirus could spread through China again. The city authorities have forbidden entrance to residential compounds for anyone except residents themselves and limited travel for Harbin’s population of nearly 11 million. The four districts where the outbreak is centered have been put under complete lockdown for the next two weeks.

The Harbin outbreak appears to be the result of reinfection from Russia. The city, which is the capital of Heilongjiang province, has always had close ties with its northern neighbor. It has a substantial Russian population and has maintained flights to and from Russia throughout China’s outbreak. But in recent weeks, the border has been tightened across China’s northeast following cases across the region imported from Russia, which was late to enact coronavirus lockdown measures and has performed relatively few diagnostic tests.

American quandary: How to secure weapons-grade minerals without China

Ernest Scheyder

MOUNTAIN PASS, Calif. (Reuters) - The United States wants to curb its reliance on China for specialized minerals used to make weapons and high-tech equipment, but it faces a Catch-22.

It only has one rare earths mine - and government scientists have been told not to work with it because of its Chinese ties.

The mine is southern California’s Mountain Pass, home to the world’s eighth-largest reserves of the rare earths used in missiles, fighter jets, night-vision goggles and other devices.

But the U.S. Department of Energy (DOE) has told government scientists not to collaborate with the mine’s owner, MP Materials, the DOE’s Critical Materials Institute told Reuters.

This is because MP Materials is almost a tenth-owned by a Chinese investor and relies heavily on Chinese sales and technical know-how, according to the company.

“Clearly, the MP Materials ownership structure is an issue,” said Tom Lograsso, interim director of the institute, the focal point of the U.S. government’s rare earths research and a facility that typically works closely with private industry.

China bashing is the new American sport

Gerard Baker
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Joe Biden, the presumptive Democratic nominee for president, has been struggling to gain attention in the face of the national coronavirus emergency. Anyone would find it hard to compete for airtime against the combination of a lethal epidemic and a media-hungry president with nightly access to a soapbox. However, the former vice-president’s near-invisibility has worried some in his party who fear it fuels doubts about the leadership potential of a 77-year-old man whose occasional live television forays have been marked by a succession of verbal miscues and hints of cognitive decline.

So late last week the people around him decided it was time to muscle in more aggressively on the public consciousness. A campaign group closely associated with his presidential bid released a political advertisement

The Chinese lab at the center of the coronavirus controversy

Bethany Allen-Ebrahimian
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China's highest-security virology center is at the center of debate, speculation and misinformation about how, where and when the novel coronavirus emerged.

Why it matters: Knowing the origin of the novel coronavirus is key to efforts to prevent future possible pandemics and will shape China's role in the post-pandemic world.

In the U.S., two similar-sounding theories link the Wuhan Institute of Virology and the origin of the coronavirus. One is very unlikely; the other is plausible but unverified.

Theory 1: The coronavirus was created as part of a Chinese bioweapons research program allegedly linked to the WIV.

Virologists have determined this is highly unlikely. By looking at a virus' genetic material, it is possible to tell if it has been engineered in a lab. The coronavirus shows no such signs, as the World Health Organization also emphasized on April 21.

Some U.S. officials previously showed interest in this theory, but the scientific evidence debunking it has been persuasive.

Satellites Track Chinese Aircraft Carrier In South China Sea

H I Sutton
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The vastness of the ocean is easily underestimated. Even a ship as large as an aircraft carrier is hard to find — it’s the classic needle in a haystack problem. Until recently it was only viable for the best-equipped navies. Spy planes, submarines, military satellites and communications intercepts are among the tools of the trade, and they do not come cheap.

But today a revolution is happening in open-source intelligence, meaning that you do not have to have a navy to do it. This has been amply demonstrated by analysts who have been tracking a Chinese aircraft carrier as it maneuvers far out to sea. And they did it via commercially available satellite imagery.

The satellite images are reminiscent of the photographs taken by scout planes in World War II. You can see the carrier and its escorts. If you look closely you can trace the wake of the ships. You can determine speed, heading and make inferences about the operational context.

Key Questions for the World Health Organization


If the WHO is to remain a credible international organization, it must answer these questions—publicly and in detail.

In view of ongoing controversies surrounding the World Health Organization’s response to COVID-19, we have isolated the most important questions that need to be answered in order to form an objective assessment of the organization’s record. These questions have been formulated after research of Chinese and other open sources.

When did the WHO receive information about COVID-19?

According to the pro-Beijing South China Morning Post, owned by Jack Ma (owner of the firm Alibaba and a member of the Chinese Communist Party), the first case of COVID-19 in Wuhan, China, was confirmed on November 17, 2019. But according to the official website of the WHO, it first received a report from China about the virus outbreak on December 31.

Before that date, did the WHO receive or discover any other information about the outbreak? If so, what was the organization’s reaction? What did Chinese authorities say in their first report to the WHO? Can the public see that report? If not, why not?

Was the WHO aware of China’s suppression of research and information about COVID-19?

How the Bottom Fell Out of the U.S.-Saudi Alliance


In late November 1973, just six weeks after Saudi Arabia and OPEC launched a devastating oil embargo on Europe and the United States, U.S. National Security Advisor Henry Kissinger railed against the Saudis at a secret meeting in the White House Map Room. He’d already toyed with the “not … so insane” idea of landing U.S. troops that “would have divided up” oil fields in the region, and he decried what he repeatedly called Saudi “blackmail.”

“It is ridiculous that the civilized world is held up by 8 million savages,” Kissinger raged.

Three months later, Kissinger was inside the palace of Saudi King Faisal, paying obeisance and promising U.S. economic, technical, and military aid—before the oil embargo was even lifted. “Our objective is to work with Your Majesty and to strengthen our friendship on a long-term basis,” he said.

The monthslong drama of the OPEC oil embargo highlighted as seldom before the often troubled, yet surprisingly resilient nature of the U.S.-Saudi relationship. Again and again, the unlikely partners would fall out—usually over the Arab-Israeli conflict, much later over the 9/11 attacks. But the fundamental bargain struck by U.S. President Franklin D. Roosevelt and then-King Ibn Saud in the waning days of World War II that consummated the U.S.-Saudi relationship 75 years ago would never break.

Until, perhaps, now. This spring, as in the early 1970s, the Saudis unleashed their oil weapon, inflicting damage on the U.S. economy by deliberately crashing oil prices at a time of global economic collapse amid the coronavirus pandemic. Lawmakers on Capitol Hill already had little love for the Saudis, disillusioned by continued human rights abuses in the kingdom, a brutal Saudi-led war in Yemen, and, perhaps most shockingly, the Saudi state-ordered butchery of a Washington Post columnist.

The Urgent Need for a U.S.-Iran Hotline

What’s new? Tensions between the U.S. and Iran have repeatedly brought the two sides to the brink of open conflict. While neither government seeks a full-fledged war, a string of dangerous tit-for-tat exchanges amid mounting hostile rhetoric underscores the potential for a bigger military clash.

Why does it matter? Due to limited communication channels between Tehran and Washington, an inadvertent or accidental interaction between the two sides could quickly escalate into a broader confrontation. The risk is especially high in the Gulf, where U.S. and Iranian military vessels operate close to one another.

What should be done? The U.S. and Iran should open a military de-escalation channel that fills the gap between ad hoc naval communications and high-level diplomacy at moments of acute crisis. A mechanism facilitated by a third party might contain the risk of conflict due to misread signals and miscalculation.


Getting the next phase of remote learning right in higher education April 2020 | Article

By Christine Heitz, Martha Laboissiere, Saurabh Sanghvi, and Jimmy Sarakatsannis

For higher-education institutions, the first frantic rush of transitioning from in-person to remote learning is behind them—not that the process is complete. Most faculty members have managed to establish new routines. Others are still working out how to teach courses designed for a physical classroom through online platforms that they may still be learning to master.

Students are also having to adjust, expected to learn as much without the ready social connection and energy of a residential and in-person learning environment. It didn’t help that until the COVID-19 crisis, online learning comprised a relatively small share of higher education. Fewer than one in five (18 percent) of US tertiary-level students learned online exclusively; as of fall 2018, about a third had taken at least one course online.1

Now that the first phase has passed, what comes next? This article details five specific actions universities could take in the next few months to help improve student learning, engagement, and experience while operating remotely. Whether students are able to return to campus for the fall term or remain remote for longer, these moves may inspire institutions to pilot new initiatives, learn what works, iterate, and position themselves to create capabilities that will enhance instruction permanently.

The Coronavirus Oil Shock Is Just Getting Started

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The idea of a negative price for any commodity is outlandish, implying the seller is prepared to pay a buyer. But for oil, the largest commodity market in the world, the basic fuel of modernity, to be trading at negative prices is nothing short of mind-boggling. In the early afternoon EDT of April 20, the May contract for West Texas crude touched negative $40.32. It was a succinct demonstration of how severe the impact of the COVID-19 crisis has been.

What triggered the inversion of prices on April 20 was the overflow of unsellable oil in the tank farms of Cushing, Oklahoma, where U.S. oil futures are settled. But the collapse in oil prices has sent shockwaves rippling around the world.

People in the West tend to think about oil shocks from the perspective of the consumer. They notice when prices go up. The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness, as price controls left Americans lining up for gas and European governments imposed weekend driving bans. This was more than an economic shock. The balance of power in the world economy seemed to be shifting from the developed to the developing world.

A Tale of Two Rescue Plans

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It has been several weeks since Robert Shindler, an accountant based in Bradenton, Florida, who represents hundreds of small U.S. businesses, began trying to puzzle his way through the bureaucratic maze set up by Washington to dispense more than $2 trillion in rescue aid to mitigate the coronavirus shutdown. And Shindler says he’s as angry now—and most of his clients are as cashless—as when he started applying for federal-sponsored loans at the beginning of April.

“I’m seething,” Shindler said in a phone interview. Echoing the complaints of many other applicants, he said a blizzard of obscure rules, changes, exceptions, and a general lack of cooperation from major banks left most of his clients empty-pocketed. And he’s certain things won’t be all that much better after President Donald Trump signs the new $484 billion replenishment fund on Friday—though it is more targeted to small businesses—with a huge queue of loan applicants already waiting.

“In the first 30 seconds, the money will be gone,” he said.

European Lockdown Hits Russia’s Gas Market

The slump in gas prices will create plenty of problems, but at the same time it could provide a much-needed purging of an industry that in recent years has seen increasingly absurd projects unveiled for pipelines and LNG terminals.

It’s a trying time for the two pillars of Russia’s energy exports: oil and gas. The new coronavirus pandemic has shattered demand on traditional markets, especially in Europe. 

Compared with the same day last year, electricity generation at gas-powered plants in northern Italy was down by 54 percent on the last Tuesday of March this year, by 37 percent in the Netherlands, and by 15 percent in western Germany. This is despite the fact that late March was colder this year in Europe than last year. One of the consequences of people staying at home rather than driving their cars and working from office buildings is a steep drop in demand for gas, totaling billions of cubic meters. 

The gas market has seen low prices and an excess of liquefied natural gas (LNG) since the middle of 2019. According to forecasts by the International Energy Agency, gas production this year will reach a record of about 4 trillion cubic meters. Against this backdrop, the sharp fall in demand has sent prices into an uncontrollable tailspin.

Bill Gates, at Odds With Trump on Virus, Becomes a Right-Wing Target

By Daisuke Wakabayashi, Davey Alba and Marc Tracy

In a 2015 speech, Bill Gates warned that the greatest risk to humanity was not nuclear war but an infectious virus that could threaten the lives of millions of people.

That speech has resurfaced in recent weeks with 25 million new views on YouTube — but not in the way that Mr. Gates probably intended. Anti-vaccinators, members of the conspiracy group QAnon and right-wing pundits have instead seized on the video as evidence that one of the world’s richest men planned to use a pandemic to wrest control of the global health system.

Mr. Gates, 64, the Microsoft co-founder turned philanthropist, has now become the star of an explosion of conspiracy theories about the coronavirus outbreak. In posts on YouTube, Facebook and Twitter, he is being falsely portrayed as the creator of Covid-19, as a profiteer from a virus vaccine, and as part of a dastardly plot to use the illness to cull or surveil the global population.

The wild claims have gained traction with conservative pundits like Laura Ingraham and anti-vaccinators such as Robert F. Kennedy Jr. as Mr. Gates has emerged as a vocal counterweight to President Trump on the coronavirus. For weeks, Mr. Gates has appeared on TV, on op-ed pages and in Reddit forums calling for stay-at-home policies, expanded testing and vaccine development. And without naming Mr. Trump, he has criticized the president’s policies, including this week’s move to cut funding to the World Health Organization.


By Edward Goldberg
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The coronavirus has acted with the power of a conquering army, upending long-established behaviors in global economics and politics. It is apparent that the virus will be similar to 9/11 in its power to alter global perspective for decades.

Some of these changes are immediately apparent; others more elusive. Some will influence the geopolitical landscape for years, while others will slowly change our economic behavior.

The first great change regards China, where the virus appears to have come under control, but at an unkown cost to the leadership of the ruling Communist Party. The Chinese government’s political legitimacy since Deng Xiaoping has been based not on communism, but on economic growth and the guarantee of an increased standard of living for its citizens. But how does the Chinese government maintain the perception that the party is all-knowledgeable regarding economics? Due to the virus, China’s GDP did not show 4% to 5% growth for the first quarter as the government projected. Instead, it shrank 6.8%. The same rosy projection never took into account the fact that China’s overseas customers are now in a virus shutdown, thus dramatically slowing China’s exports.

The virus has also called into question the issue of the competency of the Communist Party of China, due to the mismanagement of the crisis itself. Despite all the propaganda a massive dictatorship will throw at its people, the reality of botched leadership in fighting the early onset of the virus was obvious to the common person and has percolated throughout society. China’s leadership is exposed now, very much like Hans Christian Andersen’s emperor without clothes. How they will now behave both domestically and internationally remains to be seen.

Donald Trump is scapegoating the World Health Organisation to disguise his own blunders

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Aweek after threatening to withhold funding from the World Health Organisation, Donald Trump announced yesterday (15 April) that the US would suspend payments to the international body. 

“Today I’m instructing my administration to halt funding of the World Health Organisation while a review is conducted to assess the World Health Organisation’s role in severely mismanaging and covering up the spread of the coronavirus,” Trump said, adding that “one of the most dangerous and costly decisions from the WHO was its disastrous decision to oppose travel restrictions from China and other nations”. Trump noted that he, by contrast, had suspended travel from China.

Aside from the fact that the US did not, as Trump has repeatedly claimed, suspend all travel from China, there are several problems with the announcement. For one thing, it is as yet unclear how funding will be suspended, as it is largely appropriated by Congress. As others have speculated, Trump could propose to withhold congressionally appropriated funds under the Impoundment Control Act of 1974, but that would require congressional approval within 45 days.

Jamestown Foundation

o Epidemic-Related Unrest and the CCP’s Reinforced Political Loyalty Indoctrination for China’s Police

o Responding to the Epidemic in Wuhan: Insights into Chinese Military Logistics

o The China-Myanmar Economic Corridor: Delays Ahead

o Mind the Trap: What Basing Rights in Djibouti and Sri Lanka Reveal About the Limitations of Debt as a Tool of Chinese Military Expansion

o The PLA Navy’s ZHANLAN Training Series: Supporting Offensive Strike on the High Seas

A Return To Normalcy?

John H. Cochrane, Niall Ferguson, H. R. McMaster, Bill Whalen

The question on everyone’s mind: when will society revert to its pre-coronavirus existence, and is such a restoration remotely possible? Hoover senior fellows John Cochrane, Niall Ferguson, and H. R. McMaster reflect on the various factors—economic policies, governments restoring civil liberties, nations working in tandem, the search for a COVID-19 vaccine—that will lead to the “new normal.”