It is time for China and the US to fight Covid-19 together

The gains from co-operation far outweigh the modest cost of the steps they could take

Minxin Pei

(FILES) this file photo taken on November 09, 2017 shows US President Donald Trump (L) and China's President Xi Jinping leaving a business leaders event at the Great Hall of the People in Beijing. - The United States and China announced a major thaw in their trade war Friday, including immediate cuts to punishing import tariffs, but markets were not impressed. "We have agreed to a very large Phase One Deal with China," President Donald Trump tweeted after officials in Beijing made a similar announcement. (Photo by Nicolas ASFOURI / AFP) (Photo by NICOLAS ASFOURI/AFP via Getty Images)
Presidents Donald Trump and Xi Jinping should start repairing their frayed relationship out of self-interest if nothing else © Nicolas Asfouri/AFP/Getty


Science fiction writers have fantasised about how the world’s rival powers would react if Earth was invaded by aliens. Would they unite to fight a common foe? Or carry on duelling while the alien invader destroyed humanity?

The coronavirus is not from another planet. But this crisis comes closest to the scenario imagined by sci-fi writers. Tragically, those who expect the world’s great powers to co-operate in the fight are being proved wrong. The US and China have appeared more intent on undermining each other than working together. Since the outbreak of the virus in China, they have fought a war of diplomatic tit-for-tat — notwithstanding last week’s conversation between presidents Xi Jinping and Donald Trump.

Washington has attacked China, justifiably, for covering up the severity of the initial outbreak. Beijing took umbrage at senior US officials’ talk of the “China virus”. Relations, already on life support, have teetered on collapse. Despite Friday’s “very good” talk, as Mr Trump described it, the US president then signed a law obliging Washington to bolster global support for Taiwan — a direct rebuke to China.

Yet, at only modest cost, presidents Xi and Trump can halt the decline in ties — out of self-interest if nothing else. For Mr Xi, even a brief respite could shore up his damaged authority at home. His government handled the initial outbreak poorly. Success containing Covid-19 was then achieved at huge cost. Reviving the economy hinges on China’s main trading partners, including the US, subduing the virus.

Mr Trump needs a speedy victory in the war against coronavirus even more urgently. A prolonged crisis and severe economic downtown could imperil his re-election in November.

Besides such political exigencies, the gains from co-operation far outweigh the modest costs of the steps they could take to pause their escalating conflict.

Concretely, the easiest thing both can do is to refrain for six months from taking any diplomatic action that could be construed as unfriendly. Each side should also offer symbolic gestures of goodwill to signal a desire to de-escalate.

Beijing needs to retract its decision to expel US journalists. As for the US, it would be a positive sign if all US officials, and not just Mr Trump as he has recently done, stopped referring to the “Chinese virus”.

A more practical step is co-operation in fighting Covid-19. With its capacity to scale up the production of critical medical supplies, China can ramp up output quickly. As a goodwill gesture, Mr Xi should personally offer Mr Trump donations of millions of masks, test kits and protective gowns.

In addition, China should share with the US, and all other countries, the lessons and data it has gained in containing the virus and treating its victims. That would help win the war against coronavirus quickly and more efficiently, globally. Washington and Beijing should also pool their resources and scientific talent in a joint programme to find a vaccine and make it freely available to the world.

On the economic front, self-interested collaboration will help calm markets and limit damage. For example, a joint agreement to suspend for six months all the tariffs levied during the trade war would boost investor confidence. More crucially, a six-month foreign exchange swap agreement between the US Federal Reserve and the People’s Bank of China could reduce the risks of a nightmare scenario. To meet rising demand for dollars to meet the dollar-denominated obligations of its banks, Beijing may have to sell a large chunk of its US Treasuries holdings. That action would roil financial markets even more.

These modest steps are unlikely to change the course of their geopolitical rivalry. But they would follow through on the potential thaw signalled last week. By co-operating to fight a common enemy, they can both help themselves and reassure the world that the feud can be waged rationally, without endangering all humanity.


The writer is author of ‘China’s Crony Capitalism: The Dynamics of Regime Decay’

US holds off on IMF plan to boost emerging economies’ finances

World leaders call for expansion of liquidity measures for virus-hit nations

James Politi in Washington


The Trump administration is resisting urgent appeals from European and African leaders for the IMF to create additional reserve assets to help low-income emerging economies cope with the coronavirus pandemic, creating a fresh division in the global response to the crisis.

The expansion of the IMF’s “special drawing rights” has arisen as a point of friction in multilateral discussions ahead of the IMF and World Bank spring meetings, which are being held online this week.

A new allocation of SDRs would offer a liquidity boost to many countries facing a sudden depletion of foreign exchange reserves. The move is seen by many governments as a key complement to a debt relief package to support struggling emerging economies that the G20 — including the US — is expected to endorse as early as Wednesday.

Writing in the Financial Times on Tuesday, European political leaders including German chancellor Angela Merkel and French president Emmanuel Macron joined with leading African figures such as Abiy Ahmed, the prime minister of Ethiopia, and Cyril Ramaphosa, the president of South Africa, to urge the IMF to “decide immediately on the allocation of special drawing rights” to “provide additional liquidity for the procurement of basic commodities and essential medical supplies”.

“No region can win the battle against Covid-19 alone,” they wrote. “This is not the time for division or politics but for unity and co-operation.”But the US, the IMF’s largest shareholder, has held off on backing the measure, casting doubt on whether that part of the multilateral response to the pandemic will get off the ground.

“The US response for now is no. I had an opportunity to discuss this with US Secretary of the Treasury Steven Mnuchin on two occasions,” Bruno Le Maire, France’s finance minister, told reporters on Tuesday.A spokeswoman for the US Treasury said Washington “supports a variety of efforts at the IMF to provide rapid, targeted assistance to countries that need support to overcome the current challenges” but did not explain its position on a new SDR allocation.

“We support accelerating IMF procedures, higher access from the IMF’s emergency lending facilities, and support from donors for the IMF’s assistance to low-income countries, including grants to help these countries make debt payments to the IMF,” she said.

One person familiar with the discussions said US scepticism was shared by some other countries, so Washington was not alone in holding off on the effort.

Kristalina Georgieva, IMF managing director, said no options had been ruled out in the global response to the economic downturn triggered by the coronavirus pandemic, suggesting the allocation of new reserve assets to help emerging markets remained on the table despite US scepticism.

In a press conference at the opening of the virtual IMF and World Bank spring meetings, Ms Georgieva said: “What we are concentrating on is to act decisively with what we have and where there is full consensus among our members [but] we recognise that there are other options to be explored and we will continue to do so.”

SDRs are an international reserve asset created by the IMF in 1969 to supplement member countries’ official reserves. Their value is based on a basket of five currencies including the US dollar, the euro, the renminbi, the yen and the British pound. The existing stock of SDRs amounts to about $275bn, which was mostly issued during the 2009 financial crisis.

Former US Treasury secretary Lawrence Summers and former UK chancellor Gordon Brown have called for the issuance of a fresh $1tn in SDRs. Writing in the Washington Post, they said: “If ever there was a moment for an expansion of the international money known as Special Drawing Rights, it is now.”

Some officials and economists are wary of the effectiveness of SDRs because they are allocated in proportion to voting rights at the IMF so the strongest economies incur much of the benefit, unless they agree to redistribute their holdings.

Masood Ahmed, president of the Center for Global Development, a Washington think-tank, said the central banks of high-income countries had injected “substantial liquidity” into their economies and emerging markets needed the same boost.

“Blocking an SDR increase will simply force these countries to pursue less effective policy choices with adverse consequences for themselves and for the world economy,” Mr Ahmed said.
 Meanwhile, countries are exploring alternative ways to boost liquidity for lower-income nations. One option would be to set up a short-term liquidity facility at the IMF for nations that cannot access swap lines with the world’s big central banks; another would be to direct the existing stock of SDRs to poorer nations struggling because of the coronavirus pandemic.

Two people familiar with the discussions said the US would probably not oppose the use of existing SDR stock to help emerging economies.

But Mark Sobel, a former senior US Treasury official and US chairman of Omfif, a think-tank, doubted whether such an idea could be implemented.

“Workaround proposals for redistributing or pooling SDRs have long been put forward. These have not commanded support, often seen as inconsistent with the SDR’s reserve asset role,” he wrote in late March.

A Perfect Storm For Emerging Markets


Pretend for a minute that it’s 2019 and you’re Brazil. Or maybe Turkey, your choice.

You’ve got a lot of infrastructure to build if you want to keep your people happy, and to fund those projects you’ll need to borrow a lot of money.

That’s not a problem, because borrowing is easy. The whole world wants to give you US dollars at interest rates that are shockingly low compared to what prevails in your domestic financial markets.

And, icing on the cake, your experts tell you that the dollar is likely to fall versus your country’s currency, making it even easier to pay off those loans. So you load up, borrowing as much as the market will bear and use the proceeds to buy higher-yielding local bonds (thus earning a nice spread) while starting on those roads and bridges. It feels like a win-win with minimal risk.

Then the coronavirus happens. The US dollar strengthens on safe-haven demand and your local currency plunges on a global “risk-off” spasm.

And articles like the following start showing up in the global press:

Coronavirus jolts vulnerable economies
(NHK Japan) – The Institute of International Finance says that its latest data shows money is rapidly “disappearing” from emerging markets. Since late January, cumulative outflows have surpassed levels observed at the peak of the 2008 global financial crisis. 
In the midst of the coronavirus pandemic, investors are quickly selling emerging market currencies such as the Brazilian real, Indonesian rupiah, Russian ruble, and Turkish lira to buy up the US dollar. 
Kristalina Georgieva, the head of the International Monetary Fund, noted in a recent statement that investors have removed 83 billion dollars’ worth of money from emerging markets, the largest capital outflow ever recorded.

perfect storm emerging markets
 
For these countries, the problems don’t end there; they have been hit hard by plummeting oil and commodity prices. On March 18, crude prices fell to 20 dollars a barrel, half the price of just a few weeks ago. This is a crippling blow for the many emerging economies which are oil and commodity exporters. 
Some of these countries were already in vulnerable positions. The debt service ratio measures a country’s debt interest payments in relation to its export earnings. The figure is said to measure the strength of a country’s financial position: the lower the ratio, the healthier the national finances. For most countries, the number falls somewhere between 0 and 20 percent. 
According to Atsushi Nakajima, chairman of the Research Institute of Economy, Trade, and Industry, Argentina’s number stands at over 60 percent, while Turkey’s and Brazil’s exceed 30%. If more emerging countries see their ratios increase, it would lead to heightened concerns over the stability of the global financial system. Such a situation could quickly develop into a debt crisis.

———————
 
Dollar strength exposes cracks in Asian emerging-market debt
(Nikkei) – Some $1.4 trillion worth of U.S. dollar-denominated bonds are outstanding from Asian countries, with more than half of that from China, according to Dealogic. 
The resilient U.S. dollar and the resulting weakness in emerging-market currencies amid the coronavirus pandemic is increasing the risk of default on Asian companies’ corporate debt, potentially triggering a wider credit crisis. 
About $115 billion in Asian emerging-market debt is set to mature this year and $200 billion next year, according to data from Dealogic. The dollar’s 7% climb this month against a basket of currencies and a 243-basis-point blowout in Asia ex-Japan credit spreads could complicate the task of refinancing, and analysts are predicting that some stretched companies will have to seek restructurings with bondholders. 
“At the peak of the last big market sell-off [in 2018], there were 150 bonds in the J.P. Morgan Asia Credit Index yielding over 10%. That number is now 301,” said Jim Veneau, head of fixed income for Asia at AXA Investment Managers.

Which brings us to the real question facing the developed world, which is: Who owns all this soon-to-default emerging market debt? And the answer is, as usual, lots of different people. Big Western banks are on the hook for many of the loans. Hedge funds and pension funds own many of the bonds.

And the emerging market bond funds that far too many retirees were talked into adding to their nest eggs own plenty.

So when EM debt defaults, pretty much everyone feels the pain. Though it’s not clear whether anyone will notice, given what else is going on.

The Priority for the Social-Distancing Period

With COVID-19 quickly spreading around the world, much of the attention has correctly centered on the need for social distancing to slow transmission of the virus. But limiting human interactions should be regarded as merely the first step in a more comprehensive targeted strategy.

Michael Spence

spence125_Tracey NearmyGetty Images_airportcoronavirusaustralia

MILAN – The coronavirus has a chokehold on the global economy. Like many friends and colleagues in China, I, too, have been locked down, along with the rest of Italy. Many of my fellow citizens in the United States are now in the same situation; others around the world will follow suit soon enough.

Because the virus can apparently be transmitted by those without symptoms, it has spread widely and under the radar of public-health authorities. To prevent health systems from being overwhelmed, aggressive social-distancing and self-isolation measures have been broadly implemented and accepted by the public. Whether they will slow the rate of transmission and limit the number of critical cases in the West remains to be seen.

Evidence that the epidemic has been curtailed or even contained in China and some other Asian economies is promising. These countries, however, relied not just on social distancing, but also on a vast array of tools that have not been extensively deployed in Europe and the US: widespread testing, contact tracing, mandated isolation, and so forth.

Everywhere, however, measures to mitigate the pandemic have produced a sudden stop to much economic activity, with essential services often among the only sectors exempted. The result will be a sharp drop in GDP and incomes, a near-certain spike in unemployment (as already seen in the US), a disrupted school calendar, and the suspension of pretty much any activity involving gatherings of more than a few people.

For some, videoconferencing, online education, and other digital applications have cushioned the blow. But the inevitable economic outcome will be a deep recession and far-reaching collateral damage to people’s livelihoods and wellbeing.

Locking down the economy is correctly viewed as a way to buy time to expand capacity and reduce the peak-load demand on health systems. But it is not a complete strategy. Even when combined with monetary accommodation and a large fiscal program geared toward protecting vulnerable people and sectors, an economic deep freeze cannot be sustained without eventually imposing unacceptable costs on individuals and society.

Large portions of the modern economy – not least restaurants, retail, theatres, sporting events, museums, parks, and many forms of tourism and transportation (such as air travel) – simply cannot operate under conditions of social distancing. These sectors account for a significant share of total employment. Other large sectors can still function, but not on all cylinders.

The question, then, is what can be done now to ensure that the recovery and return to normalcy happens as safely as possible. A lockdown of an economically tolerable duration cannot in itself reduce the risks associated with interpersonal interactions.

Within a number of weeks – say four to six – the economic costs of the lockdown will start to mount, at which point some group of people will start returning to work if there is any to be had, simply because they have no choice. (For many poor people in India, where the economy was locked down this week, the crisis will be immediate.)

Though the risks of infection will remain high, they will not have the resources to remain isolated. At the same time, although the costs of closing schools for long periods are very high, schools will not or should not reopen until the risks of a coronavirus resurgence are low to nil.

The speed and safety of the recovery thus will depend critically on whether the risks of group activities have been lowered sufficiently. One important element of risk reduction concerns health-system capacity. The current focus on adequately equipping and protecting doctors and medical staff with what they need to provide critical care is therefore entirely justified.

But these front-line efforts will not reduce the risks of interpersonal contact more generally. To do that, we must use the lockdown period to expand the capacity for testing, contact tracing, isolation, and treatment.

Here, a March 25 briefing from Tedros Adhanom Ghebreyesus, the director-general of the World Health Organization, is well worth reading. “Asking people to stay at home and shutting down population movement is buying time and reducing the pressure on health systems,” Ghebreyesus explains.

But on their own, these measures will not extinguish epidemics. The point of these actions is to enable the more precise and targeted measures that are needed to stop transmission and save lives.” If I were amending this clear statement of purpose, focused on health, I would only add to that last sentence: “… and to reduce infection risks, restart the economy, and accelerate the recovery.”

After explaining what those more precise and targeted measures require, Ghebreyesus added that exactly the same steps will be required in countries – including many developing, lower-income economies – that still have low infection counts.

We can already foresee that some of these countries will need external assistance to prepare for domestic outbreaks. International cooperation and support are thus crucial for managing the crisis at the global level.

In any case, the key point is that the steps needed to restart the economy are the same as those needed to slow the transmission of the virus. As we anticipate the end of aggressive social distancing, building the capacity for testing, contact tracing, isolation, and treatment becomes an urgent economic priority.

We absolutely must drive down the risks of interpersonal contact so that those who feel they must return to work can do so, and so that those inclined to self-isolate voluntarily can return to schools and full economic activity, feeling relatively safe.

The Asian cases suggest that digital technologies are effective tools for targeting and monitoring infections, and for keeping people and authorities informed about risks. Some of the most effective techniques rely on location data and may raise privacy concerns in some countries.

But given the scale of the challenge, these methods should not be dismissed out of hand. The platforms already have location data that could be used to inform citizens of potential exposure.

After all, digital infrastructure has already proven to be a key source of economic resilience in this crisis. Without it, remote working and schooling, e-commerce, and digital financial services would not be possible, and aggressive social distancing would have already brought the economy to a near-complete halt.


Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.

The Method to Bolsonaro’s Madness

By: Allison Fedirka


Known for his contrarian and uncouth behavior, Brazilian President Jair Bolsonaro frequently comes under intense scrutiny for his decisions. The latest controversy stems from his refusal to shut down economic activity in response to the coronavirus outbreak. Many governments face this decision but few have opted for Bolsonaro’s economy-first approach.

The policy hasn’t been well received at home: Governors have lined up against him, media outlets have raised the idea of removing him from office, and even Facebook removed a video of Bolsonaro speaking to street vendors on the grounds that the content violated misinformation standards related to the virus.

But however controversial it may be, there is a method to Bolsonaro’s apparent madness.

Brazil’s economy is simply too weak to deliberately close down for a prolonged period of time.

Backlash

Brazil first addressed the coronavirus as an economic problem rather than a public health one because the economic effects arrived a month before its first confirmed case. At the end of January, Brazilian mining giant Vale suspended operations in China and restricted travel to and from the country.

In early February the electronics industry, particularly makers of small electronics such as mobile phones, started experiencing supply chain problems, and by mid-month firms were implementing short-term closures and discussing furloughs. Leading solar power companies in Brazil, also highly dependent on China, forecast supply shortages in April and May as well as a 5-10 percent drop in sales.

Brazilian beef exports – worth billions of dollars when it comes to China trade – experienced a sharp drop in demand, putting small and medium-sized slaughterhouses in peril of closing.

Oil giant Petrobras, which sends 72 percent of its exports to China, also reported slumping demand. The shipping industry and exporters expressed worries about a potential shortage of containers by April. All this occurred before Feb. 25, when Brazil reported its first confirmed case of COVID-19.

Once the virus arrived in Brazil, the question in the government of balancing competing demands between health and economic needs unsurprisingly turned contentious. Bolsonaro leads the economy-first camp, downplaying health risks in public and rejecting restrictions on social movement on the grounds that they will destroy the economy. He advocates “vertical isolation,” which calls for the elderly and those with preexisting conditions to self-isolate while everyone else goes about business as usual.

On the public health side, several state governors, led by Sao Paulo’s Joao Doria and accompanied by Rio de Janeiro’s Wilson Witzel, have called for restrictions on movement for the whole population. Together, these two states account for nearly 40 percent of national gross domestic product and are home to 63.2 million of Brazil’s 210 million inhabitants. Restricting economic activity in these states will greatly reduce the country’s GDP.

On one hand, the governors fear that their densely populated major cities are conducive to the virus’ rapid spread. But on the other hand, those cities also have concentrations of poor neighborhoods whose residents cannot afford extended periods of limited or no work.

A further complication is the question of jurisdiction. In mid-March, the executive proposed legislation aimed at centralizing power to regulate the closure of businesses and social distancing measures to ensure an efficient response. The proposal now has 126 amendments and is currently in a joint commission for discussion, allowing governors to pursue their own measures in the meantime.

A second measure that addresses workers’ rights and unemployment during the crisis has already been rejected by some legislators as unconstitutional. Judges have weighed in, encouraging the federal government to coordinate efforts more closely with states.

Bolsonaro is reluctant to limit economic activity because the Brazilian economy is weak and can ill afford another economic crisis. Brazil has yet to recover from its two-year recession from 2015 to 2016. During that time, GDP contracted by nearly 7 percent. In the three years since, the economy essentially stagnated, registering growth of just about 1 percent annually.

Prior to the recession, in 2014, Brazil overtook the United Kingdom to become the seventh-largest economy in the world, with a GDP of $2.4 trillion. Now the economy ranks ninth globally, with a GDP of $1.89 trillion.

The unemployment rate in 2014 was 6.8 percent before doubling to 13.7 percent in early 2017.

Now unemployment has been reduced to 11.6 percent, though the quality of jobs created is low, as is remuneration.


Unemployment Rate in Brazil

Plans Interrupted

Bolsonaro was elected in 2018 on a pledge to reform and jump-start the economy, but economic measures taken early in his term have reduced the country’s arsenal for dealing with the impending global recession.

Last year, the government focused on structural reforms and facilitating household consumption, which accounts for over 70 percent of GDP. The central bank launched monetary easing in July 2019 in an effort to boost lending to consumers. In the second half of 2019, the government also permitted individuals to withdraw funds from their Workers’ Severance Fund accounts to help boost economic activity.

The effect of these policies was supposed to kick in during the first half of 2020, but the onset of the global recession doomed the strategy from the get-go. In just two months, the central bank cut interest rates to 3.75 percent from 4.5 percent. Though there is still room to go lower, these rates are already very low by Brazilian standards.

Benchmark Interest Rate in Brazil


The global downturn has hampered other stimulus policies. A privatization drive was intended to raise 150 billion reais ($29 billion) this year, but this week the electric utilities company Eletrobras postponed its privatization plans until 2021, and others will likely follow.

The government also loosened rules to give foreign companies equal footing in competition for government contracts, with public tenders valued at 50 billion reais, but foreign investment interest has dried up. Finally, the government planned limited trade deals to open markets and diversification in trade with China, the U.S., Mexico and India. But trade has fallen off a cliff, and governments are focused on mitigating the contagion and economic damage at home.

Other plans to remake the economy have had to be repurposed to limit the short-term damage from the virus. A plan launched in February called Brazil More included funds to incentivize startups and provide more credit to small and medium-sized businesses, but it will now be used to save existing companies. Around the same time, after months of study, the central bank loosened reserve requirements in a move that could inject up to 135 billion reais into the economy.

The central bank will also allow individuals to use personal retirement plans as collateral to access lower interest loans.

And lastly, there are the reforms that risk being undone as a result of the government’s all-out effort to mitigate the impact of the recession. One of the main objectives of the reforms was to cap government spending and reduce debt.

However, in mid-March, it became apparent that government bailouts and other costly measures would be necessary to prop up the Brazilian economy. A state of emergency was declared, enabling the government to remove national spending caps and launch a 147.3 billion-real support package to ensure liquidity, prevent layoffs and support vulnerable groups.

The government also intended to reduce its support for states’ debt but has now released an
85.8 billion-real bailout package for them (and that’s after suspending debt payments).

At the end of 2019, the government stayed on track for a primary budget surplus of 1 percent of GDP, well below the official goal of 2.3 percent. The National Treasury now anticipates a primary deficit for 2020 of 4.5 percent of GDP (over 350 billion reais), well over the previous goal of 124.1 billion reais.

Difficult Choices Ahead

Support packages like these can keep firms afloat only for so long, and the ability to extend them depends on disposable resources. Herein lies the problem for Brazil: It has very limited headroom to deal with these matters. There are already concerns over the potential for a credit crisis and future lack of investment.

The government does have $359 billion in reserves, but it is extremely reluctant to tap these resources – the government would do so only if it believed it was entering the worst-case scenario. All of this is further complicated by the fact that dollar gains against the real since the start of this year resulted in a 43.4 billion-real increase in gross debt, and low oil prices have wiped out tens of billions of reais in oil-related royalties and tax revenue (the budget was based on an average price of oil of $61.25 per barrel).

Central Bank of Brazil Market Expectations


Under these circumstances, Bolsonaro’s effort to preserve what’s left of Brazil’s economy at any cost does not seem unfounded. At present, the economic pause in parts of Brazil has been in place for only a couple of weeks.

During this time, the government has worked to better position the economy to stay afloat. The calls for vertical isolation demonstrate that the government believes it is reaching the limits of its ability to save the economy from severe recession if more economic activity is not restored soon.

Bolsonaro, of course, is not alone in being trapped between two bad policy options, and many leaders will soon have to decide when measures to protect public health no longer outweigh the economic cost.

When this shift will occur depends on the economic resilience of the country in question, and Brazil came in with a weak hand already half-played.

Populists Love the Pandemic

One byproduct of the COVID-19 crisis is that opposition parties are finding it increasingly difficult to hold governments accountable. In Poland, Hungary, and other countries under populist rule, the authorities are exploiting this to the fullest.

Sławomir Sierakowski

sierakowski53_Carsten KoallGetty Images_jaroslawkaczynskipispoland


WARSAW – Threats to national security invariably limit domestic political disputes. Now that governments have assumed a leading role in fighting the COVID-19 pandemic, the political opposition in countries under populist rule is quickly being marginalized. In theory, the authorities in these countries could use the crisis to invoke a state of emergency to limit democracy. But even if they don’t go that far, the need for social distancing and other containment measures implies a sharp contraction of the public sphere.

In the absence of large gatherings or campaign rallies, political debate has migrated completely to the media, which is devoting its full attention to the disease. This is happening for pragmatic reasons – COVID-19 coverage is what the reading and viewing public currently demands – but also for ethical reasons: providing accurate information about the coronavirus is an essential service.

Still, wall-to-wall coverage of the pandemic leaves no attention to spare for political opposition parties and movements. Hence, Joe Biden, the presumptive Democratic nominee to challenge US President Donald Trump in November’s election, has essentially disappeared overnight from public view.

Americans are instead furnished with daily, live coverage of Trump’s press conferences cum political rallies, in which he trots out government experts who somehow must try to correct his lies and misinformation about the pandemic while standing right next to him. Similarly, in Israel, Benny Gantz, the leading opposition politician, has decided to join a new government led by Prime Minister Binyamin Netanyahu, citing the extenuating circumstances of the pandemic.

In Central and Eastern Europe, populist governments are exploiting the suspension of normal life to implement long-held plans. With the international media focused completely on the pandemic, few people will notice what is happening in Hungary or Poland. Reporting on Poland’s de facto leader, Jarosław Kaczyński, and Hungarian Prime Minister Viktor Orbán seems to have disappeared even from the pages of media outlets that have reliably covered them for years.

Whereas the Hungarian opposition is protesting against Orbán’s imposed “state of emergency,” the Polish opposition is demanding one. The West, even if it wanted to protest, could easily get lost in this quagmire and not know what to demand.

Hungary’s parliament has now given Orbán the authority to govern by decree for an indefinite period of time. Once vested with emergency powers, he will be able to suspend individual rights and force people into quarantine on pain of imprisonment. His government also will be able to jail – for up to five years – journalists deemed to be spreading false or distorted information.

By contrast, in Poland, the last thing that Kaczyński and his Law and Justice (PiS) party want is to introduce a state of emergency, because doing so would mean postponing the next election.

Under current conditions, Poland’s incumbent president, Andrzej Duda, is certain to win re-election on May 10. The PiS government is thus using the pandemic to sweep Duda into another term while the opposition is in coronavirus lockdown.

Duda and PiS ran into significant trouble in January and February when they were found to have allocated two billion złoty ($480 million) – an unprecedented sum – to Poland’s public media, which is effectively a PiS mouthpiece. Since the opposition had been calling for those funds to go toward health care, that decision now looks all the more scandalous.

Moreover, before COVID-19 struck, the opposition presidential candidate Małgorzata Kidawa-Błońska was rising in the polls. In an IBSP survey conducted on January 14-16, Kidawa-Błońska, with a projected 49.91% share of second-round votes, was trailing just behind Duda, who had a vanishingly small majority of 50.09%. But now that Kidawa-Błońska has been forced to stop most forms of campaigning, her support had fallen to 44.12% as of March 10-13, and Duda’s had risen to 55.88%.

Polish voters, fearing the pandemic, have little appetite for partisan brawls. The demand now is for political agreement to address the crisis, which makes it much more difficult for the opposition to attack the incumbent government. Donald Tusk, the former Polish prime minister who recently stepped down as president of the European Council, expressed disappointment as much during a recent appearance on TVN24, where he chastised the Polish opposition for its overly submissive attitude.

Tusk also has indicated that he does not intend to vote on May 10, and that he will not encourage his family, friends, or other voters to do so, owing to the risks of contracting COVID-19. As he told Gazeta Wyborcza, “Only a madman or criminal could propose holding elections now.”

In surveying who is most likely to turn out on May 10 despite the pandemic, Gazeta Wyborcza has determined that it is mainly PiS supporters. If the presidential election is held as scheduled, Duda will get as much as 65% of votes in the first round, whereas if it were postponed until after the pandemic has passed, his first-round vote would fall to around 44%.

Kaczyński and his party are not concealing their intentions in pushing for the election to be held during the crisis. “It would be extremely unfavorable for the president and the prime minister to be from different political camps and to argue,” Kaczyński said in a recent interview, “Today, under different conditions, we need effective crisis management and political stability. This is also the reason why these elections should be held on May 10.”

Meanwhile, elections, primaries, and referendums have already been postponed or altered (to mail-in ballots, for example) in more than 20 countries, including the United States, Spain, France, Germany, and Italy. It is therefore not surprising that 72% of Poles surveyed believe that the presidential election should be postponed.

After the Polish presidential election, PiS will have a three-year break in the electoral calendar, which it will use to consolidate its power. Polish civil society will remain the last bastion against unchecked PiS rule.


Sławomir Sierakowski, founder of the Krytyka Polityczna movement, is Director of the Institute for Advanced Study in Warsaw and Senior Fellow at the German Council on Foreign Relations.