Horsemen of the apocalypse

Covid-19 raises the risks of violent conflict

War and disease feed upon each other




BUNIA, A DUSTY city of perhaps 650,000 in Ituri, a province of eastern Congo, has long known war. Since the start of this year, rebels have burned dozens of villages to the ground and hacked hundreds of people to death with machetes.

A rebel group made up of assailants from the seed-sowing Lendu tribe has launched a series of attacks on the pastoralist Hema. The government hospital in the city is overrun with patients.

“We have people wounded with machetes, with gunshots, women with amputated limbs, people with fractures,” says John Katabuku, a doctor working there. “When the displaced arrive we look after them for free—they have lost everything.

But it is difficult for the hospital. We really do not have the means.”

With war comes disease. Ituri is still recovering from an outbreak of Ebola which started in 2018 and killed 2,262 people in the region before subsiding. Now it has covid-19. Though there are just two recorded cases in the province, that is surely a woeful undercount. If the disease is spreading, it would not be easy to tell.

Tests have to be sent 1,800km to the capital, Kinshasa. And few people can get tested. Some 22 clinics have been burned down. One man living in the nearby war-torn area of Djugu says that there is nowhere to go if you are sick—all the clinics are either ruined or occupied by rebels.

The hospital in Bunia has no working ventilators and only enough space to isolate up to ten people, in the area that was previously being used for suspected Ebola patients. “We have to hospitalise two to three displaced children per bed, so you can see that we do not have infection prevention under control,” says Dr Katabuku.

Covid-19 has thus far taken its most serious toll on rich, peaceful countries. America, Britain, Italy, France and Spain, five of the six worst-affected, have collectively borne over half of recorded deaths from the virus worldwide. But the disease is now rippling through less stable places. What will happen as it does?

There are reasons to fear not only that conflict will help the virus to spread, but also that its spread may worsen wars. The two could feed upon each other, creating a cycle of misery it is difficult to arrest.

At the outset of the Peloponnesian war with Sparta, which raged from 431BC to 404BC, Athens was ravaged by a plague that swept through the city for three years, killing thousands of soldiers and a third of its inhabitants.

“Such was the nature of the calamity, and heavily did it weigh on the Athenians; death raging within the city and devastation without,” recalled Thucydides, a Greek historian and general.

The Spanish flu of 1918, another world-shaping pandemic, festered in the trenches and barracks of the first world war and killed more people than the conflict itself. Over 36,000 American soldiers died before ever reaching France, with 12,000 dying on troop transports. In total, more American soldiers, sailors and Marines died of flu and pneumonia than bullets and bombs.

Some still hope that confronted with an indiscriminate killer, human beings on all sides of a conflict would put down their guns—at least briefly—and confront the shared enemy. In March António Guterres, secretary-general of the United Nations (UN), began urging a global ceasefire.

Encouragingly, fighters in more than a dozen countries seemed to heed his call. The National Liberation Army (ELN) in Colombia, which has been trying to “liberate” the country for a half century, declared a ceasefire on March 30th. So did the New People’s Army (NPA) in the Philippines, a communist guerrilla group that has been in the field since 1969.

Saudi Arabia has sought to draw down its forces in Yemen and declared a unilateral ceasefire.

In Syria there were just 71 civilians killed in May, the lowest monthly toll since the start of the civil war in 2011, according to the Britain-based Syrian Observatory for Human Rights.

But in many places the tranquility has proven short-lived. By the end of April, both the ELN and the NPA announced that they were not extending their ceasefires and would return to violence. The Philippine government argued that the NPA had violated its ceasefire early on and that peace talks were pointless after the guerrillas killed two soldiers at the end of March.

The Security Council, the UN’s cockpit of big powers, has been deadlocked by squabbling between America and China, including over weighty matters such as what to call the virus.

Political violence has risen in 43 countries and remained steady in 45 since the start of the pandemic, according to data collected by the Armed Conflict Location & Event Data Project (ACLED). Some of the largest increases were in Libya, Yemen and Mali, each enmeshed in civil wars with a web of international links.

Behold a pale horse

Battlegrounds are easy pickings for the virus. But they also help it spread. War displaces civilians, shifting disease from one place to another, while their immune systems are worn down by hunger, trauma and ill health. Trust in government tumbles, making it harder to enforce social distancing or deliver vaccinations.

And those who normally provide succour are driven away. UN humanitarian agencies have already cut staff in places like Yemen and placed limits on where their staff can travel, notes Robert Malley, the president of the International Crisis Group, a research outfit.

In Congo, some 480,000 people have fled their homes since violence escalated in late March. This number accounts for 75% of the total number of people displaced worldwide during the pandemic. Near Bunia, over 27,000 displaced people live in rows of white tarpaulin tents in a camp. Twenty-nine-year-old Charlotte Tabu sleeps in a tent that she shares with nine others. She fled when rebels attacked her village. “The rebels burned my house while I was working in the fields,” she says. “We are suffering here. It is not easy to find food in the camp. We need this war to end. I had seven children, two were burned inside my house.”



Health workers worry about the spread of the virus through and among such wretched communities. In Cox’s Bazar in Bangladesh, for instance, 900,000 Rohingya Muslims, driven out of Myanmar, live in packed camps. In a survey conducted from April 11th to 17th, researchers at Yale found that 25% of respondents in camps had experienced at least one common covid-19 symptom. Most had attended a communal prayer in the previous week, a setting in which transmission is especially likely. Several refugees have already died.

Those with the guns—governments and rebel groups alike—are exploiting opportunities created by the virus and its shock to economic and social life. Since March Islamic State has switched its focus from intimidating civilians to attacking government and government-backed forces in Iraq and Syria.

It killed more than 30 Syrians soldiers in two days of fighting in April and briefly seized a small town, Mubarak, in Diyala province north-east of Baghdad. In early May it launched its biggest attack in Iraq since the coalition declared its defeat in 2017, killing ten fighters from Hashad al-Shaabi, a mostly Shia militia.

In Colombia, the Simon Bolivar bridge on the border with Venezuela has closed. That means that many of the 35,000 Venezuelans who crossed on an average day are now being forced to use illegal crossing points controlled by armed groups. Authorities in Colombia fret that this flow of untested people might unleash a health disaster. It also gives rebels a fresh source of recruits among desperate Venezuelans.




That is one of many ways in which Colombia’s armed groups have consolidated their position.

Many have jumped at the opportunity to expand their control and build something resembling legitimacy by imposing cordons sanitaires and lockdown.

In parts of Nariño, in southwestern Colombia, the Oliver Sinisterra, a “dissident” group descended from FARC, a guerrilla organisation that is now a political party, threatened to “sanction”—in practice, attack—any shop found open or any pharmacy with too many customers inside.

In Bolivar, in northern Colombia, the ELN has said only bakeries, food stores and pharmacies may open. In Arauca, on Colombia’s border with Venezuela, the ELN has even offered to educate the children of farmers, while schools are closed. Such indoctrination could breed another generation of rebels.

The crisis has also made it easier for the government to target insurgent groups and their illegal coca crop. Because road traffic has plummeted and the army has been put in charge of supplying towns and cities with food, illicit vehicles heading to rebel hideouts stick out like lines of powder cocaine on a mirror.

That has enabled the armed forces to mount a string of attacks in Cauca, on the Pacific coast.

The government is also eradicating coca in areas which they previously avoided, because farmers, who would otherwise offer vigorous resistance, are safely locked down.

Armies and navies are also fertile ground for contagion. Troops are packed into barracks; sailors, into cramped ships. Men in uniform gather in large numbers for drills and exercises. They cross oceans and borders. Marauding land armies are rarer than they once were, but many war zones pull in spooks, soldiers and insurgents across borders.

In Iran, one of the worst-hit countries in the Middle East with nearly 9,000 deaths, Mahan Air, an airline affiliated with Iran’s Islamic Revolutionary Guard Corps (IRCG), continued to operate between China and Iran for weeks after other airlines had suspended flights. Several commanders contracted the virus.

The movement of IRGC-financed Shia fighters between Iran, Iraq, Syria, Lebanon, Pakistan and Afghanistan also spread the disease. Syria’s first documented cases occurred in Saida Zeinab, a Shia shrine near Damascus under the control of IRGC-backed armed groups.

Rich countries’ armies are affected too—in ways that may have lasting consequences. In America over 8,000 military personnel have tested positive for covid-19, with three deaths (the case fatality rate for those with military ties is 0.3%, considerably lower than the rate for the broader public, perhaps because soldiers tend to be young and fit). Foreign governments have sharply cut ground forces and military trainers, including most of Iraq’s 29 coalition partners pursuing Islamic State (IS).

In March America withdrew from six bases in Iraq and NATO suspended its training programme. Defender-20, a military exercise slated to be the largest movement of American troops to Europe since the cold war, was halted, not long after a Polish general involved in its planning was taken ill. At the same time, America’s armed forces, like many others, have been tied up on the home front, to support beleaguered civilian authorities with everything from logistics to testing.

The most dramatic impact, however, has been on navies, whose confined spaces are ripe for disease. “It is a Petri dish of virus,” says one former commander of an American carrier strike group. “There is no social distancing of 5,000 people on a vehicle that’s three football pitches long...and one football pitch wide.” America’s navy comprises a quarter of the country’s military personnel but a third of all cases among them.

The USS Theodore Roosevelt, one of America’s largest carriers, was forced to halt operations in the Pacific and return to port in Guam in March after an outbreak of covid-19 that eventually infected 1,000 of its crew, out of 5,000 or so in total, including its captain.

It limped back to sea only at the end of May. France’s sole aircraft-carrier, the more diminutive Charles de Gaulle, was also taken out by covid-19, with two-thirds of its crew infected (though only half were symptomatic).

Many countries are anxious that such self-evident disruption to their armed forces reeks of vulnerability. On May 6th the UN’s Mr Guterres warned that some “may see opportunities because the attention of governments and the international community is absorbed by the health crisis”.

That is presumably why Thomas Modly, America’s then navy secretary, rashly sacked the Roosevelt’s captain, who had sounded the alarm about conditions on the ship. In a speech to the Roosevelt’s ailing crew, Mr Modly told them to “stand strong as warriors, not weak like victims”.

The ship, he said, “has to demonstrate to the citizens back home that it has its act together, and that it is knocking down this virus, just as it would knock down the Chinese or the North Koreans or the Russians if any one of those nations were ever so stupid enough to mess with the Big Stick”. (Mr Modly himself was later forced to resign for his poor judgment.)

Opening the seals

The urge to downplay weakness and project strength has resulted in a form of nervous muscle-flexing that Nick Childs of the International Institute for Strategic Studies, a think-tank, calls “pandemic deterrence”. In mid-April China steamed its own aircraft-carrier through the Miyako Strait between Taiwan and Japan, an “opportunistic” act “almost calculated to contrast with the plight” of the stricken Roosevelt, notes Mr Childs. On May 22nd America’s navy pointedly noted that it had seven out of eleven carriers at sea, though it is implausible that all are fighting fit. In mid-June three were sent to the Pacific for the first time in three years.
Covid-19 has not had the shattering effect on military power the Spanish Flu had a century ago. Modern health care is vastly better. Today’s pandemic, unlike the earlier one, largely spares the young adults who fill the ranks of armed forces. But as governments have been preoccupied at home and distracted abroad, the virus has deepened geopolitical tensions—between America and China, above all—and worsened what was already a febrile international mood. “Some leaders may...see covid-19 as cover to embark on destabilising foreign adventures, whether to deflect domestic discontent or because they sense they will face little pushback amid the global health crisis,” warns the ICG.



The line between pandemic deterrence and adventurism can be hard to draw. But some of the geopolitical manoeuvring has already taken a more violent turn. In early March, Indian troops in Ladakh, a Himalayan region abutting China, delayed their annual summer exercise after soldiers were infected by covid-19.

China went ahead with its own matching drill. But the People’s Liberation Army (PLA) peeled away from exercises and dashed to several disputed areas on the mountainous border, where it dug in to strategic territory. India’s army stumbled upon them at the end of April, prompting it to rush forces to the disputed area.

The entanglement of virus and war was encapsulated in a series of videos and photographs showing PLA troops in the aftermath of a brawl in May, wearing masks as they leant over trussed and bloodied Indian captives, mindful of good respiratory hygiene even during a skirmish between nuclear-armed rivals. Another fight erupted on June 15th, resulting in serious casualties on both sides.

“A section of the Chinese leadership believes that the…pandemic is a window of opportunity for China to expand its regional and global influence,” reflected Shyam Saran, India’s former top diplomat, in May. “China stabbed us in the back,” complained an Indian officer to News18, a television channel. “In the middle of a pandemic, this was not expected.”

Leaving lockdowns

Latin America opens up before it’s ready

Mexico’s failure to contain covid-19 shows why the region is now the centre of the pandemic




On a spring afternoon in Mexicali, in northern Mexico, Erick Mercado pondered what was coming.

The private Hispanic American Hospital, where he runs the accident-and-emergency service, had cancelled all elective surgery and made plans to seal off the second floor. In half an hour, he explained, the governor of Baja California would confirm the state’s first coronavirus cases. People with flu-like symptoms, Dr Mercado predicted, would “go into a panic” and rush to hospitals for testing. Sure enough, a queue appeared in the car park by nightfall.

Three months later, Dr Mercado and his hospital are at breaking point. For every covid-19 patient to whom he can offer a bed, he must turn away five. More than 90% of the city’s hospital beds are taken, and the number of registered deaths nearly tripled to 660 in the first half of June.

Dr Mercado’s days are filled with suffering patients, exhausted staff and visitors who cannot approach loved ones. Most distressing of all is knowing that “people who do not comply” with government orders to stay at home, wear masks and keep social distance have made the pandemic worse.

His frustration is provoked by the messiness of Mexico’s response to covid-19. The government shut down the formal part of the economy on March 30th, when fewer than 1,000 cases had been registered. But—unlike in richer countries—its lockdown order failed to contain the outbreak (see chart). Mexico has 159,793 confirmed cases and 19,080 deaths. The number of new cases is rising, both nationally and in 27 of the 32 states. Yet with covid-19 on the rampage, the country is easing its controls.




The rest of Latin America shares its plight. The region is reporting more cases each day than Europe did during its covid-19 peak in April. By some measures it is the world’s most urbanised region, which may help explain the virus’s spread.

Governments’ responses have varied greatly.

Brazil’s President Jair Bolsonaro has been cavalier, dismissing covid-19 as “sniffles” and breaching his own health ministry’s social-distancing advice.

Nicaragua’s Daniel Ortega imposed no lockdown. Governments in Peru, Argentina and elsewhere acted early and sternly, using the police to enforce quarantine orders. Yet with few exceptions (see article), the spread of the virus has been swift.

Even where the rules are strict, many people have not obeyed. The rich have adhered to lockdowns more than the poor. Many informal workers—street vendors, cleaners and the like—must work to eat.

Few Latin American countries have European-style safety nets. Many have nonetheless provided emergency aid.

In Brazil, El Salvador and elsewhere beneficiaries flocked to cashpoints, potentially spreading the virus. In a region where trust in government is low, citizens are detached from the state “not just legally, but emotionally and cognitively”, says Hugo Ñopo, a Peruvian economist.

That makes them less inclined to listen to pandemic pleas from officialdom. The resignation, firing or arrest of six Latin American health ministers since March is unlikely to have bolstered citizens’ confidence in governments.

Despite the region’s leaky lockdowns, its economy will shrink by 7.2% this year, more than anywhere else, predicts the World Bank. Small wonder that governments besides Mexico’s are contemplating ending lockdowns before they have tamed the disease. They are taking a gamble.

A quasi-quarantine is better than none. Andrés Manuel López Obrador, Mexico’s president, has said in private meetings that his priority is to avoid the apocalypse that struck Guayaquil, Ecuador’s largest city, where corpses lay in the streets in April. Mexico’s quarantine achieved that, buying time for the government to find extra beds, doctors and ventilators, educate citizens and review research about how to halt the virus.

It was loose by design, avoiding “authoritarian” restrictions on movement and allowing workers in informal jobs to continue to practise their trades. Nonetheless, the government expects up to 10m people to fall below its poverty line this year.

In Iztapalapa, a suburb of Mexico City that has the country’s highest confirmed infection rate, both the lockdown and the government that ordered it seem distant. On Callejon 57, a tiny colourful street, life carries on as normal. Although Mexican media dubbed it “Covid Alley” after it saw 45 deaths in three months, many residents downplay the threat. One man says the powers that be want to kill off pensioners.

Another, whose uncle died recently (“not from covid-19”), thinks the government is exaggerating to keep the poor under its thumb. Others doubt the virus is real. Yet most residents make some effort to protect themselves and others. “When the deaths started the masks came out,” says Miguel Contreras from behind a sheet of plastic at his hole-in-the-wall convenience store.

Joaquín Reyes recalls that when his 90-year-old grandmother died, he could say farewell only by phone, through a doctor. The doctor said covid-19 “probably” killed her, though the death certificate does not mention it. Mr Reyes, who wears a mask as he flattens chicken breasts at the stall outside his house on Callejon 57, is unsure.

His till, a margarine tub packed with coins, is filled with water to ward off germs. This reassures customers, he explains. As ever, he is working long hours and resting only on Sundays. “If I had money, I would stay in my house all day,” he says.

Covid-19’s devastation is greater than the government admits. Among the 25 countries with most cases, none tests fewer people than Mexico as a share of population. Two in five tests are positive, a sign that the outbreak is being badly undercounted. An analysis of death certificates shows that between April 1st and June 7th Mexico City had 17,000 more deaths than it normally does over that period. This suggests a toll nearly four times the government’s count.

The capital’s excess deaths are nearing New York’s 25,000, even though its people are on average younger.

Despite this, Mexico’s government is desperate to end lockdown. It expects the pandemic to peak this month. The government has introduced a traffic-light system, which encourages states that are taming the virus ease lockdowns. Just one state qualified for any colour other than red. But the government tweaked its criteria so that 16 could begin to reopen on June 15th. Mexico City, which remains red, is starting to reopen anyway.

Other countries that left lockdowns prematurely have suffered. Guatemala and Venezuela have tried alternating between tough and loose regimes, only to find that cases rise after streets fill up during lax phases. Panama City and Santiago, Chile’s capital, have reinforced lockdowns after authorities declared victory too early. Chile now has the highest confirmed infection rate of any non-tiny country.

Even so, many countries, suffering lockdown fatigue along with economic pain, are moving towards gradual easing. Bolivia, Colombia and Honduras, whose president, Juan Orlando Hernández, was hospitalised after testing positive for the virus, plan to phase out their lockdowns this month. Governments hope thereby to support their economies. They run the risk of boosting the virus, too.

Why Hong Kong is worried about its digital freedom

‘Some people hoard dried food or stash bullets. I collect VPN servers’

Yuan Yang


© Pâté


For years, this Beijing correspondent has looked forward to Hong Kong trips, not only for the chance to see beloved friends and colleagues, but also to enjoy the uncensored internet. Emails get sent. WhatsApp calls connect. I don’t have to hold a mental list of things I want to google for the next time I can access Google.

Since China erected its “Great Firewall” system of internet controls, Hong Kong has been the bridge between the mainland and the global internet, just as it is a financial and economic bridge into China. It has been a convenient and safe place to park servers for VPNs (virtual private networks) in order to prevent snooping and circumvent censorship.

VPN servers function as portals for your internet data: journalists, academics and others on the mainland can transport their data via a VPN server in Hong Kong, and surf the web as if they were there.

Now China plans to implement a national security law extending its control over Hong Kong, and many residents fear their digital freedoms will be taken away. On the day of the announcement, Hong Kongers’ interest in commercial VPN subscriptions surged, according to several providers.

They were looking for a way to encrypt and thus protect their internet traffic from government surveillance, as well as to get it out of Hong Kong in case the Great Firewall is extended.

In recent months, Hong Kong police have learnt from their mainland peers and shut down protesters’ chat groups on Telegram, the messaging app, as well as arresting group admins.

The threat of even more China-style censorship is already forcing residents on to VPNs, and on to the streets.

Some Hong Kong students who otherwise pay little attention to politics said that fear of the Great Firewall motivated them to join the protests. Only a minority may be interested in the security law itself or the legal somersaults required to pass it.

But the idea of having access to one’s favourite apps vanish overnight is a much more immediate and practical problem for a populace that relies on WhatsApp, Facebook, Twitter and Instagram.

Imposing the Great Firewall on Hong Kong would not be technically difficult, says Andy Yen, chief executive of encryption software company ProtonMail, which fights for internet freedoms.

“Hong Kong is small compared to the rest of China, so it’d be like implementing the Firewall in a mid-sized Chinese city.”

In regulatory terms, Beijing could argue that online communications can be used to organise threats to national security, and it therefore needs to be involved in issuing licences to internet service providers and telecoms operators in Hong Kong. A condition of its licensing would, of course, be applying censorship.

If Hong Kong’s internet starts being censored, this will affect not only residents and businesses but also those on the mainland who have relied on it as a safe haven for their data traffic. This goes beyond the use of commercial VPN services, which Beijing has cracked down on in recent years.

Hong Kong’s telecoms carriers offer Sim card deals for travellers hopping to the mainland, which allows them several gigabytes of uncensored data by routing their data through Hong Kong. That’s enough to last this journalist a month or two.

Many of China’s multinationals are also tied to Hong Kong, where they have erected internal VPN servers. Even worse, after the shuttering of many commercial VPNs, some multinationals have been cornered by Beijing into buying costly government-approved “direct line” services.

These are similar to VPNs, except in some cases they’re not really private. And again, the data ends up passing through Hong Kong.

In turbulent times, some people hoard dried food or stash bullets. I collect VPN servers. It’s difficult to convey to those outside China how much we rely on these annoying yet vital apps.

They are as much a part of my daily routine as putting on my shoes, and if they don’t work, then I can’t leave my digital house. Some behavioural psychologists say the best way to break an addictive habit such as social media is to build in a delay of even a few seconds before opening up any particularly tempting app.

The thinking is that your body’s short-term hunger for gratification will be outweighed by the boredom of waiting. I experience a delay of up to a minute every time I wait for my VPN to connect before doing almost anything online.

Unfortunately, my addictive behaviour is being a journalist in China, and I’m not going to quit. I’ll just keep hoping that my VPN will hold out.


Yuan Yang is the FT’s deputy Beijing bureau chief

Free Exchange

Japan probes the limits of economic policy

Including loan guarantees, fiscal support this year will amount to 40% of GDP




IN THE 1990S Japan seemed to offer a cautionary tale, an example of how feckless macroeconomic management could lead to troubles that other governments had long ago learnt to avoid.

By the 2000s many economists came to see it as a harbinger. The path its leaders took in their efforts to lift weak growth, chronically low inflation and near-zero interest rates has been followed, repeatedly, by others in the rich world.

Japan’s trailblazing has helped reveal that the limits to extreme policy are much farther away than economists had thought at first. This path-finding may well continue. At the end of May the government announced spending plans that will take total fiscal support for the economy this year to 40% of GDP. (Because the measures include loan guarantees, the budget deficit will probably amount to less than half of that.)

The colossal figure might bolster queasy politicians elsewhere. But even as it does so, Japan’s fiscal radicalism exposes the limits to what government borrowing can achieve.

Japan’s experience of covid-19 has been remarkably mild. Despite its older population, a rash of cases early in the epidemic and a reluctance to impose strict lockdowns, its recorded infection rate is among the lowest in the rich world: just 134 per million, less even than in widely touted success stories like South Korea and New Zealand. It began its battle against the economic effects of the pandemic from an especially weak position, though.

In most countries the coronavirus interrupted an economic boom, but Japan’s downturn began last year. An increase in consumption tax last autumn, part of an effort to repair the government’s finances, was followed by a drastic pullback in spending.

Output shrank at an annual rate of 7.1% in the last quarter of 2019, compared with the previous three months, and by 3.4% in the first quarter of 2020. As in much of the rest of the world, the pace of contraction is likely to have been far more dramatic in the second quarter.

In the face of this bleak outlook, the Bank of Japan has continued to provide extraordinary monetary support. It has led efforts to revive the Japanese economy since Abe Shinzo, the prime minister, entered office in 2012. Its policy of yield-curve control, introduced in 2016, caps ten-year government-bond yields at 0% (the idea is gathering some support in America). Bonds with longer maturities yield less than 1%.

Like many other central banks, the Bank of Japan has made emergency loans to vulnerable firms. Furthermore, it has bought about ¥62trn ($600bn) in assets, taking its already swollen balance-sheet to more than 110% of GDP.

More remarkable, though, has been the extent of fiscal support. In April Mr Abe’s government unveiled spending and guarantees worth ¥117trn, or roughly 20% of GDP, one of the most extreme responses to the pandemic. Perhaps feeling the pressure from a public that has become increasingly frustrated with the government’s handling of the crisis, Mr Abe announced another package in late May, which is roughly the same size as the first.

As a consequence, the flow of red ink this year tests the limits of comprehension. Japan will issue government bonds worth roughly 40% of the size of its economy. All else being equal, borrowing could account for nearly 60% of the government’s revenue in 2020. A third spending programme cannot be ruled out. Soaring borrowing and falling output together promise to push Japan’s level of gross government debt well above the already vast level of about 240% of GDP.

Markets have yawned in response. Share prices in Japan have risen steadily from their lows in March—no doubt influenced by the central bank’s large-scale purchases of exchange-traded funds—but so have stock indexes in most of the rest of the rich world. Government-bond yields have barely stirred.

The Bank of Japan’s yield cap partly explains that. But the central bank’s pace of government-bond purchases has slowed since March and April, amounting to just ¥5trn between May 20th and 31st. The yen has been surprisingly well behaved. At the moment, punters do not seem to have become more worried about Japan’s fiscal sustainability or the risk of inflation.

Investors’ indifference to such borrowing may come as a relief to other rich-world governments seeking to breathe life back into their economies. Since the global financial crisis of 2007-09, economists have become more comfortable with the notion that large-scale government borrowing is needed to fight economic weakness. But the awesome scale of debt issuance created by the response to the pandemic risked deterring some governments from borrowing as much as needed. Japan’s benign experience should provide some reassurance.


The Abe shoe drops

There is a risk of over-interpreting the lessons of Japan’s trailblazing, though.

Debt issuance of 40% of GDP, tacitly financed, in large part, by central-bank easing, will probably influence debates around the world about the extent to which sustained borrowing can be used to fund generous social programmes.

But all its stimulus notwithstanding, Japan’s economy is hardly roaring ahead. Its output per person, in real terms, is unexceptional by the standards of the rich world.

In fact, Japan has been able to borrow so much, now and in more placid times, because the rest of its economy spends so little.

High levels of net saving by households and firms—that is, savings less investment—are a persistent problem, and represent forgone consumption and unused economic capacity.

Demography is partly to blame. People approaching retirement save more, and that surely discourages companies from making large investments at home.

But corporate thrift also represents a failure of reform, and of ambition; an inability to take full advantage of the country’s capabilities and its attractiveness to would-be immigrants, for instance.

Japan has shown the rest of the world a policymaking route that is seemingly sustainable. That does not mean it is worth following.

D-Day and Stalin

By: George Friedman



Editor’s Note: The following analysis was published on the anniversary of D-Day in 2019. It has been lightly edited.


Over 70 years after it was fought, D-Day remains one of the most vividly recalled battles in history. It was also one of the most decisive. There are those who will argue that the Allies would have won World War II regardless of the outcome of the Battle of Normandy. Indeed, similar arguments are made for most decisive battles.

Two years ago, I wrote about the Battle of Midway, on the 75th anniversary of that campaign, and argued that a defeat there would have been disastrous to the global balance. But some readers rejected this, saying that, even if the U.S. had been defeated, it would have deployed ships into the Pacific and recovered.

That might well be true, but as I will try to show, the invasion of France’s Calvados coast was a turning point in the war. Had it failed, the Allies likely would not have been able to recover.

Far From Over

The pivot was the Soviet Union. By the time the D-Day invasion was launched, the Soviet Union had been fighting the Germans for three years. Germany had conquered most of the Soviet heartland and its treatment of the occupied areas was barbaric.

For the first five months of the war, it seemed likely that the Soviets would lose. Only an extraordinary effort by the Red Army, aided by supplies from the United States, allowed them to stabilize the front and return to the offensive.

But when D-Day was launched, the Soviets were still over 1,000 miles from Berlin. For them, the war was far from over.

The Soviets distrusted the Anglo-Americans. They didn’t launch their promised offensive, code named Bagration, until a few weeks after D-Day. Bagration took them into Poland, but as they said at the time, and later documents showed, without an attack from the West, they would stop on the Vistula River.

The front grew narrower the farther west they went. They had demanded a second front for years and with good reason. The Germans were still strong and massed against the Soviets, formidable even this late in the war.




For the British and Americans, the continued Soviet participation in the war was essential. The Soviets had tied down the bulk of the German army for years and bled it dry. Without the Soviets’ involvement in the war, an Allied invasion of France would have been impossible as Germany could have massed overwhelming force and shifted troops to Italy, blocking access from there.

But the Soviets believed that the Allies had deliberately delayed an invasion of France to allow the Germans and Soviets to weaken each other so that American and British forces could come ashore with minimal opposition and fight their way into Germany, and perhaps beyond.

The Soviets had repeatedly asked for a second front in 1942 and 1943. The Allies responded with a Mediterranean campaign, first in North Africa and then in Italy. From the Soviets’ perspective, this was merely a gesture – they were fighting for their lives in Stalingrad, and the Mediterranean operations were not large enough to force the Germans to redeploy troops away from their eastern flank.

And so, the basic correlation of forces between Germany and the Soviets remained as it was.

The Americans and British said they simply weren’t ready for an invasion. Stalin didn’t dispute that but argued that even a failed invasion would have forced Hitler to re-evaluate the vulnerability of his troops in the west and shift some forces there. A reduction of German forces and redirection of logistical support would have increased the likelihood of a Soviet victory and reduced the damage to Soviet forces.

Stalin was left with the impression that the Western Allies wanted the Germans to do maximum damage to the Red Army and that the Americans and British were unwilling to carry out a doomed spoiling attack because they were unwilling, for political reasons, to absorb a fraction of the casualties the Soviets were absorbing.

The two sides didn’t trust each other. The British and Americans were appalled at the Hitler-Stalin pact of 1939, while the Soviets were angered by the Americans’ willingness to enter the war only after the Japanese attack on Pearl Harbor and Hitler’s declaration of war on the United States.

The U.S. built up its forces slowly and deliberately, minimizing exposure to minor battles in the Pacific and major thrusts at nothing important. Stalin believed that Roosevelt wanted a weak Soviet Union to emerge and that, after the Soviets destroyed the Wehrmacht, the U.S. would seize Europe and the British Empire.

He once said that Churchill was the kind of man who would pick your pocket for a kopeck but Roosevelt was the kind of man who would steal only big coins. From Stalin’s view, Churchill was governing a declining power while Roosevelt, brilliant and utterly ruthless, was in charge of the future hegemon of the world.

A Hard Pill to Swallow

There is ample evidence that Soviet and German representatives had met in Stockholm for serious talks. Hitler saw Stalin’s opening as a sign of weakness. Understanding the tension between the Soviets and the Americans and British, he didn’t believe in 1943 that they could mount an invasion.

Since Stalin himself had doubts, Hitler drove a hard bargain, demanding that Germany retain the land it had already won, particularly Ukraine. The talks broke down, though contacts seem to have continued.

Had the Allies not invaded Normandy in 1944, it is reasonable to assume that Stalin, whose troops were still fighting far inside their own country, would have accepted the deal with Hitler, since he likely could not continue fighting without a western front or at the very least could not regain the territory on his own.

Churchill, it should be noted, was never enthusiastic about the invasion, either because he feared the resulting losses would be the end of the British army or because he wouldn’t have minded if the German-Soviet war continued so the Allies could intervene at the last minute, while nibbling at Greece.

Either way, Roosevelt rejected Churchill’s view, sensing that the Soviets would make peace without an Allied invasion.

Thus, the invasion was launched in June before the campaign season was lost. Had the Americans and British not seized the opportunity to invade at that time, or had the campaign failed, they would have had to wait until the following spring to mount an invasion.

And by then, the Soviets may well have been forced to make peace, giving the Germans a far denser defense along the French coast that would almost certainly have made an invasion impossible. Alternatively, the Allies could have tried to attack Germany through Italy or the Balkans – through the Alps.

But with the Soviets out of the war, the Germans would have gained a massive advantage. A German-Soviet truce would have been hard for the Soviets to swallow, but if D-Day had failed and if the Allies couldn’t mount another operation for another year, Stalin may not have had any other choice. He couldn’t win the war on his own.

The Americans would have had the atomic bomb within a year, and I don’t doubt they would have used it while the war raged. But if there was peace in the east, and little fighting in the west, would the U.S. really nuke Berlin or Munich and then try to occupy Germany?

I don’t believe it would, but I could be wrong.

D-Day was the decisive battle of World War II not only because it unleashed the full strength of the Anglo-American forces but because it forced Hitler to fight on two fronts, easing the Soviets’ positions sufficiently for a confident advance. Had the invasion not taken place or had it failed, Stalin would likely have made peace with Hitler.

Germany would have grown stronger, unless the U.S. and Britain wanted to wage war alone, which I don’t think they did. In the end, Hitler was right when he said Germany’s fate would be decided in France – on the Calvados coast in Normandy, to be exact.

The Black Sea: The Key to Eurasian Stability?

What happens in this region matters to the rest of the world.

By: Antonia Colibasanu


Halford Mackinder, one of the founding fathers of geopolitics, said that if the Heartland was unstable, the world was unstable. And since the Heartland encompasses virtually all of Eurasia, it’s safe to say that what happens in the Black Sea matters to the entire world.

In times of peace, the Black Sea is largely stable, a region that fosters movement, trade and general prosperity among the lands it abuts, including Russia, the Middle East, Eastern Europe and the Caucasus. In times of uncertainty, it’s the key to stabilizing the region.



A New Era

In 2008, the Black Sea region entered into a new era. Interestingly, this was only partly because of the 2008 financial crisis, which took some time to reach a region as poorly integrated into capital markets as the Black Sea. More consequential was the Russo-Georgian War, which showed that Moscow was ready and able to defend its buffer zones.

For Black Sea countries that were also members of NATO and the EU, these events hit home the need to reconsider the utility of the systems they were a part of. For countries that were part of neither, the choice between Russia and the West became much more urgent.

Then came the 2014 Ukraine crisis, which literally divided the nation into separate camps. Russia annexed Crimea, eastern Ukraine separated from the mainland, and the rest of the country maintained ties with Kyiv and thus the West. Russia has a strategic priority to maintain influence in Kyiv, without which it is relegated to sustain a frozen conflict. Moscow may have lost some of its power there, but keeping Ukraine engaged like this at least prevents it from falling entirely into the Western orbit.

Naturally, the events in Ukraine triggered responses from the U.S. and its NATO allies. Since 2014, for example, the U.S. moved its containment line eastward by improving bilateral ties with Poland and Romania while supporting NATO exercises in the area. This was by no means the beginning of a new Cold War, but neither was it the picture of regional stability.

Meanwhile, the fallout of the 2008 economic crisis touched nearly every corner of the world. As nationalism and protectionism grew, it became clear that globalization was deepening the differences between classes and countries.

It wasn’t just that people were angry; the ensuing socio-economic problems started to slowly challenge if not change the global order. The very basis of the U.S.-led world order was being questioned. China was working to remodel its economy and lessen its dependence on the U.S. market, exemplified by the ambitious Belt and Road Initiative, but was finding it difficult to do so when so many countries from Asia to Europe were in economic decline. Russia, which had actually fared fairly well after 2008 because of high oil prices, began to slow after sanctions were introduced in 2014. One way it countered sanctions was the war in Syria, which it helped propagate by supporting its ally in the Syrian government and thus kept the U.S. bogged down.

This, in part, led to the refugee crisis in Europe, which contributed to the success of nationalist and sometimes anti-immigrant parties. The route by which many Middle East and North African migrants took, moreover, passed through Turkey, a country with a lot at stake in the Syrian conflict and, as it happens, a border country of the Black Sea. Turkey’s negotiation power with the EU has grown since the refugee crisis started. More important, its regional balancing act between Russia and the U.S. points to its recently announced neo-Ottoman policy, which seeks to reestablish Turkey as a regional power.

Put simply, the Black Sea region is undergoing changes that present an opportunity for strategic realignment. Turkey is a NATO ally and, for now, a U.S. ally. Accommodating though it may be at times to Russia, it is historically a Russian competitor. The U.S. is meanwhile courting Eastern Europe and tacitly encouraging the Intermarium, only some of whose members are NATO allies.

Which is to say these institutions, at one point vital to the stability of the Black Sea, are merely vestiges of an increasingly irrelevant Cold War era that no longer reflects the imperatives of the region.

The Future of the Black Sea

This is why the timing of the COVID-19 pandemic was so crucial, especially for the Black Sea region. The outbreak exposed the fragility of global supply chains and hammered home the need to reconfigure them.

Transportation and shipping have dropped as international trade in goods and tourism have slowed. Cruises have been halted pretty much everywhere, and container shipping, which constitutes the majority of Black Sea traffic, has seen an unprecedented decline.

It wasn’t that long ago that transportation in the Black Sea was expected to grow. Initiatives such as BRI convinced many that they should invest in the development of port facilities. Ukraine, Bulgaria and Georgia have been undergoing expansion plans of their ports since before 2010 and were aiming to increase terminal capabilities so that they could accommodate larger ships. The idea was to make the Black Sea a maritime hub.

However, transshipment is volatile and highly price sensitive. Port tariffs are dependent on both economic and security risks, and therefore there’s a lot of interdependence between geopolitics and maritime shipping. This is to say nothing of the war in eastern Ukraine, the U.S.-China trade war, the consumption declines in the U.S. and Europe, and the coming recession, all of which have stunted the Black Sea’s recovery from the 2008 crisis and dampened hopes for future shipping. (The most optimistic estimates suggest the industry will recover at the end of 2021. The most pessimistic suggest 2023.)

Ultimately, the evolution of global trade flows depends on the economics of the United States, the single biggest consumer in the world, and of the European Union, the largest market union.

The recovery of China and Russia depend on how fast demand will recover from the pandemic.

Both are undergoing reforms meant to restructure their economies, and both have to manage the socio-economic disparities between their regions, while maintaining stability.

All four of these regions “meet” in the Black Sea. All have special relations with Turkey except China, which has developed better relations with Ankara for the past year. China’s central bank, for example, reportedly transferred $1 billion to Turkey as part of a currency swap, giving a short-term boost to the country’s dwindling foreign exchange reserves.

Turkey will need the financial stability a partner like China can provide if it is to expand its regional influence as it intends to. (It will also need to champion its “neo-Ottoman” policies to keep the public on its side.) To that end, for example, it has been negotiating directly with Germany to settle the migration crisis with Europe. As Turkey resets its relationship with the West, it is the Balkans and Eastern Europe – the Black Sea region – that will feel the growing tensión.

Russia is in trouble too. Its economy won’t grow if oil prices remain low, so its foremost priority is to somehow keep the economy afloat and thus stave off social unrest. But as always, it also needs to maintain the buffer zone between it and Europe. Ukraine will be essential to Russia in that regard, but Moscow will have less money to spend abroad, so while some of its operations may become more aggressive, others will become less so. (Moscow may choose to spend more money in Ukraine and less in Moldova, for instance.)

The U.S. will remain engaged in Eastern Europe and will continue to support regional cooperation between its allies on the Eastern front, namely Poland and Romania. However, due to its internal problems it is likely to keep costs and involvement to a minimum.

While defense capabilities will remain in place and support for the new Intermarium will continue, it remains to be seen how the U.S. relationship with Western European countries that are unwilling to contribute as much to NATO as Washington wants will change.

While this will not affect defense alliances in the Black Sea region, it will likely shape the security arrangements in the region. (Security here refers to resilience to outside influence and the risk that such influence poses. Depending on how the EU solves its socio-economic problems, and whether Brussels increases its political power after the pandemic, countries in the Black Sea region will seek to decrease their reliance on the EU or become more antagonistic to Brussels.)

For Romania and Bulgaria – the Eastern European member states bordering the Black Sea – the challenge after the pandemic lies in solving economic problems while also limiting influence from Russia and Turkey. As the EU gateway to Asia and the Middle East, the two countries will need to manage traffic and trade toward and outside the EU common market. Considering the negotiations over a more political EU, which involves more coordination for managing funds, the need arises for an extended Schengen zone that would include Romania and Bulgaria.

With less maritime cargo in the ports, the EU will likely need to expand its control over borders, if it wants more coordination and to build up the idea of “European sovereignty.”

Trade flows from the Black Sea will never be comparable by volume or value to those from the North Sea or the Atlantic, but the pressing need for critical infrastructure, especially technological infrastructure, may force more coordination along the Black Sea border. New green energy standards, too, might prompt some countries to invest in the management of naval traffic, which currently serves Central Europe through the Danube.

These will likely become topics of negotiations in Brussels. In terms of the plan for “repairing and fixing” the EU for the next generation, the consideration of potential risks for the very existence of the EU remains key. For the Black Sea area, the future of the U.S. is important, but the future of the EU is fundamental.

If the EU increases its role through further integration, its neighbors will gravitate to it. Even if frozen conflicts continue to exist, the security environment will remain relatively stable as the common European market will continue functioning. If, on the contrary, the EU weakens, the Black Sea region will follow suit as the potential for conflicts increases.