In January, 2020 looked set to be a decisive year for Germany. In addition to a seat on the UN Security Council, the country would hold the rotating presidencies of two key European institutions: the Council of the European Union and the Council of Europe’s Council of Ministers. The government saw this alignment as an opportunity to assert its position and vision on major European and international issues, writes Jean-Christophe Bas.
This determination was reinforced by the willingness of the new President of the European Commission, Ursula von der Leyen, a close associate of Angela Merkel, to lead a "geopolitical commission" more proactive in its approach to European security.
However, fine ambitions soon fell victim to domestic and international events. Despite a strong turnout of world leaders, the Berlin Conference on Libya was ignored by the two main protagonists in the conflict, Fayez al-Sarraj (head of the National Accord Government) and Khalifa Haftar (leader of the Libyan National Army). The final communiqué’s call for "the parties to redouble their efforts for the suspension of hostilities, de-escalation and a permanent ceasefire" read like wishful thinking.
Soon afterwards, the Munich Security Conference’s newly minted concept of “Westlessness” – a world no longer dominated by Western powers – left many participants perplexed. Faced with China's rise and America's retreat, Emmanuel Macron said he wanted to go "faster and further on the elements of sovereignty at the European level" and hinted at frustration regarding Germany’s reluctance to embark on a European recovery, which he considered essential.
More serious for Merkel was the domestic political crisis that followed the election in Thuringia in February of a Minister-President with support from the far-right AfD as well as the backing of Merkel’s own CDU. This broke a taboo in German post-war politics and crossed one of Merkel’s red lines. Her putative successor, fragile CDU boss Annegret Kramp-Karrenbauer, was forced to resign. Months of efforts to achieve a succession in line with the Chancellor's wishes went to waste, and the race was thrown wide open and out of her control.
Against a backdrop of economic stagnation and the prospect of the German economy entering recession, speculation in Berlin swirled that the Chancellor would leave before her term ends in 2021. Many major media outlets said it was time for her to go.
However, the Covid-19 crisis changed everything, and gave Merkel the opportunity to re-assert authority in Germany and – above all – her leadership on the international scene. Germans have re-embraced "Mutti", whose management of the crisis with scientific rigour, empathy and pragmatism stands in stark contrast to the erratic, dramatic and chaotic approaches of many leaders. In announcing precautionary measures in mid-March , she had the wisdom to stand alongside the Minister President of Bavaria and the Mayor of Hamburg, underscoring the decisive role of local authorities and her own ability to act collectively. During a G7 conference call, she had no hesitation in strongly denouncing Donald Trump’s decision to suspend US financial contributions to the WHO, and call instead for stronger international cooperation in response to the pandemic. Speaking at the Petersberg Climate Dialogue in April, Merkel said economic stimulus plans must place particular emphasis on combating climate change. Her voice carries weight both at home and abroad, and her handling of the crisis has put her at the top of the polls for the first time since 2017.
With Chinese and American leaders weakened by the pandemic and an almost total lack of leadership on the international scene, Merkel has a unique opportunity to be the voice of reason and moderation in the necessary reinvention of the mechanisms of international cooperation and the re-composition of global order. The crisis has created a "Merkel moment" to promote a new, fair and balanced internationalism capable of addressing the common challenges facing humanity, and appealing to everyone committed to values of equality, balanced development and dialogue and cooperation. This includes the major task of reforming the UN and laying the lasting foundations for a “Globalization 2.0” serving the interests of the many. The challenge is to take advantage of this moment, when the whole of humanity faces the same threat, to develop a sense of common belonging, shared responsibility and common destiny.
Although narrow, the window of opportunity is very real for Merkel as she takes over the Presidency of the EU in July. She has 18 months left to complete this mission and take her place in history alongside the leaders who 75 years ago were able to overcome their differences following World War II and develop a vision to put the world back on track.
Jean-Christophe Bas is the CEO of the Dialogue of Civilizations Research Institute, an international think tank based in Berlin. The DOC’s annual Rhodes Forum on 2-3 October seeks to contribute to building a new multilateralism and draw up concrete recommendations to this end.
Coronavirus: Practical advice for safe travel
After months of lockdown, travel and tourism have slowly restarted. Discover what the EU recommends to ensure safe journeys, Society.
While people need to take precautions and follow health and safety instructions from national authorities, the European Commission has come up with guidelines and recommendations to help you to travel safely:
- Re-open EU: a portal with the latest updates on travel conditions and safety measures in the EU
- The EU Digital Covid Certificate, which facilitates safe travel by proving that you are vaccinated, have a negative test result or have recovered from COVID
- Mobile coronavirus contact tracing applications
The European Union Aviation Safety Agency recommends the following when flying:
- Don’t travel if you have symptoms like cough, fever, shortness of breath, loss of taste or smell
- Complete your statement of health before checking in and check in online if possible
- Ensure you have enough face masks for the journey (they should usually be changed every four hours)
- Leave enough time for extra checks and procedures at the airport;have all documents ready
- Wear a medical face mask, practice hand hygiene and physical distancing
- Cough or sneeze into a tissue or your elbow
- Limit your movement in the plane
Parliament has been insisting since March 2020 on a strong and co-ordinated EU action to overcome the crisis in the tourism sector, when it called for a new European strategy to make tourism cleaner, safer and more sustainable as well as for help to get the sector back on its feet after the pandemic
Find out more on what the EU is doing to fight the coronavirus.
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Warning signs for global recovery as Delta dims outlook
A drubbing in world equity markets and a huge flight to safety into US Treasuries this week suggests investors now doubt that a much-anticipated return to post-COVID normality is feasible any time soon, write Saikat Chatterjee and Ritvik Carvalho.
Data from the United States and China, which account for more than half of world growth, suggests a slowdown in the recent blistering pace of the global economy alongside rising prices for all manner of goods and raw materials.
Coinciding with a resurgence in the Delta variant of COVID-19, markets may be sending alarm signals about the global economic outlook, Deutsche Bank chief FX strategist George Saravelos told clients.
"As prices have risen, the consumer has been cutting back demand rather than bringing forward consumption. This is the opposite of what one would expect if the environment was genuinely inflationary and it shows the global economy has a very low speed limit," Saravelos wrote.
That sentiment was evident in the latest flow data too. Bank of America Merill Lynch flagged "stagflation" concerns for the second half of 2021, noting slowing inflows into stocks and outflows from high-yield assets.
Data on hedge funds' weekly currency positioning is the closest available real-time indicator of investors' thinking about the $6.6 trillion a day foreign exchange markets.
With the dollar at its highest since end-March, latest Commodity Futures Trading Commission data shows net long positions on the dollar against a basket of major currencies is the biggest since March 2020. Positioning had dropped to a net short bet as recently as early June.
Dollar appreciation against the euro and emerging market currencies is unsurprising given economic uncertainty, said Ludovic Colin, senior portfolio manager at Vontobel Asset Management.
"Whenever Americans get worried about growth at home or globally, they repatriate money and buy dollars," he added.
In recent months, investors optimistic about an economic recovery sent a flood of cash into so-called cyclical sectors such as banks, leisure and energy. These are, in short, companies that benefit from an economic recovery.
The tide may now be going out.
Instead "growth" stocks, especially technology, has outperformed its value counterparts by more than 3 percentage points since the start of July. Many clients of Goldman Sachs believe the cyclical rotation was a short-lived phenomenon driven by recovery from an unusual recession, the bank said.
Defensive stocks such as utilities are back in favour too. A basket of value stocks compiled by MSCI is testing its lowest levels for this year against defensive peers, having risen 11% in the first six months of 2021.
Early this year, the dollar's trajectory was determined by the interest rate differentials enjoyed by U.S. debt over its rivals, with correlations peaking in May.
While real or inflation-adjusted US yields are still higher than their German counterparts, the drop in nominal US yields below 1.2% this week has raised concern over the global growth outlook.
Ulrich Leuchtmann, head of FX at Commerzbank, said that if global production and consumption did not return to 2019 levels soon, then a permanently lower GDP path has to be assumed. This is reflected to some extent in bond markets.
Investor sentiment has become more cautious, according to weekly polls by the American Association of Individual Investors. BlackRock, the world's biggest investment manager, cut U.S. equities to neutral in its mid-year outlook.
Stephen Jen, who runs hedge fund Eurizon SLJ Capital, noted that because China's business cycle was ahead of that of the United States or Europe, weaker data there is filtering through to investor sentiment in the West.
Popular reflation trades in the commodity markets have also gone into reverse. A ratio of gold/copper prices has fallen 10% after rising to more than 6-1/2 year highs in May.
Push to get wary Russians vaccinated leaves some COVID clinics short
Alexander tried three times over 10 days to get his first dose of Russia's Sputnik V coronavirus vaccine in his home town of Vladimir. Twice, supplies ran out as he was standing in the queue, writes Polina Nikolskaya.
"People line up from 4 a.m. although the centre opens at 10 a.m.," the 33-year-old said, as he finally entered the walk-in vaccination room in the town, where gold-domed medieval churches attract crowds of tourists in normal years.
A third wave of COVID-19 infections has lifted reported daily deaths in Russia to record highs in recent weeks and sluggish demand for vaccines from a wary population has finally begun to grow with a big official push to boost uptake.
The switch poses a challenge for Russia, which has signed contracts to supply Sputnik V to countries around the world.
With vaccination now compulsory in some Russian regions for people working in jobs involving close contact with the public such as waiters and taxi drivers, shortages have appeared.
"At the last minute we all decided to get vaccinated at the same time," Maria Koltunova, a representative of the Vladimir regional health watchdog Rospotrebnadzor told reporters on July 16. "This has caused a problem."
Late last month, after several Russian regions reported shortages of the vaccine, the Kremlin blamed them on growing demand and storage difficulties which it said would be resolved in the coming days. Read more.
At the appointment desks of four clinics in different towns in the wider Vladimir region last week, Reuters was told that no shots were available at this time. The earliest appointments available were next month, all said they could not give a date.
The industry ministry said it was working with the health ministry to close the demand gap in places where it had jumped. The health ministry did not respond to a request for comment.
Russia is producing 30 million sets of doses per month, the industry ministry said, and can gradually scale that up to a monthly figure of 45-40 million doses over the next few months.
Overall, almost 44 million full doses of all vaccines have been released for the vaccination of Russia's 144 million people, the industry minister said last week.
Russian Prime Minister Mikhail Mishustin ordered the government on Monday to check what vaccines were available.
The country does not provide data for vaccine exports and the Russian Direct Investment Fund (RDIF), responsible for marketing the vaccine abroad, declined to comment.
A laboratory in India said last week the country's full rollout would have to be put on hold until the Russia producer provides equal quantities of its two doses, which are different sizes. Read more.
Argentina and Guatemala have also reported delays to promised supplies. Read more.
Despite launching its vaccine rollout in January and approving four homegrown vaccines for domestic use, Russia had given only around 21% of its entire population one shot by July 9, according to data provided by health minister Mikhail Murashko, although counting only adults, that would be higher.
The Kremlin earlier cited ‘nihilism’ among the population; some Russians have cited distrust, both of new drugs and government programmes.
Around 12% of the 1.4 million people in the Vladimir region 200 km (125 miles) east of Moscow had been vaccinated by July 12, data provided by local officials showed. Some people said the sudden uptick in demand for shots was due to a spate of government policies.
These included a week-long regional requirement to prove vaccination against, or recent recovery from, COVID-19 with QR codes to enter cafes and other venues. The policy was cancelled amid an outcry from business and shortages of vaccine. read more
The region also ordered some public sector and service sector businesses to inoculate at least 60% of their employees with one dose by August 15. Cafe owners Dmitry Bolshakov and Alexander Yuriev said oral recommendations came earlier.
Third-time lucky vaccine recipient Alexander, who gave only his first name due to the sensitivity of the issue, said he had queued for the shot of his own accord after his local clinic said it could not offer one until late August.
But nine out of 12 people approached by Reuters at the city’s vaccination centres said they did not want to be vaccinated but had been pressured by their employers. The local governor's office and the health department did not immediately respond to requests for comment.
In one Vladimir café called ZZZed, owner Yuriev had, along with officials, set up a centre for vaccinations, starting with the city’s restaurant workers. People filled out their consent forms sitting at the bar, under a disco ball.
"We have a queue now of about 1,000 people," Yuriev said. With demand up, shortages of shots are the next obstacle. "We are limited by the lack of vaccines in the region," he said.
The acting head of the local health watchdog, Yulia Potselueva, told reporters on July 16 that the problem of vaccine supply would be solved in the near future.
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