Year 2020 has changed our lives for ever

It has truly been a year like no other, with the pandemic dominating not just every news cycle but each of our lives. From work to family life, where we went, and what we did, nothing was untouched by COVID-19. But as people got used to phrases like “self-isolate” and “social distancing”, there were plenty of other news too. 

Coronavirus

The year began with a new virus originating from Wuhan, China. Wei Guixian, a 57-year-old shrimp seller, is thought to have been the first person infected. “Every winter I always suffer from the flu,” she later told Chinese media. “So I thought it was the flu.” We now know it wasn’t. COVID-19, as it has since been named, first took hold in the Chinese city then swept the globe. In Wuhan, some citizens have decided to sue the government for what they believe was suppression of the news in the early days of the virus. By January, the first case was in the UK and by March the world witnessed lockdown, focused on maintaining distance and washing hands repeatedly. As cases mounted across the world, there were unexpected issues, like those who wanted to believe that Covid-19 was in fact a hoax. As well as the terrible human cost, with tens of thousands dead in Britain and more than 100,000 still suffering with long-term effects, the pandemic has delivered the largest economic shock to the UK in three centuries – and it isn’t over yet. But with a vaccine now being given to the most vulnerable, even with Christmas plans derailed by another surge, there is still hope for 2021.

Brexit

When Boris Johnson won last December’s election, he succeeded on a series of slogans. First up was to “Get Brexit Done”, which he did, taking Britain out of the European Union on 31 January. After that, it gets a bit more tricky. He pledged to “level up” the country, and, after coronavirus hit, suggested a “Rooseveltian approach”, invoking FDR’s New Deal, though there’s little sign much has changed yet in the “red wall” seats the Tories took from Labour. However, the most pertinent of his soundbites now appears to be the promise that he had an “oven-ready deal” with the EU over Brexit. With time running out, there’s still no trade deal in sight. In the pantheon of prime ministers, Johnson’s currently far from the top of the pile after a whirlwind 12 months. But falling at the final hurdle with Brexit could make things far worse for both the prime minister’s legacy and, more importantly, the country.

US politics

Even by the standards of Donald Trump’s presidency, 2020 has provided some eye-opening moments. Questionable presidential pardons were perhaps to be expected, as were outrageous election claims. Suggestions of injecting bleach into the body to stop coronavirus, on the other hand, were not something anyone expected of a president. As 2020 progressed, the protests in the wake of George Floyd and Breonna Taylor’s deaths took hold across the United States and with them questions over the response from heavy-handed police. Along with coronavirus, it became the big issue of American politics, neither of which Trump had any real solution too, other than to stoke flames. By summer, the Republicans were already preparing for life after Trump. Stuck in campaign mode, the president pressed on, maskless, with rally after rally, and even planned to go ahead with a Republican convention as normal. Now, with Joe Biden set to come into power in a few weeks, the question is how much havoc Trump can wreak before leaving the Oval Office – and what he does next.

Climate crisis

The year began with bushfires blazing across Australia, killing 500 million animals and more than a dozen people, with acres upon acres left scorched in their wake. But it could end on a hopeful note, as the UK looks ahead to hosting the Cop26 climate summit in November. Joe Biden’s election, and his pledge to sign the US up to the Paris Agreement again, will surely help – with climate an issue that could bring him together with British leaders. In the UK, the government’s independent climate advisers have put together recommendations for how the country can limit its carbon emissions to keep temperatures down, and it’ll take more than sending fewer emails. Instead, they say that by 2050 almost every element of our lives will have to change, from the cars we drive to what we eat, if we’re to reach net-zero emissions. But can it really be done while building a third runway at Heathrow airport?

Arabs Israel relations

Many countries have established diplomatic relations with Israel in quick succession. The decision to establish diplomatic relations by itself cannot create alliance. In case of the Arab world, the matter is different. Within each country, there are factions that are hostile to Israel. Any regime that opens relations with Israel will have to face this reality. Each state that has recognized Israel has broken a barrier. Among many Arabs, it is a violation of a fundamental principle. This process, which began with the UAE, is rooted partly in the US Middle Eastern policy that has played an important role in implicitly endorsing the process and occasionally adding a sweetener. The US also made it clear that it was withdrawing its forces from the region and reducing its commitments. That left the region without the power that held it together. These countries could and did work together, but only through secret contacts and US coordination. Without the United States, each state was left to either go it alone or form meaningful relations on the whole. The US policy forced the countries of the region to face a reality they had tried to hide.

And finally Saudi Arabia bows down before US mantra

The decision by OPEC plus to cut production can be termed a time-out to avert a tripartite war. Lately, there has been significant deterioration in relations between the United States and Saudi Arabia.

Reportedly, nearly 50 US Republican lawmakers warned Saudi Crown Prince Mohammed bin Salman on the eve of this week’s OPEC oil ministers’ video-conference that economic and military cooperation between the United States and Saudi Arabia was at risk. The congressmen demanded that the kingdom must convince Russia to save oil marker from a collapsed.

The United Arab Emirates (UAE) had joined Saudi Arabia in raising production in a move that was sparked by Russia’s initial refusal to extend production cuts agreed early this year but more fundamentally was designed to knock out competition from US shale producers that had turned the United States into the world’s largest oil producer.

It is being portrayed that Saudi Arabia, Russia and the UAE share a desire to render the US shale industry uncompetitive. The prime objective of Russia is to end the US hegemony by stripping it off its status of largest oil producing country.

The threats for Arabian Peninsula monarchs and the US have been raised by the collapse of the oil price as well as demand in the midst of a global economic meltdown.

For Saudi Arabia and the UAE, the stakes were their relationship with the US and significant reputational damage with a move that put at risk tens of millions of American jobs at a time more than 17 million people have been rendered jobless in the United States in the past four weeks.

Oil is but the tip of an iceberg in efforts, particularly in the case of the UAE, to manage a divergence in interests with the United States without tarnishing the country’s carefully groomed image as one of Washington’s closest allies in the Middle East.

Emirati gestures were designed to ensure that it would not be a target in any military confrontation between the United States and Iran.

However, when UAE began reaching out to Iran last year by sending a coast guard delegation to Tehran to discuss maritime security in the wake of alleged Iranian attacks on oil tankers off the coast of the Emirate, the relationship got bitter.

The Trump administration remained silent when the UAE last October released US$700 million in frozen Iranian assets that ran counter to US efforts to strangle Iran economically with harsh sanctions.

While the United States reportedly blocked an Iranian request for US$5 billion from the International Monetary Fund (IMF) to fight the virus, the UAE was among the first nations to facilitate aid shipments to the Islamic republic.

The shipments led to a rare March 15 telephonic conversation between UAE foreign minister Abdullah bin Zayed bin Sultan Al Nahyan and his Iranian counterpart, Mohammad Javid Zarif.

UAE officials stressed that there would be no real breakthrough in Emirati-Iranian relations as long as Iran supported proxies like Hezbollah in Lebanon, pro-Iranian militias in Iraq and Houth rebels in Yemen. The UAE gesture contrasted starkly with a Saudi refusal to capitalize on the pandemic.

A against this, Saudi Arabia appeared to reinforce battle lines by accusing Iran of “direct responsibility” for the spread of the virus. Government-controlled media charged that Iran’s allies, Qatar and Turkey, had deliberately mismanaged the crisis.

Moreover, the kingdom, backing a US refusal to ease sanctioning of Iran, prevented the Non-Aligned Movement from condemning the Trump administration’s hard line.

In a further indication of a divergence of interests, the UAE was alleged for trying to sabotage US support for Turkey’s military intervention in northern Syria as well as a Turkish-Russian engineered ceasefire in the region.

It was also reported that UAE Crown Prince Mohammed bin Zayed had promised Syrian President Bashar al-Assad US$3 billion, out of this US$250 million were paid upfront to break the ceasefire in Idlib, one of the last rebel strongholds in Syria.

Prince Mohammed had hoped to tie Turkey up in fighting in Syria, which would complicate Turkish military support for the internationally recognized Libyan government in Tripoli. The UAE aids Libyan rebel forces led by Field Marshal Khalifa Haftar.

A tweet by Prince Mohammed on 28th March declaring support for Syria in the fight against the coronavirus was designed to keep secret the real reason for the UAE payment.

“I discussed with Syrian President Bashar al-Assad by phone the repercussions of the spread of the coronavirus and assured him of the UAE’s support of and assistance for the brotherly Syrian people in these exceptional circumstances. Human solidarity in times of adversity supersedes all else, Sisterly Syria will not be alone in these difficult circumstances,” Prince Mohammed said. It is unlikely that Prince Mohammed’s explanations will convince policymakers in Washington.

Nevertheless, the United States, Saudi Arabia and the UAE are likely to hide cracks in their relations, but it is only a matter of time the cracks will re-appear.

A bruising day for US Dollar

Thursday could be a bruising day for US Dollar. One of the reasons investors are liquidating their positions is depressing news. It is also anticipated that social distancing rules may be extended to April 30th, which delays the return to normal business activity. With the focus on US data this week, a disappointing jobless claims or non-farm payrolls report could also send USD reeling against other currencies.

If the first day of April 2020 was an indication of what’s to come, it will be a very rocky second quarter. After falling more than 24% during the first quarter, the Dow Jones Industrial Average plunged. Currencies have been taking their lead from equities, so it was no surprise to see some of the currencies falling against the greenback. The strongest currencies continue to be the USD and JPY – which absorbed all of the gains in the first quarter.

However the supremacy of the USD is likely to come into question in the weeks ahead. Investors have been buying it on the premise that the rest of the world will be stuck in recessionary conditions longer than the United States because there can’t be a global recovery without a US recovery. While that may be true, the data coming from many countries is weak. The spread of coronavirus in United States is alarming and lockdown is becoming a serious concern.

Looking ahead to Friday’s non-farm payrolls report, it could it be even worse. In many ways tomorrow’s jobless claims report will be more telling and more market moving. The current forecast is 3.5 million, which sounds about right but the underlying numbers are probably much worse. 

According to New York State Labor Department, between March 23rd and March 28th, the agency received more than 8.2 million calls compared to just 50,000 in a typical week. Of course many of those calls are redundant but with just one state receiving that many requests, we can only imagine how many claims are being requested and filed nationally. 

With the exception of JPY, all of the major currencies are lower against USD. Despite an unexpectedly strong increase in German retail sales, Eurozone PMIs were revised lower. UK PMI was also revised lower.  Although manufacturing activity increased in March according to Australia’s PMI report, the RBA minutes were very dovish. According to the central bank a very material contraction is expected in Australia with significant job losses over the months ahead.

Coronavirus: Pandemic, Biological war or Azab (torment)

Ever since coronavirus has attacked Pakistan all sorts of explanations are being given, but mostly end at ‘it is a virus and no vaccine or treatment is available’. First it was said people should restrict socializing and now government is being asked to impose complete lockdown.

The point being propagated is that the victim will face death; therefore, lockdown is the most appropriate.

Since the lockdown can bring even the most robust economies to stand still, various bailout packages are being prepared by the multilateral donors.

To save the less developed economies, economic powers have developed consensus to offer US$2 trillion package.

This reminds formation of International Bank for Reconstruction and Development, now known as World Bank

While many still don’t believe, a small group has been saying from day one that it’s a biological war. The virus has a stipulated life and after a while all the cities and countries will be declared ‘clean’.

It is estimated that around 25,000 people have died in three months, but a point to be remembers is that the largest number of deaths are in the countries which have one of the best Medicare systems in the world.

This number may look colossal but it is only a miniscule keeping in view the loss of millions of lives in WWII.

During this virus spread, faith of Muslims, Christians and Jews was also jolted as their places of worship were closed. Followers of these religions were terming this pandemic an Azab and they were made to believe the contrary.

It becomes easy to believe that it is a biological war when one looks as the ‘disinformation’ spread by three global news agencies. The ‘embedded’ journalist reported global outbreak so extensively that achieve ultimate goal ‘lockdown’ became too easy.  

Let me conclude that this virus may also have become out of control, keep in mind many of the science fictions, and you will tend to agree with my briefest narrative.