Covid-19 Threatens Political Earthquake

(Bloomberg) --

Governments around the world are taking very different approaches to tackling Covid-19, and in many cases they are driven as much by political expediency as the underlying infection rate.

Marc Champion takes a closer look at what the pandemic could mean for the populist leaders ushered into power by the fallout from the 2008 financial crisis.

The U.S. is now the site of the most confirmed cases, putting President Donald Trump center stage as he tries to mitigate the impact of the virus on the world’s largest economy in an election year.

Like populist leaders in countries from Brazil to Hungary, Trump’s natural instinct is to portray the country as under siege — he’s called it a foreign virus — and find an enemy to blame. There’s evidence his strategy isn’t harming him politically. A recent poll showed 60% of Americans approve of Trump’s handing of the crisis.

But it’s unclear how the public will react as the death toll continues to grow, with cities like New York and New Orleans now in the front line.

While it’s too soon to predict which governments will suffer politically from their approach to the virus, questions are growing over whether populists’ grip on power will loosen.

Global Headlines

Delivering the aid | The U.S. House is set today to pass a $2 trillion economic stimulus package, clearing it for Trump’s signature. But the success of the measure will depend on how quickly the aid reaches beleaguered consumers and businesses — a huge challenge for federal and state agencies that aren’t built to move quickly.

• The U.S. government will rank counties according to their outbreak risk, Trump told state governors as he seeks to return Americans to work by his aspirational Easter deadline.
• Click here for more on how the virus is complicating Trump’s efforts to relax federal regulations.

Europe, fiddling | Euro area governments are struggling to thrash out how to finance their stimulus plans. Finance ministers punted the decision to leaders on Tuesday and last night the leaders punted it right back. Finance chiefs now have another two weeks to agree on how to mobilize the bloc’s bailout found with hundreds dying each day and the economy in freefall.

Under scrutiny | The long lines and stacks of ash urns greeting family members of the dead at funeral homes in Wuhan are spurring questions about the true scale of coronavirus casualties. According to official figures, 2,535 people in Wuhan have died of the virus. But there’s skepticism over the accuracy of that tally, particularly given authorities’ attempts to cover up the initial outbreak, and multiple revisions to the way cases are counted.

Gulf irritation | Saudi Arabia’s oil-price war with Russia is irritating its Gulf allies as it shatters the fiscal defenses they need to combat the coronavirus. As the pandemic shuts down major chunks of the global economy, the Saudi-Russia standoff is helping to drive oil even lower and hampering the Gulf economies’ recovery from the last price plunge in 2014, Sylvia Westall and Fiona MacDonald report.

Hard choices | While the leaders of Mexico and Brazil have downplayed the virus impact, Argentina has taken strict measures, even if they hurt the livelihoods of President Alberto Fernandez’s mostly middle-to-lower class voter base. As Patrick Gillespie and Jorgelina do Rosario report, Fernandez’s move to put his country into quarantine was influenced by the views of the WHO and his conversations with the leaders of Spain and Italy, two virus hot spots. 

What to Watch

• Trump says there’s “no way” he will cancel the Republican National Convention in August, as Democrats look at contingency options for their own gathering a month earlier.
• South Africa began a three-week lockdown today to curb the spread of the coronavirus as the disease claimed its first two victims in the country.
• The pandemic has put on indefinite hold a major portion of the U.S. Supreme Court’s docket, including a multibillion-dollar clash between software giants Google and Oracle and cases that could affect Trump’s re-election chances.

Pop quiz, readers (no cheating!). Which Latin American leader has echoed Trump in calling for an early restart of his economy in the face of the coronavirus pandemic. Send us your answers and tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.

And finally ... The only road into Yarrabah shut at midnight yesterday. Like many remote communities across Australia, the town on the tropical far northeast coast is pulling up the drawbridge to stop coronavirus from entering. With Aboriginal Australians among the most vulnerable due to underlying health conditions, it’s a matter of life or death. Indigenous communities around the world, including the First Nations in Canada, are also preparing for the fight.

©2020 Bloomberg L.P.