Global Translations comes to you this morning from Sydney, Australia!
After 68 hours of flying and transiting to get here, I’ve got mostly bad news for those of you who are eagerly anticipating getting back to international travel this summer.
First, your CDC vaccination card is useless for getting into countries like South Korea, Singapore and Australia. They only want to know about your negative test results. Even then you’ll have problems if you don’t get the right stamps and signatures (each have slightly different rules), or you misread the fine print on timing.
Escorts for all: Second, after days of escorts ensuring I didn’t mingle with locals, and being treated like I was radioactive despite being heavily tested and recently vaccinated — it’s clear to me that these good faith efforts to keep local populations safe are incompatible with mass tourism and business travel. Why? Because every location has a different system (annoying for the traveler) and labor-intensive escorting of travelers simply can’t scale. Singapore’s Changi airport processed 68 million passengers in 2019 — but there are only 5.8 million Singaporeans. The math doesn’t work.
You can beat the system, but then it beats you: Because I wasn’t willing (or able) to pay $11,000 for a one-way flight to Australia — and yes, that’s actually the going rate because arrivals caps mean airlines are only selling the most expensive business and first-class seats — my effort to hack the ticketing system created testing issues. Yes, I saved $6,400 on my flight by choosing to fly economy from NYC via Detroit and Seoul to Singapore, before flying business for the last leg to ensure entry into Australia. But I was also nearly denied boarding at Newark and nearly denied entry into Singapore.
The only way to get a PCR test (rather than a rapid antigen test) before a Monday morning flight and also meet Singapore’s 72-hour rule, was to join One Medical ($199), a concierge medical service promising speedy results. Even then, my test results arrived only six minutes before check-in closed.
Along the way, I was served by flight attendants in full medical scrubs and clear plastic glasses designed for industrial protection, had my thumbs printed six times, my temperature checked even more often, and was escorted nearly everywhere, including to two prison-hotels.
Orwellian Chic: The highlight was Singapore’s “business exchange quarantine facility” [email protected] Beneath the branding, it is several wings of prefab rooms in a convention hall starting at $400 per night. Designed for short-stay quarantine-business trips, I experienced it as a pleasant ghost hotel, not seeing another guest in the 32 hours of my stay. Staff said I conducted only the sixth business meeting since they opened.
When I finally boarded my flight to Australia Thursday morning, after being trailed around by another escort as I collected more test results, checked-in and went to the bathroom, relief was the only emotion.
It’s more endless rules in Australia — and they’re popular here. As I complained to my brother about waiting in a special bus at Sydney airport (no social distancing possible) for a police car escort to guide us to our quarantine hotel, he texted me bluntly: “Imagine if America had done this instead.”
Your next six Global Translations editions will come from a 5-star downtown quarantine hotel room. There’s no fresh air and no possibility to leave for 14 days — for $200 a night I get a set menu left at my door, no room cleaning and only one change of linen on Day 8.
The bottom line: I did this to see my family for the first time in three years, and because my mother is recovering from a lung transplant. But there’s nothing else about Australia or the other destinations that makes the hassle worth it. For most globalists, diplomats and executives that read GT, a Zoom call delivers better overall value for the time being.
REALITY CHECK — SUEZ CANAL BLOCKAGE: Covid was supposed to be the ultimate wake-up call about the risks of global and just-in-time supply chains. Clearly we didn’t take the Great Toilet Paper Crisis of March 2020 to seize the moment to implement much change.
Instead global companies kept piling into major trade choke points like the Suez Canal (the Ever Given’s massive cargo alone could be worth around one billion dollars, according to IHS Markit), and nothing was done to spread the risk. Waiting for climate change to open up the Arctic Northwest Passage is not a strategy.
This week’s hilariously pathetic scenes in the canal are also a reminder of the dangers of failing to maintain and upgrade critical infrastructure. President Biden will appreciate the message, given his planned $3 trillion infrastructure plan.
History’s other lesson: Suez blockages are usually connected to other political problems. The 1956 closure accelerated the death of colonialism. In 1967, it signaled the outsize role Middle East politics would play in our lives until now. In 2021, alongside China tensions, is this incident telling us we need to move into a new era of trade?
FRIDAY INTERVIEW — MARTIN GUZMÁN, ARGENTINA’S FINANCE MINISTER
The all-encompassing threat of Covid has amplified challenges to economic orthodoxy. Stimulus has replaced austerity in national budgets. Monetary policy — with interest rates at rock bottom and nowhere to go— has been pushed out of the spotlight. The battlefront is now so wide that Martin Guzmán, Argentina’s left-wing finance minister, has serious reform proposals for the International Monetary Fund (IMF) and a serious audience for them.
It’s astonishing because Argentina is in the middle of its 21st IMF bailout since 1958. Ten years ago Guzmán would have been laughed out of the fund’s doors. Even five years ago Greece’s hard-left Prime Minister Alexis Tsipras could do little with his democratic mandate to alter Greece’s bailout. Global Translations spoke to Guzmán by Zoom on Thursday as he wrapped up a week-long DC visit:
Love the one you’re with: Guzmán is working on a mind-meld with IMF chief Kristalina Georgieva, “on what Argentina actually needs.” Guzmán praises Georgieva as “very productive, positive,” and other senior Argentine officials both at home and at IMF share that view, though they remain skeptical of how much Georgieva can change in the institution. He called the support of Georgieva and Treasury Secretary Janet Yellen, along with other G-20 countries, for a $650 billion expansion of the IMF’s lending capacity, “a positive outcome that was possible due to positive leadership.”
Argentina’s goal — get the IMF to cut it a new deal: Argentina owes the IMF $45 billion over the next three years. Thanks to Covid recession pressure “we cannot pay on the original terms and the original schedule” Guzmán said, adding that “there is broad consensus at the international level” that the country’s 2018 deal isn’t working as intended.
Guzmán believes that with inflation running at 40 percent — despite complying with the IMF deal — it’s time to give up the notion that fiscal discipline alone will solve Argentina’s inflation problem. The risk of staying the course is that Argentina stays in recession, unemployment rises, and it fails to meet its payments anyway.
Not exactly where a democracy (or indeed the global club of democracies) wants to be.
The private sector saw the light Guzmán is shining: creditors offered debt relief of around $37 billion, by agreeing to cut interest rates on Argentina’s privately-held debt from around 7 percent to 3 percent on average.
Can a new Argentina deal symbolize a new post-austerity IMF? Georgieva in 2020 told Global Translations she wanted governments to “spend as much as you can,” to fight the Covid recession. Guzmán said he’s only asking for the same flexibility: since the economic landscape changed, the IMF’s terms should change with it.
As part of any new deal, Guzmán is promising new transparency. Argentine governments have often treated debt and bailouts like political footballs, but Guzmán wants bipartisan support in Argentina’s Congress for any deal (which he obtained for the private sector deal). “It means that when the government runs negotiations with the fund, we put the outcome in front of the public. There is a wide public debate with participation of the entire political spectrum.”
Where trade politics go, bailout politics follow: Trade deals have been forced out of closed rooms and into the public eye in recent years. IMF deals may be headed the same way.
The IMF must stop charging fees to bankrupt countries: Guzmán went further than he has before in his Global Translations interview, directly calling for the IMF to stop extracting punitive fees from the countries it helps. “The IMF mission is to contribute to a more stable global environment from a financial viewpoint. But these surcharges basically punish the countries in the most adverse circumstances,” he said. Changing the way the IMF raises its operating revenue “will contribute structurally, not just in the pandemic, to a more stable global environment.”
Kevin Gallagher, the director of Boston University’s Global Development Policy Center, is one of Guzmán’s allies on the issue. He told Global Translations it’s not only Argentina that would immediately benefit from “suspension or even cancellation of the extra surcharges on the hardest hit countries,” but also Angola and Georgia. “When the IMF is relying on exorbitant fees on its hardest hit members for 44 percent of annual revenue it is clear that its business model needs fundamental reform,” he said.
Climate change is just another word for long-term change: Guzmán supports Georgieva’s efforts to integrate climate risk analysis into the IMF’s work, saying the Fund’s repayment timelines and interest costs are often “not aligned with the time it takes for structural reforms.” Given that climate action might, for example, require a 30-year green transition, the bank needs new lending systems to reflect that he said.
In strategic terms, it isn’t lost on Global Translations that the more the IMF shifts into that long-term mode, the easier it is for Guzmán to mount the case for Argentina having more time to repay the IMF.
Can Guzmán win? There’s a lot of reasons to think he will get a new deal for Argentina in coming months. No-one needs another Argentine default, while a successful renegotiation could herald more sustainable IMF deals for all future bailout recipients. The task of overhauling the IMF’s fees is a tougher one. The IMF is expected to perform more and more economic roles, and the operating funds have to come from somewhere. With Republicans in Congress already attacking the Biden administration’s support for a $650 billion expansion of the IMF’s lending capacity, the U.S. is unlikely to be throwing even more cash Georgieva’s way.
Is he going to World Economic Forum in Singapore this August: Yes
IMF — SPRING MEETINGS AGENDA: Stakeholder events have already begun, a curtain-raiser to the main event takes place March 30, and the main show follows after Easter.
BIDEN MEETS WORLD
U.S. PROGRESSIVES ANTSY OVER BIDEN’S SLOW-MO FOREIGN POLICY: The Democratic left is about to end its Biden honeymoon, reports Nahal Toosi.
HOW ARE THOSE NORTH KOREA TALKS GOING? President Joe Biden has said he is open to more Korean peninsula diplomacy, but short-range missile and ballistic missile tests complicate the drawing up of offers and red lines.
Speaking of new missiles — Taiwan has begun mass production: There’s four models including one long-range missile. The island’s armed forces are in the middle of a modernization program to offer a more effective deterrent against Chinese invasion and fears the U.S. won’t be able to help in time. Beijing regards Taiwan as its own territory and has never ruled out the use of military force to “reunify” the island.
CARDIN BACK TO HELSINKI COMMISSION: Sen. Ben Cardin (D-MD) is returning to his Obama-era role as chair of the Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, which promotes human rights.
D.C. TECH CRACKDOWN ENTERS HAGGLING PHASE: It’s all very seven stages of grief, isn’t it? The good news (or the bad news), that metaphor puts us halfway through this fight.
JOBS RECOVERY SPOTLIGHT
REALITY CHECK — HOW MANY JOBS DID $961 BILLION BUY? We know how much the Paycheck Protection Program has cost, but no-one’s been able to measure the benefits with precision. University of Chicago’s Eric Zwick estimates 3.5 million jobs were saved. If that’s right, the cost per job was around $274,000.
SIX MILLION LONG-TERM UNEMPLOYED: While new U.S. jobless claims fall to 684,000 last week, the fewest since the pandemic started, 19 million continue to collect benefits. Around one-third of those people have been unemployed for more than six months.
It’s worse in Nigeria: Unemployment has hit 33 percent, meaning around 23 million are out of work.
THE TRUTH IS OUT THERE … BUT NOT FOR YOU: Military and spy agencies accused of stiff-arming investigators on UFO sightings.
BACKLASH AGAINST CLIMATE MEN’S CLUB: We called it, but didn’t think climate conference organizers would stupidly parade that climate diplomacy in 2021 is being run by a bunch of older men. After giving top billing to men only at next Wednesday’s “net zero summit,” the U.K. government and International Energy Agency were forced to add several women to the program when a draft agenda leaked.
APPOINTED: James Crabtree starts next week as Executive Director of International Institute for Strategic Studies’ newly enlarged Asia office, in Singapore. His first task: pulling off an in-person Shangri-La Dialogue, Asia’s premier security summit, in June. Invitations are in the mail — but don’t be surprised if you don’t get one. The list is shorter this year thanks to Covid.
Thanks to editor Ben Pauker and Nahal Toosi.