Italy Quarantines Millions as Global Markets Plummet
Italy’s prime minister expands quarantine as coronavirus death toll jumps, oil prices drop, and global markets plummet.
Here is today’s Foreign Policy brief: Italy puts the north on lockdown, Saudi Arabia sparks an oil price plunge, Lebanon defaults on debt, and what to watch in the world this week.
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Italy Quarantines Millions
In an attempt to tackle its growing coronavirus outbreak, Italy has taken the unprecedented step of placing over a quarter of its citizens on lockdown for a month, limiting movement for those living in the country’s north. In a news conference after signing the quarantine decree, Italy’s Prime Minister Giuseppe Conte called the crisis a “a national emergency.” The move comes as the number of coronavirus cases in Italy exceeded 7,300 and the number of deaths increased from 233 to 366.
Economic fallout. Italy’s stock market plummeted by 11 percent on Monday morning as stock markets around Europe opened sharply lower, with opening drops of more than 8 percent on London’s FTSE and over 6 percent on the German DAX. Southern Italian leaders, meanwhile, have urged northerners to obey the quarantine restrictions and not bring the coronavirus to the country’s south, which has so far remained largely unaffected. “I speak to you as if you were my children, my brothers, my nephews and nieces: Stop and go back,” Michele Emiliano, the president of the southern province of Puglia wrote on Facebook Saturday.
Is it spreading in Europe? Elsewhere, Germany’s health minister Jens Spahn has urged the German public to consider staying at home and for large events to be canceled as the country deals with almost 1,000 confirmed cases—a move that could affect sporting events including Bundesliga soccer matches. Armin Laschet, the head of the North Rhine Westphalia state—and a leading contender to replace Angela Merkel as head of the governing CDU party—said he would heed Spahn’s advice meaning that Saturday’s major soccer match between Dortmund and Schalke could be played in an empty stadium.
Meanwhile, in Britain, Prime Minister Boris Johnson is chairing an emergency meeting to consider more stringent measures to slow the spread of the virus as cases in the U.K. jumped from 209 to 278. Restrictions could include bans on gatherings in pubs, at religious services, and other mass-attendance events.
What’s the U.S. response? Anthony Fauci, the head of the infectious diseases unit at the National Institutes of Health, told NBC on Sunday that 400,000 more coronavirus tests would be available by Monday, increasing to 4 million by the end of the week. He added that large-scale quarantines, as seen in Italy and China, were unlikely to be put in place. Washington, D.C. reported its first case of the virus over the weekend, joining 34 states with confirmed cases, while Sen. Ted Cruz and Rep. Paul Gosar self-quarantined after a man they shook hands with at the recent Conservative Political Action Conference tested positive for COVID-19.
What We’re Following Today
Oil plummets and market panic. Oil prices dropped nearly 30 percent to their lowest levels since 2016 as a price war develops between Russia and OPEC countries. Saudi Arabia’s announcement of dramatic price cuts on its oil as well as an increase in production levels above 10 million barrels per day sent shock waves through global markets.
The moves appear to be a retaliation after Russia’s refusal to agree to production cuts during meetings with OPEC in Vienna last week. A drop in oil price won’t just hurt Russia, but will likely affect U.S. producers, too. As Foreign Policy‘s Keith Johnson reported last week, $30 dollars a barrel is well short of the $50 limit U.S. shale oil producers usually need to make a good return on investment.
The collapse in oil prices led a broader, global rout across stock and bond markets Monday, with more carnage expected in New York trading later in the day. With Saudi Arabia and Russia throwing open the taps on oil production—even as the impact of the coronavirus has hammered the world’s thirst for oil—crude prices are now in free fall. That combination of shrinking demand and massive oversupply creates a situation with “no equal in market history,” said Fatih Birol, the head of the International Energy Agency.
Saudi Palace intrigue. In addition to market shocks, there was also palace drama in Riyadh over the weekend. Crown Prince Mohammad bin Salman, the kingdom’s de facto leader, accused senior royals of a coup plot and arrested Prince Ahmed bin Abdulaziz al Saud, a brother of Saudi King Salman, and Prince Mohammed bin Nayef bin Abdulaziz al Saud, the king’s nephew. Bin Nayef’s younger brother was also detained along with as many as 20 others. The move was seen as a warning to anyone within the royal family who dares to criticize MBS’s rule.
Lebanon defaults. For the first time in its history, Lebanon is to default on a foreign debt payment. Lebanon had been due to pay a $1.2 billion bond today, but amid a financial crisis the country now faces the prospect of International Monetary Fund (IMF) intervention. In a televised address, Prime Minister Hassan Diab said the country’s debt had “become bigger than Lebanon can bear.”
Erdogan to Brussels. Turkish President Recep Tayyip Erdogan is in Brussels today for discussions with EU leaders, including European Council President Charles Michel and European Commission President Ursula von der Leyen, with Syria and migration expected to top the list of priorities. In a speech in Istanbul on Sunday he called on Greece to “open your gates” to the thousands of refugees seeking to enter the European Union from Turkey.
The World This Week
On Tuesday, March 10, six more states have their say on who should be the Democratic nominee for the 2020 presidential election. The race is now effectively down to two candidates, former Vice President Joe Biden and Sen. Bernie Sanders (Rep. Tulsi Gabbard remains in the race but is far behind). Biden heads into Tuesday’s vote with a 90 delegate lead as both candidates eye up the main prize: the state of Michigan and its 125 delegates.
The chiefs of both U.S. Africa Command (Africom) and U.S. Central Command (Centcom) will brief the House Armed Services Committee on Tuesday to discuss U.S. military activities in Africa and the Middle East. Two members of that committee introduced a bill last week that would curtail the Pentagon’s ability to reduce troop numbers in the Africom theater, as Foreign Policy’s Robbie Gramer reported on March 4.
Brazilian President Jair Bolsonaro continues his visit to the United States. Following meetings with President Trump and a visit to U.S. Southern Command over the weekend, Bolsonaro will meet with U.S. senators today before visiting a facility belonging to the Brazilian aerospace company Embraer on Tuesday.
Keep an Eye On
Afghan talks. After the recent agreement signed between the United and States and the Taliban, its unclear whether the next step—talks between the Taliban and the Afghan government—will proceed as scheduled. The dialogue, believed to be set for March 10 in Oslo, remains in limbo. A source in Norway’s foreign ministry speaking to Norwegian media about the prospect of talks this week said “We know nothing at present.”
MH17 trial. The criminal trial of those accused of downing Malaysian Airlines flight 17 over Ukraine in 2014 begins today in the Netherlands. The four defendants, three Russians and a Ukrainian, were senior commanders in the Donetsk People’s Republic militia, the group alleged to be responsible for firing the Buk missile that destroyed the passenger aircraft mid-flight. None are expected to attend in person and will instead be tried in absentia.
Odds and Ends
Amid falling consumer demand due to the coronavirus outbreak, warehouse retailer Costco has been one of the few businesses benefiting from the epidemic. Sales for this quarter are up 9.1 percent on the previous year, with 3 percent of that growth an “uptick in consumer demand” the company attributes to coronavirus panic-buying.
That’s it for today.