分类： 新闻动态

25.DEC.2020 . 6 MIN READ

January 24, 2020: Nepal reported its first case of COVID-19—the first in all of South Asia. By March 8, every country in the region had at least one reported case of the virus. Governments purported to act quickly, immediately announcing a COVID-19 relief fund when there were merely 150 cases overall. Amidst rampant government shutdowns with cursory notices, the region comprising a fourth of humanity was expected to come to a complete standstill—within a single day or two in some instances. As always, some groups fared worse than others. Visceral images of migrant laborers walking hundreds of kilometers back to their villages—unable to survive in closed cities or access regular transportation back home—quickly gained global infamy. As the international focus on domestic migrant workers in South Asia reached its eventual peak, another problem started appearing on countries’ purview: the millions of workers working abroad, supporting their families, communities, and in many cases, whole economies.

Remittance, for more than 272 million people around the world, is the money they send back to their families from their wage labor.  For developing countries, remittance is a macroeconomic promise—a promise to act as a safety net during economic downturns. But as remittance-dependent economies in South Asia experienced a global pandemic, the promise started to falter; the promise to individual workers from the sub-continent, that of a better life with lower poverty, higher disposable income, and a better life overall started slipping through the cracks too. The pandemic revealed what decades of political consensus had missed - that exporting labor, without a plan B, is an ill-conceived long term growth strategy. Countries in South Asia which depended heavily on foreign remittance suffered more during this pandemic. People in the region who built their lives around foreign remittance suffered the most.

The World Bank predicted in April that remittance flows in South Asia would fall by more than 22 percent in 2020—slightly higher than its global prediction of 20 percent. For the millions of families of migrant workers around the world, the pandemic threatened their main source of income and economic stability. The effect was especially pronounced in South Asia, with India contributing the highest number of migrant workers globally. India was also the highest recipient of foreign remittance in 2019. For a country like Bangladesh, where remittance contributed to 38 percent of the growth in output per capita over 1970-2009, remittance was simply too significant of a growth driver to replace. In Nepal, which garnered 26 percent of its total GDP in 2019 from remittance alone, the consequences of such a drop would be devastating to families, communities, and the whole country.

Remittance and History

Following the economic liberalization of the subcontinent starting in the 1980s, government policies heavily encouraged labor migration. Pakistan offered special incentives, including duty-free imports for migrant workers and seats in public universities and public housing schemes to non-resident Pakistanis (NRPs). Bangladesh introduced special wage earner bonds to promote migrant savings. Sri Lanka even went as far as offering pre-departure travel loans and free insurance to the families of migrant workers. They had every reason to—every measure of economic health expressed glowing reviews in favor of remittance. One study found that migrant remittances had led to a decline in poverty in Nepal from as much as 42 percent in 1995 to 31 percent in 2003.

One would be remiss to ignore the historical consequences of colonialism at the heart of modern South Asia. Colonialism formed channels of vulnerabilities in the sub-continent which manifests today, most starkly among others, in the form of economic dependencies like the export of labor. The central reason why any large number of people would move beyond the comforts of their home country for job opportunities is painfully obvious—a lack of economic opportunities at home. Such incentives are boosted by a more lenient international migration system facilitated by the demand for foreign labor. Gulf countries, as they embarked on their own state-building enterprise, were one of the biggest employers of workers from South Asia. Today, the Gulf region alone contributes more than half of all the remittance sent to South Asia.

Nepal - an outlier of an outlier

With more than 28 percent of the total GDP funded exclusively by foreign remittance, Nepal stands as an outlier even for South Asia. Pakistan comes at a distant second, with 8 percent. Nepal has the fifth highest GDP dependence on remittance of any country in the world. A report in 2016 found that one in four households in Nepal has one member working abroad at any given time. More than three-quarters of the formal work permits are issued for Gulf countries, but informally, many in Southern Nepal work in India given the open border between the two nations. Why are so many people in Nepal going abroad for work?

A lot of what happened can be traced back to the Maoist Civil War from 1996 to 2006, which displaced more than 100,000 people in Nepal and disproportionately ruined the economic prospects of rural areas. The war was followed by nearly a decade of political and economic instability. Many fear that such conditions have formed a recurring culture of dependence on remittance. The absence of the household head, the father in many cases, for most of one’s childhood creates channels of vulnerability among young children. These children then disproportionately drop out of school and follow their father’s footsteps—footsteps which lead them directly to foreign lands among unfamiliar faces but a very familiar situation.

Nobody disputes the great extent to which remittance has helped curtail poverty and boost economic growth in Nepal. Yet, there is similarly little disagreement over the remarkable ineptitude of the Nepali government to assuage economic needs within the country. The public outcry against government negligence of foreign workers shifts with the tides of media coverage. Meanwhile, the harrowing halls of the only international airport in Kathmandu shrieks with cries of horror as it receives three dead bodies of migrant workers every single day of the year.

Remittance and COVID

Remittance failed to outlive its illustrious promise of a countercyclical safety net during COVID. While estimates of a precipitous downfall in remittance rattled families and governments in South Asia, some pointed to the pre-COVID years of 2015, when remittance from migrant workers almost doubled during the once-in-a-lifetime earthquake in Nepal, significantly boosting recovery efforts. Some also point to the more recent floods in Kerala, a state in India, where floods in 2019 led to India retaining its top spot as the highest recipient of remittances globally. The pandemic, however, shed a bright light on the biggest vulnerability of remittance-based economies, that is, its nervous reliance on many issues desperately beyond the control of any single state: geopolitical tensions, the global economy, and now, a global pandemic.

While a global pandemic has dire economic ramifications for all countries, dependence on remittance makes economic recoveries much harder. Such countries do not only require their own economic comeback; they also desperately depend on increased remittance from the economic recovery of other countries they previously depended on. Hope in such dependency gets murkier as different channels of economic associations falter and break during long recessions or lockdowns. For long periods of time, this could simply become a catch-22 for option-less governments and families: no recovery without further remittance and no remittance without further recovery.

Remittance and Economic Prosperity?

Again, nobody disagrees over the poverty-lifting, standard-increasing, and consumption-boosting benefits of remittance. But the pandemic has made it abundantly clear, that questions about economic growth should not merely concern the short term upliftment of people’s living standards, as important as that is. Long-term prospects of economic growth are equally, if not more important. Economists generally agree that the long-term effects of remittance in a country’s economic prospects simply depends on how the remittance is spent. If the money coming in is being spent for the future, then it will yield good results in the future. But surveys in Nepal show that 80 percent of remittance is spent buying foods, clothes, and home appliances. The multiplier effects of consumption is unfortunately not always to one’s benefit. In fact, one of the studies reported that remittance in Nepal had resulted in a sharp decrease in the country’s net productivity due to a paucity of domestic workers and increased consumption of agricultural imports boosted by remittance.

Many highlight the moral hazard associated with a remittance culture: that governments simply stop spending enough on social services like education and health care, and citizens also cease holding governments accountable. For a region that receives more than a quarter of all the remittance in the world, any discussion of shifting away is definitely distressing—but it is a discussion we must have.

Cover picture source: http://www.asergeev.com/pictures/archives/compress/2016/1808/15.htm, by Alex Sergeev, licensed under CC BY-SA 3.0

15.JAN.2020 . 6 MIN READ

The lightest of metals may be causing the largest of impacts. Lithium, which powers our phones, laptops, and electric cars, is essential to our battery-driven world. The demand for lithium has rapidly increased, as the global market’s annual consumption has risen by 8.9 percent annually. This demand will only intensify as hybrid and electric vehicles, energy storage systems, and portable electronics become increasingly widespread. While lithium has been found on each of the six inhabited continents, Chile, Argentina, and Bolivia—together referred to as the “Lithium Triangle”—hold more than 75 percent of the world’s supply beneath their salt flats.

The Lithium Triangle is one of the driest places on earth, which complicates the process of lithium extraction: miners have to drill holes in the salt flats to pump salty, mineral-rich brine to the surface. They then let the water evaporate for months at a time, forming a mixture of potassium, manganese, borax, and lithium salts that is then filtered and left to evaporate once more. After between 12 and 18 months, the filtering process is complete and lithium carbonate can be extracted.

While lithium extraction is relatively cheap and effective, it begs the question of sustainability and long-term impact. That is to say, will lithium mining benefit the globe and its inhabitants, or will it entrench societal and environmental harm? Perhaps the Lithium Triangle will provide some answers.

Economic and Social Factors at Play

Bolivia is home to Salar de Uyuni, the world’s largest salt flat that spans 4,000 square miles. Beneath this natural wonder are massive lithium deposits, composing about 50 percent of the earth’s total. In 2008, the vice president of Bolivia, Álvaro García Linera, proclaimed that this natural resource would relieve the 40 percent of citizens who are living in extreme poverty by “training them in scientific and technological fields so that they become part of the intelligentsia in the global economy.” This sentiment was echoed through government policy and action, with the impassioned declaration of “¡100 percent Estatal!”, or full control by the Bolivian state of the lithium extraction that would occur in Salar de Uyuni.

However, these ideals have yet to come to fruition. Bolivia may be rich in natural resources, but it is a very poor nation, which makes the prospects of autonomously operating lithium-mining projects slim. Lithium mining requires significant financial and technological investments, and no foreign firm was willing to cede control if it was to make those investments. It was not until 2018 that Bolivia found a partner. ACI Systems Alemania, a German firm, formed a joint venture with the Bolivian government and planned an investment of US$1.3 billion for the industrial use of lithium.

This joint business venture, however, has not appeared to take the form of a true partnership, and has certainly not been what García Linera envisioned. The local population is not reaping the benefits of the work that is being done near their homes. There have been few jobs offered to unskilled, indigenous workers, let alone well-paid jobs. These concerns have built up to recent protests in the city of Potosí—where Salar de Uyuni is located—which are demanding higher royalties and a greater allocation of the revenue from lithium mining. On November 3, 2019, the government rescinded the legislation that established the joint venture with ACI Systems Alemania. This experience parallels how Bolivia was similarly once positioned as a major owner of natural gas reserves, but lost any potential profit to foreign exploitation. Official statements from the government have been lacking, but what is known is that Latin America’s poorest nation has little to gain through agreements that sign away its mineral rights to foreign firms in pursuit of quick but fleeting profits.

In Argentina, a similar story unfolds. Beneath the ancestral land of the indigenous Atacamas lie lithium stockpiles worth billions of dollars which have attracted the attention of mining companies for years. One such company, a joint Canadian-Chilean venture called Minera Exar, has made an agreement with six indigenous communities, with expected sales of US$250 million a year. Minera Exar originally established that each community would receive an annual payment ranging from US$9,000 to US$60,000, but testimonies from local residents complicate that picture. Luisa Jorge, a resident and leader in Susques, said “lithium companies are taking millions of dollars from our lands… they ought to give something back. But they’re not.”

Local residents should not be struggling to pay for sewage systems and adequate resources while distant firms profit off of their natural resources. Revision to the legal framework that governs lithium mining is essential, as the current system privileges the interests and whims of companies like Minera Exar. While the provincial government in Argentina has control over mineral rights, the Atacamas have legal rights of their own. However, those rights have been undercut by the present lack of a formal process for negotiations between local communities and mining companies. As such, the interests of mining companies are ultimately overrepresented in the contracts, with leaders of local communities left unaware of how much money and support they should expect to receive. This process is emblematic of a broader legacy of exploitation in Latin America, and in need of urgent reform. Such reform would not be unprecedented, as Argentina has previously adopted international standards to ensure that indigenous communities “shall wherever possible participate in the benefits of such activities, and shall receive fair compensation for any damages which they may sustain as a result of such activities.”

Investments in lithium mining should not be universally rejected. Sales de Jujuy, a mining company that operates directly within Argentina, extracts lithium from the Olaroz salt flat and has explicitly identified the goal of fostering mutually beneficial and understanding partnerships with localities, evident in the fact that 65 percent of its employees are from indigenous communities. Those employees are paid about US$1000 a month, which is an above average salary for the region and an overall satisfactory salary for the nation. Additionally, Sales de Jujuy has provided medical and dental services and made microloans to support health and innovation among local residents. Lithium mining, then, does have the potential to lift up communities it interacts with, but this can only be the case if companies respect and prioritize local conditions and voices, which has so far proven to be the exception rather than the rule.

Environmental Friend or Foe?

Lithium extraction in Bolivia, Argentina, and Chile requires significant amounts of water, at approximately 500,000 gallons per ton of lithium. In Chile’s Salar de Atacama, lithium extraction being performed by various companies has consumed 65 percent of the region’s water supply. This has not only created extreme water shortages, but has also had a substantial impact on the abilities of local farmers to grow crops and maintain livestock.

An additional environmental impact of lithium mining is that it harms soil and contaminates the air and the already limited water supply. In Tibet, for example, Chinese lithium mining has leaked chemicals like hydrochloric acid into the Liqi River, which resulted in the poisoning of fish and the killing of livestock. Similar consequences are being seen within the Lithium Triangle already. In Chile, local inhabitants have criticized mining companies for polluting their waters and covering their landscapes in blankets of discarded salt. In Argentina, natives of the Salta and Catamarca provinces have alleged that the operations of lithium mining companies have contaminated the streams that are used by humans and livestock and for the purposes of crop irrigation.

However, advocates of lithium mining maintain that lithium-ion batteries are essential in the fight against the adverse effects of global warming. The rechargeable battery has a relatively high power density that enables it to store more energy for longer periods of time. Electric automakers like Tesla are pushing drivers to adopt clean, battery-powered replacements for combustion engines. More electric cars on the road would be a powerful way to combat climate change by producing fewer greenhouse gases and emissions. The Department of Energy estimates that the carbon pollution of electric vehicles is 60 percent lower than that of gasoline-powered cars. In a clean-energy state like California, it would be 80 percent lower.

Saving the planet, however, should not come at the cost of destroying fragile ecosystems. Lithium mining cannot be considered a long-term or just solution if it contributes to water depletion and air pollution, which have severe and disparate impacts for local communities that are already struggling in many ways to make ends meet.

A Battery-Powered Future

Lithium mining is in need of much reform if it is to be universally beneficial as a practice. The biggest players in lithium mining must commit to principles of transparency and cooperation with the local governments of the Lithium Triangle. Chile, Argentina, and Bolivia could lead efforts in researching and organizing data that sheds light on the impacts of mining and extraction. Progress has already been made on that front, as in Chile, the Atacama People’s Council has set up monitoring stations in a lagoon on its salt flat in order to track changing water levels. Further developments can and should be made in that regard to ensure that the green revolution does not endanger the people and environments it promises to protect.

02.MAY.2020 . 3 MIN READ

Technological change has always been one of the largest dividers between developed and developing countries. The scientific heavy-hitters have traditionally included the most economically powerful nations. According to the World Bank, every year, the United States, Germany, and Japan all spend upwards of 2.8 percent of GDP on research and development. However, global economic development in the 21st century has spurred increased investment in research and development worldwide, as science and technology have become increasingly critical in the global economy. The African continent has begun to take part in this growing sector as well, at a time when new infrastructure in education has created a promising young scientific workforce. Leaders in academia and industry now seek to mobilize these bright young minds towards a unifying rallying cry: “African solutions to African problems.”

The historical disadvantages faced by Africa’s economic and educational systems are well-known. The political and economic withering of colonialism left most of Africa’s new independent states struggling with violent political upheavals and devastating resource scarcities, allowing little stability or development. In the 21st century, Africans across the continent are changing that narrative. Contemporary South African artist Mary Sibande, globetrotting Nigerian speaker and novelist Chimamanda Ngozi Adichie, and millionaire Sudanese-British philanthropist Mo Ibrahim are carving out spaces for African players by claiming the spotlight. This new do-it-yourself strategy has certainly unified the continent economically and politically. Originally a mantra strongly associated with the African Union, “African solutions to African problems” has come to apply to science as well, bridging industries, academics, and political thinkers in a wave of professional development and educational investment.

Many leaders in academia and industry have taken an international and collective approach that seeks to mobilize a new generation of policymakers, scientists, and engineers towards solving Africa’s problems, from unemployment and limited education to the looming crisis of climate change and sustainable development. For decades, numerous institutions and initiatives have been working on the training and professional development of scientists and researchers on the continent, including the network of African Institutions of Science and Technology in Sub-Saharan Africa. Other such networks across the continent, including the African Institute for Mathematical Sciences and the African School of Fundamental Physics and its Applications, select and train small classes of African students at various locations across the continent, furthering the collectivization of Africa’s scientific assets.

However, due to the centralization of major journal readerships in the United States and similar countries, African researchers at these newer institutions receive little global exposure for their work. In an industry where patents and publications not only legitimize research areas but also make or break careers, invisibility is a large obstacle to professional growth. Economic and political opportunity ultimately drive many trained individuals to emigrate, contributing to brain drain on a massive scale.

In order to stem the outflow of trained talent, leaders in the scientific community are promoting the African solutions approach through action as well as rhetoric. The Scientific African, a pan-African peer-reviewed journal, was launched in 2018 to circulate, promote, and highlight African research within the continent and around the world. It is being published by the Next Einstein Forum (NEF), an initiative of the African Institute for Mathematical Sciences (AIMS), which has worked to connect African science and policy with the global scientific community, particularly through the empowerment of young people. Recently, the organization coordinated an Africa Science Week to unify the continent in the pursuit of scientific development. These efforts continue to represent the energy growing on the continent for a scientific renaissance. In the words of the NEF: “We believe the next Einstein will be African.”

In addition to advocacy organizations, experts in various fields speak about untapped potential. In a 2019 interview about the latest IPCC global warming prediction report, Arona Diedhiou, Senior Research Director at the French National Research Institute for Development, argued that “For a long time, there has been a gulf between the sustainable development options suggested at the international level and the local African realities…. It is time for a paradigm shift in order to propose solutions for Africa, developed by Africans.” And describing the climate challenges that face the continent in the coming years, Diedhiou also stressed the possibility of educating and energizing young people.

While these institutions, organizations, and leaders have been instrumental in the growth of professional development, it is important to consider their drawbacks. By perpetuating the selection and elevation of “the best of the best,” these systems have the potential to exacerbate brain drain on a local level. Well-trained scientists cannot achieve progress without comparably valued support teams, laboratory facilities, and financial investments; they can easily relocate to where those resources are available. But all is not lost. To bolster R&D infrastructure, the African scientific community has a couple of unexpected advantages: a rapidly growing population of young people hungry for education and employment, and the pressure of climate change necessitating innovative solutions.

Despite what the rest of the world may believe, Africa’s scientific aspirations are only growing as the 21st century goes on. In spite of the political and economic hardships embedded in the fabric of the continent’s history, leaders are turning the page. The African Renaissance is upon us. What a wondrous world it will bring.

20.NOV.2020 . 8 MIN READ

International Scientific Collaboration

On October 4, 1975, the Soviet Union launched Sputnik I, the first artificial satellite to enter Earth’s orbit. This caught the United States by surprise, as the United States had hoped that they would be the first to achieve this scientific feat. The resulting intensification of Cold War tensions ushered in a new era of scientific research and technological development. These heightened geopolitical tensions unexpectedly led to the rise of scientific diplomacy and international scientific collaboration, ultimately paving the way for the large-scale collaboration that has shaped today’s scientific landscape.

In a time of global upheaval caused by the spread of the SARS-CoV-2 virus, the need for international collaboration on scientific research and therapeutic development is crucial. International scientific collaboration has been on the rise in recent years. Motivated by the need to share information across borders, countries have been partnering to solve issues in virology such as HIV/AIDS, Ebola, and Zika well before the coronavirus pandemic. However, with regard to COVID-19 vaccine development, wealthier countries have exploited global power dynamics, resulting in the dangerous politicization of vaccine development that could significantly skew access to vaccines and other treatments as they become available. Due to the infectiousness of the SARS-CoV-2 virus and the initial inability of governments to contain the spread, the current coronavirus situation requires a greater level of collaboration than past infectious disease outbreaks. These conflicting trends of international scientific collaboration and necropolitical power and control, ultimately dictating who lives and who dies, only add to the global upheaval and chaos spurred by the COVID-19 crisis.

Despite implicit sovereign and imperialist undertones, collaborations between academia and industry may appear well-intentioned. However, these overtly political partnerships and efforts play into geopolitical tensions and ultimately prioritize wealthier countries over international need concerning vaccine access and distribution.

Vaccine Sovereignty

In March, Oxford University and AstraZeneca announced their collaboration to develop and globally distribute a recombinant adenovirus vaccine targeted towards preventing COVID-19 infection. Oxford and AstraZeneca’s long-standing research partnership, which now strives to advance basic science in order to develop and manufacture a COVID-19 vaccine, highlights the growing need for research collaborations between academia and industry.

The Oxford-Astrazeneca deal highlights the fact that, despite efforts at collaboration to advance vaccine development, wealthier and highly developed industrialized countries will inevitably be prioritized, thus leaving countries with fewer resources and less capital to invest in vaccine efforts in the dust. Many argue that this landmark partnership reinforces vaccine sovereignty, where wealth and power determine vaccine access as opposed to a need-based approach that would serve populations most in need of the potentially life-saving treatment. Although not explicit in their messaging, AstraZeneca has foreshadowed that when the vaccine becomes publicly available, it intends to supply the UK before releasing doses to the rest of the world. Vaccine sovereignty is tightly linked to historical imbalances in power and resources, discriminating between wealthier countries whose access is likely to be prioritized and countries that are desperately in need of therapeutics but are denied access due to an investment paywall.

Medical Imperialism

In addition to the way this Eurocentric approach to vaccine development prioritizes Western access, developing countries are often used as testing grounds to determine the safety and efficacy of various pharmaceuticals. In April 2020, a conflict about the suggestion by a French physician to test coronavirus vaccines in Africa sparked outrage. This echoed the history of ethically ambiguous Western medical testing in Africa and other developing nations, as these studies are often conducted without the subjects’ knowledge or consent. The historical trend of using African and South Asian countries as testing grounds for pharmaceuticals before they are distributed to the “wealthy elite” of nations maintains threads of Western medical imperialism and colonial domination. This wealth-based discrepancy between locations of COVID-19 vaccine testing and priority access could further destabilize the current situation of the pandemic. By exacerbating the already-evident inequalities, countries with priority access to the vaccine will reap the benefits at the expense of countries historically subjected to unethical testing, in which the rates of infection and mortality could continue to escalate and endanger the already at-risk population.

From a bioethics perspective, these types of transgressions target often impoverished and marginalized groups in developing nations and explicitly violate internationally-agreed-upon terms of conducting scientific research. The Declaration of Helsinki of 1964 outlines specific criteria that should be considered when conducting scientific research involving human subjects, emphasizing the importance of beneficence and respect for subject dignity. Although these ethical transgressions are often kept under wraps by governments and influential key players, government agencies’ and industry leaders’ calls for transparency in scientific research along with the severity of the coronavirus pandemic may not allow for this continued discretion. If this type of unethical testing is implemented on a large scale and the COVID-19 vaccine is less effective than promised, an entire region or country's population could be severely affected by the resulting increase in infection. Such an error could also negatively influence global perceptions of the idea of a coronavirus vaccine, which could prove detrimental to the already difficult-to-enforce public health measures and undo months of progress.

Scientific Supremacy and the Resurgence of Space Race Tensions

Leaving life and death in the hands of politicians who are primarily focused on furthering their respective agendas will prove dangerous in terms of setting the scene for future scientific developments as well as vaccine access. Reminiscent of the Space Race of the 1960s and 1970s, both the Russian and US administrations’ efforts to advance vaccine development are ultimately fueled by political motivations, exacerbating concerns around what is evolving into a competition of scientific supremacy.

Dangerous politicization of vaccine development has become evident in the increasing friction between the United States and Russia in a vaccine race similar to the Space Race of the 1960s and 1970s. As of August, Russia became the first country to announce the approval of a COVID-19 vaccine developed by the Gamaleya National Center of Epidemiology and Microbiology in Moscow. The Russian vaccine’s moniker, Sputnik V, directly alludes to the Space Race between the United States and the USSR, highlighting the geopolitical tensions underlying its rushed approval. The launch of Sputnik I by the USSR in 1957 inaugurated the Space Race with the United States, ultimately leading to the formation of NASA and the notion of outer space as a frontier available for exploration and dominance. Similar to the beginning of the Space Race, it appears that Russia’s Sputnik V has crossed the finish line of the global vaccine race. However, the Russian COVID-19 vaccine has not gone through the large-scale testing involved in Phase III trials, raising global concerns about its safety and efficacy in a larger population. Western scientists remain skeptical of Sputnik V, which although lauded by President Vladimir Putin, has been tested in less than 80 people as the scientists at Gamaleya forwent large-scale human testing. Although the scientists at Gamaleya claim not to be directly connected to the Kremlin, the Russian vaccine effort is funded by the Russian Direct Investment Fund, Russia’s sovereign wealth fund created to invest in Russian companies and enterprises. Amidst the multiple layers of conflicting geopolitical and scientific interests, the question of whether or not the Russian vaccine is effective remains, as well as to what extent its announcement was a political gesture as opposed to a genuine attempt at scientific progress for the betterment of global society.

Operation Warp Speed (OWS), the American equivalent to the Russian vaccine effort, aims to manufacture and distribute 300 million doses of a safe and effective coronavirus vaccine to the general public. By investing in various public and private scientific enterprises, including a variety of pharmaceutical and biotechnology companies who are at the forefront of vaccine research, OWS aims to achieve this goal by January 2021. Contributing to the development, manufacturing, and distribution of a coronavirus vaccine, various US government agencies are partnering to advance these efforts both in terms of scientific development as well as its cost, claiming that any vaccine or therapeutic purchased with taxpayer dollars will be provided to the American public free of cost. However, this claim will inevitably be put to the test when billions of dollars in profit are on the line. As this massive effort to produce and distribute millions of vaccine doses focuses on vaccine development itself, the United States plans to distribute the final product nationally first, again prioritizing US access over international needs. Placing this large bet on vaccines and attempting to shrink the development timeline to one year, although the fastest a vaccine has previously been developed is four years, would also have major implications for the public image of the current presidential administration. Regardless of the relative success of OWS, it is evident that the political administration will attempt to capitalize on the positive aspects of scientific development.

The depoliticization of this geopolitical race for scientific sovereignty by focusing on international collaboration and access could lead to a more effective solution and eventually slow the spread of the coronavirus. Russia has offered doses of Sputnik V to countries such as India and Venezuela, recently reviving tensions similar to those of the Cold War. This evident case of competing necropolitical power plays could be de-escalated by impartial, neutral collaboration between countries with the resources to dedicate to the vaccine effort. History has shown that when scientists voice their concerns and stand apart from politics, international efforts to address their concerns and implement tangible solutions can be done more effectively. In the 1950s, scientists’ warnings against the unregulated proliferation of weapons of mass destruction led to a series of non-proliferation conferences. These meetings served as an apolitical means of communication between the global superpowers involved in the Cold War and gave scientists an international platform. The current circumstances could benefit from the development of neutral channels through which scholars can convey scientifically-sound insights with the goal of maximizing global health outcomes.

The Impact of Politicization on Global Access

Despite the increasing politicization of vaccine development by governments, pharmaceutical and biotechnology companies insist on the separation of scientific research and politics. Adding a layer of politics to the rapidly-evolving coronavirus situation detracts from the energy and focus that should be spent on the scientific research aspects of vaccine development: countries such as the United States and the United Kingdom, where national leaders have prioritized politics over public health, have ranked near the top of countries with the highest numbers of COVID-related deaths. Pfizer, which has been developing an mRNA vaccine candidate known as BNT162b2, has made it a point to remain independent of government funding with regards to the coronavirus vaccine, and Pfizer's CEO has expressed disappointment about how the US presidential debates speak about the pandemic in political terms rather than employing a scientific framework. Many hoped that a US-based pharmaceutical company would have developed and been distributing doses of a vaccine by the end of 2020; however, biotech executives have spoken publicly about putting political considerations aside. Many makers of leading vaccine candidates insist on drawing a line when it comes to adhering to the strict FDA regulations for safety testing preceding vaccine approval. Although governments and pharmaceutical companies appear to be at odds about the political and scientific considerations at play, it is evident that focusing on the political aspects of the coronavirus crisis proves dangerous for determining distribution and access. Once a safe, effective COVID-19 vaccine is on the market and/or available, global access should be governed by principles of equity and medical necessity. Despite the potential for political entanglements to interfere with and exacerbate this international public health crisis, access to a life-saving vaccine should be determined by medical need over national wealth and international influence.

Cover Image: Vaccine (21 February 2020). Photo by Anna Shvets, CC0 1.0, accessed via Wikimedia Commons.

06.JAN.2021 . 7 MIN READ

As the coronavirus pandemic began to sweep the globe, health experts, political commentators, and others quickly turned their eyes to Africa. With the 2014-2016 Ebola outbreak in West Africa lingering in recent memory, many predicted a coronavirus nightmare unlike anything seen in decades. On CNN, Melinda Gates, a major advocate for global health causes, said that COVID-19 spread in Africa would result in "bodies out on the street." Forecasters predicted millions of COVID-19 deaths throughout the continent, with untold devastation and damage to the continent's economy, infrastructure, and education. Global forecasts foretold a dark future, one which would threaten millions of lives across the continent.

These predictions, however, turned out to be largely incorrect. Scientific papers and leading experts warned of the risks of a West African pandemic, including high mortality rates and devastation across some of the world's poorest countries. However, many of these nations, especially in West Africa, have defied expectations with far less deaths and infections than many models predicted. In fact, in a strange twist of irony, many of these nations now have lower per-capita case counts than some more developed nations like the United States.

On paper, these results may seem surprising. After all, many Western nations have higher numbers of hospital beds and doctors per capita than West African nations, while also boasting some of the world's largest and most advanced healthcare systems. Meanwhile, medical professionals are scarce in several West African states. In Senegal, for example, there are only about seven doctors per 100,000 people. But despite their limited resources, these states are beating the odds. How?

The answer to that question depends on a variety of factors that have enabled West Africa to respond to the coronavirus pandemic effectively. They include everything from lessons that governments have learned from previous pandemics to rapid and decisive action by political figures and innovative organizational methods that have assisted COVID-19 mitigation even in low resource settings.

Likely, the most important factor for the effectiveness of the West African COVID-19 response has been the speed at which measures have been taken. For example, in Ghana, national lockdowns and travel bans were put in place as the first cases started to appear on the continent in late February. These lockdowns prohibited all major public gatherings, sealed the country's borders to non-citizens or residents, and mandated social distancing measures in order to avoid an outbreak with enforcement conducted by health and security personnel. Self-reported data indicates that substantial numbers of people followed these measures, though some suggest a lower compliance rate than expected due to the number of cases initially seen in the Ghanaian capital Accra.

But, the critical part of these moves was that they occured far earlier after its first cases than when the United States enacted such measures, which helped slow the spread much more quickly. Similar mitigation efforts were made in other nations, like Nigeria and Côte D'Ivoire, after only a handful of cases, which was critical to slow the spread of the virus despite partial noncompliance. If these countries had locked down after tens or even hundreds of confirmed cases, the virus could likely have spread like wildfire throughout this region of the world. As a result, the strategy, while perhaps interpreted as overly cautious, was likely a critical move in helping mitigate the virus.

Additionally, West African states were able to draw on their previous experience with the Ebola pandemic to improve COVID-19 mitigation. Only a few years ago, Ebola became a crisis in this part of the world with thousands of West Africans dying and thousands more infected. In the wake of the pandemic, West African governments reorganized and developed new approaches to prevent another gruesome pandemic. Many countries, like Sierra Leone and Liberia, began reorganizing their health systems to become more efficient and resilient, focusing on how to achieve successful mitigation and care in spite of lower health resources.

As a result, when COVID-19 hit, West Africa was far more ready. Countries like Sierra Leone, which had been a center of the Ebola outbreak, learned from their experiences and took the virus quite seriously. The nation had an effective testing and tracing strategy three weeks before its first cases were confirmed. Meanwhile, intergovernmental organizations, like the World Food Programme and World Health Organization, already had established networks for speaking with local residents and acquiring supplies, which helped ensure that lockdowns and other mitigation efforts would not be too damaging on the population. With these efforts, West Africa's COVID-19 response was far more organized and well-prepared for the storm to come.

With these efforts, West African countries began to boast a rather impressive series of health achievements. For example, Liberia, which once had around 5,000 deaths from Ebola, now has only 82 deaths from the coronavirus. Similarly low COVID-19 figures are also present in Ghana and Sierra Leone as of October 2020, serving as a reminder of how coordinated responses have been broadly successful in spite of the lack of resources in these environments. In many ways, it serves as a testament to how ingenuity and effective planning on behalf of these governments can overcome many of the developmental challenges that harmed pandemic response in the past.

One country in particular, Senegal, serves as a guiding beacon of success. After dealing with Ebola, the Senegalese government created the Health Emergency Operations Center, which has played a key role in coordinating the country's response to COVID-19. For nearly five years, the Center has run simulations of various epidemics and cooperated with international organizations, like the WHO, to create emergency measures that can be rapidly enacted. As a result, when the coronavirus pandemic hit, the Center was in a unique position to act quickly, to oversee the gradual increase in Senegalese testing rates, and to ensure access to hospital beds for those infected with the coronavirus. As a result, Senegal has maintained an extremely low COVID case count, with the country having substantially fewer per capita cases than the US itself.

Now, it is important to note that there are other factors that are actively helping West African societies respond to the pandemic. For example, many of these countries are extremely young, on average. The median age in Sierra Leone is around 19 years old, and other West African societies follow the same trend. The region stands in stark contrast with Europe, where hard-hit states like Italy and Spain have median ages of 47 and 45 years old respectively. Since younger groups are less likely to suffer from debilitating or highly distressing COVID-19 outbreaks, these demographic differences could explain why West Africa's epidemic has not been as severe as other countries.

Additionally, some estimate that up to 80 percent of African COVID-19 cases are asymptomatic, which is almost double the estimates for much of Western Europe. As a result, it is likely that fewer people have died, but detection and testing of cases are harder without symptoms. These countries' true case counts could be much higher than what official statistics report. However, for the West African countries with available data, like Senegal, positivity rates have remained around two percent, indicating only a limited level of viral spread. This result may be due to factors like the lack of transportation infrastructure in some communities, which would prevent infected individuals from traveling and help slow the virus's spread. In addition, several West African states have received medical equipment from other countries, such as the United Kingdom, helping them better cope with increases in cases.

However, despite these factors, the fact that West Africa has not seen the kind of unmitigated community spread seen in the United States is a cause for celebration, especially given the under-resourced or lack of healthcare infrastructure present in these countries. It is a tremendous undertaking to be able to mitigate COVID-19 in any country, let alone in societies that have been recently marred by pandemics and suffer from a host of economic and political issues on their own.

As a result, West Africa can serve as a unique example and lesson for other under-resourced or developing states on how to manage and deal with these kinds of humanitarian crises. While West Africa's success is partially due to some uncontrollable factors, like age, the region's experience does provide some key ideas for other developing countries struggling with the coronavirus, like Brazil or India. While the population sizes are quite different, the models are still able to be scaled up with adjustments. These countries could initiate national pandemic control centers, like those in Sierra Leone, to help coordinate their nations' COVID response and attempt to get the infection under control. In addition, for future pandemics, the West African model could serve as an example of what early lockdown efforts can do, helping motivate other countries to take the same proactive approach.

Regardless, the experience of West Africa with COVID-19 is a unique reminder of a certain phenomenon in international relations. West Africa, and indeed many African states, have long been discounted as prone to endless crises, like hunger and disease, without any way to stop it. But Ghana, Senegal, Sierra Leone, and more have shown the world that this region should no longer be counted out. Rather, it has the potential to innovate and serve as a model to resolve humanitarian crises across the world.

Cover Image: "NHG Continues to Fight COVID-19. 200422-N-VR594-1078"by NavyMedicine is marked with CC PDM 1.0

30.APR.2020 . 6 MIN READ

Primary presidential elections in Argentina in August 2019 saw international coverage and plunging financial markets as then-President Mauricio Macri lost the primary election, and ultimately the general election, to the ticket of Alberto Fernández and Cristina Fernández de Kirchner. The drop in both the stock market and the exchange rate was the latest in a recession that started in the second quarter of 2018. After the election, inflation soared until it reached its highest levels since 1991 at the end of 2019. The new administration in Argentina has tried to blame the crisis almost entirely on Macri’s economic policy, claiming that Macri left the country in “virtual default,” where the new administration cannot pay its debt.

However, drought affecting the Argentine soy crop, increases in US interest rates, and economic trouble in Turkey all came at the wrong time for Macri’s desperate attempts to revitalize the economy, scaring away investors from emerging markets more broadly and hurting Argentina since it also falls in this group. Overspending has been the way of Argentine populism for decades, and Macri’s gradualismo approach to spending cuts, intended to placate the population and retain favor, was not enough for foreign lenders. The blame for the economic spiral of the past months cannot be pinned on any one person or administration. In fact, perhaps it is not economic trouble that stems from a repetitive cycle in government, but rather a populist government that consistently arises from a country trapped in a restrictive economic cycle.

The Perón Legacy

Juan Perón’s address from the balcony of the presidential palace in 1945 marks the rise of Argentine populism, sparking a trend that has continued in the country since that time. A  charismatic leader promising benefits to the working class and advocating anti-United States and anti-British policy, he rose to power on the support of the laborer descamisados. The anti-elitist and anti-imperial stances he took are characteristic of populism, but the reforms that he initiated, like wage increases and financing public works, made him not just populist but popular. That is not to discount his authoritarian tendencies, though—his admiration for Mussolini was well known, and the restriction of constitutional freedoms and corruption within his administration were part of the motivators for the coup that ousted him.

However, time away emphasized his positive reforms and minimized the negatives of his administration, and so, in large part because of the ineffectual nature of the governments that followed him, he was welcomed back in 1972. The legacy that Perón created, especially after being clouded by time, left a population eager to relive a “golden age,” and a government willing to spend beyond its means to achieve it.

The economic context of Perón’s rise to power makes sense: after World War II, Argentina followed protectionist and inward-looking economic policies, which made it so foreign capital did not play as key a role in Argentina’s economy, and policies like import substitution cut off their economy. The Great Depression hit hard, leading to a dissatisfied population—another of the many factors contributing to the default in 1951. Finally, the government encouraged industrial growth during this period, which diverted investment from agriculture and led to a larger urban, working class population, creating the perfect conditions for leaders like Perón to gain popularity.

Legacy is also a huge part of what makes populism so prevalent in Argentina. Juan and Eva Perón were idolized when they were in power, but a resurgence of the popularity of the Peróns came in the context of repeated economic recessions in the 1970s and 1980s. During this time, their influence even spread beyond Argentine borders. The Andrew Lloyd Webber musical Evita, which included the hugely popular song Don’t Cry for Me, Argentina, premiered just four years after Juan Perón’s death in 1974, and after his death he left his third wife Isabel Perón in power because she represented that same legacy. As history shows in Argentina, charismatic figures represent hope during economic turmoil, creating populist dynasties.

The more recent case of Néstor Kirchner and Cristina Fernández de Kirchner gives another example of charismatic figures that Argentina has latched on to in its love affair with populism. Néstor was president from 2003 to 2007, and he stepped down and became First Gentleman for his wife Cristina, who was president from 2007 to 2015. They came to power after a period of incredible instability after failed capitalist reforms in the late 90s, and their administration was responsible for restructuring debt after the massive 2001 default.

The series of defaults in Argentina and the fiscal upheaval that led up to them often came just before the election of populist leaders, who often promised to help and give more to people who had been saddled with all the responsibility for huge amounts of spending that came before their time. Populism makes promises to the people, and in Argentina, the lack of funds has never stopped the government from spending on those promises. The current financial crisis in Argentina is one instance of this, and accompanies a repetitive political cycle that has been in motion since the election of Juan Perón.

Repetitive indeed, because a country that was richer than France, Germany, and Italy at the beginning of the 20th century has defaulted eight times since its independence from Spain in 1816. That the political and economic trends seem to be locked in the same cycle, repeating the same destructive pattern over and over again, is the tragedy of the Argentine economy.

Despite the fact that populism seems to be what Argentina turns to for relief when the people feel that the burden placed on them is unfair, the economic policies of Argentina’s many populist administrations were less than beneficial—economic mismanagement, corruption, and manipulation of statistics in the case of Fernández de Kirchner’s administration did nothing good for the Argentine economy, and some, like TIME magazine, argue that she “ran the country into the ground.” Whatever the quality of Kirchner or Fernández de Kirchner’s economic policy, though, the trigger for the economic instability of their administration and the crisis that spanned the 2000’s was the 2001 default. It is biased to pin the state of the economy solely on Kirchner, or populism in general, since populism is what the Argentine people turned to in the face of that crisis. However, the administration’s chronic overspending initially increased Argentina’s debt even further, and then, once Argentina was shut out of capital markets, led to high inflation through printing more money.

Vultures and Carrion

In 2015, Mauricio Macri inherited an Argentina excluded from global credit markets due to a bitter legal battle with holdout creditors. The dispute was left over from the massive 2001 default of almost US$100 billion, where some funds, called “vultures” or “vulture funds,” refused a renegotiated price of 30 cents to the dollar and demanded to be paid in full. Some of Macri’s first actions after taking office were settling with the holdouts, and lifting currency controls. He implemented a policy of slow and steady changes, or gradualismo, in the hope that he would avoid the unpopularity of previous leaders who tried to institute too many spending cuts.

When the Argentine peso collapsed in 2018, Macri’s gradualismo was brought to a harsh end. In exchange for US$56 billion from the International Monetary Fund (IMF), he significantly cut spending, which destroyed much of Macri’s popularity within the country. As a result, Argentina turned away from him and towards history. Many Argentines dislike the IMF because it demanded austerity measures in order for them to receive a loan. The debt as percentage of GDP is 5 percent in Argentina, quite close in comparison to 4.5 percent in the United States, which means that the market in the United States tolerates debt more than Argentina. That the United States is given more free rein on its debt is determined by the market and other factors, but populism appeals to those who feel that they have been slighted, whether by international markets or other countries.

Looking Forward

The election of Alberto Fernández, with Cristina Fernández de Kirchner as vice president, represents a swing towards the past and towards populism.  Even without Kirchner at the top, Fernández’s ticket still carries and represents the Kirchner name, and with populism, representation and perception is incredibly important. Like the Perón legacy, the legacy that is currently alive and well in Argentine politics is one that advocates high spending and antagonism towards the IMF, the United States, and Great Britain. But that is understandable, given that under Macri’s administration, things have not really gotten better. And so, as the risk of a ninth default looms, especially with continuing inflation and another collapse of the peso in late 2019, the Argentine people have turned to the ones who promise something better.

With a struggling economy and little international help without severe and painful spending cuts, the pro-business Macri has become a representation of a system that has failed them, again and again. As the economy deteriorates, as it has so many times in the past, Argentina has embraced a populist legacy. To turn again to populism is a risk, of course, because the recurrence of overspending means that the economy will likely stay locked in its current place, and future generations must suffer and shoulder the burden. However, Argentina could also just cast that burden off, like they have many times before. Investors have shown that they are willing to re-enter Argentina after a default, so why should now, or the next time—or the next—be any different?

06.NOV.2020 . 4 MIN READ

What will the COVID-19 recovery look like? That question has economists around the world confused and, frankly, slightly terrified. Many of the horsemen of past economic catastrophes appear to be back with a vengeance. Some economists worry about inflation: as consumers regain confidence, go out, and spend their money in stores with empty shelves, prices and wages may be skewed, hurting creditors and investors. But deflation is a much more dangerous alternative, and it is one deemed even more likely by many analysts. As unemployment levels skyrocket, demand will continue to fall even as supply recovers, forcing producers to lower prices. Central bankers and political figures are doing their best to land in between these extremes. Without international coordination, though, it appears that the United States and the European Union will take very different approaches to recovery.

The goal of all recovery policies is stemming unemployment—laid-off workers contribute to both demand and supply-side shocks. Despite agreement on this point, it is in handling unemployment that the United States and European Union have diverged the most. The United States has focused on aggressive stimulus in the form of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in late March, and several other rounds of stimulus. This stimulus took the form of loans to small businesses, corporate subsidies, and direct cash payments. Meanwhile, the EU has taken an approach broadly focused on wage subsidies, meaning that EU countries (as well as many others in other parts of the world, including Canada and South Korea) are paying wages directly to keep workers employed.

At first flush, it seems like the EU took the smarter approach. They kept people working for the first few months of the crisis, while unemployment in the United States spiraled. Moreover, the small US cash payments to workers, controversy around corporate bailouts reminiscent of the Great Recession, outdated unemployment software, and opaque regulations around small business loans have all led to a US unemployment rate of 11 percent. The situation is likely to worsen, too, as structural unemployment (meaning permanent unemployment because of macroeconomic factors), is on the rise.

But the situation is nowhere as clear-cut as it seemed in the middle of June. Since then, the unemployment rate for the eurozone has started to climb closer to 10 percent, as US jobless claims shrink slowly. The eurozone’s protections could be its downfall: about 45 million workers, a third of the total employment base in Germany, France, Britain, Italy, and Spain, are at high risk of losing their jobs, highlighting the dilemma for governments as they plan to amend or extend their subsidies.

Most governments have extended their programs into the fall for fear of huge job losses.  However, policymakers and analysts are increasingly calling for an end to these kinds of programs. The pandemic, they argue, is not simply a short-term “pause” on economic activity, but rather a systemic shift in employment trends. Katharina Utermöhl, a senior economist at Allianz, recently wrote that “Extending job protection will just postpone the problem,” in a study showing that 9 million of the 45 million at-risk jobs are in sectors that are likely to struggle or experience extreme restructuring after the crisis.

In particular, economists have criticized continual employment in sectors such as retail and tourism, which are unlikely to maintain the same pre-pandemic workforce, even if a vaccine became available shortly. In fact, pre-COVID-19 employment in service sectors was inflated to begin with due to a fall in productivity per worker, leading to high employment for the same output. That situation is likely to be reversed in the new normal, as employers react with density restrictions and capital productivity-enhancing measures. Investment in industries that can no longer support workers on their own regardless of government protection is, according to many economists, shortsighted. A continuation of these kinds of policies could lead to a rise in “zombie jobs” in dead-end industries propped up by government subsidies.

Even as the United States has experienced a sharp rise in unemployment claims, and signs of structural unemployment grow, the majority of US unemployment is temporary. US employment laws make it easy for newly unemployed workers to get rehired quickly in a dynamic economy. European officials worry that their economies will soon fall victim to US-like jobless claims, but things might in fact get much worse. Job churn is relatively easy to fix; structural unemployment is not.

Both the United States and the European Union need to think hard about their new COVID-19 toolkits in the coming months. A study from the Peterson Institute suggests that neither body’s approach has been fully correct. There should be some shift toward the US model that provides larger unemployment subsidies, but working with unions and industry to try to preserve sustainable jobs is still essential in large swaths of the economy.

And there is room for policies neither region has considered. So far, both US and EU legislators have ignored debt restructuring for small and medium-sized companies and other aid to help them pay rent. This point is even more important in light of the EU’s July COVID-19 stimulus plan, which includes 750 billion euros (US$826.5 billion) in a mixture of grants and loans. The deal has no provisions for debt restructuring, even as it is likely to increase the debt burden on weak economies like Greece and Italy. That debt is crucial to keep those economies from collapsing in the short term—but it could lead to inflation and debt crises in the long term.

At the time of publication, the United States has yet to pass a continuance on the US$600 weekly unemployment benefits or another major stimulus bill. As in the European Union, having the liquidity and government support to help with unemployment transitions would prevent short term crises and potentially allow governments to prepare for a debt crisis down the road. Doing nothing could lead to higher infection, death, and poverty rates as desperate people seek work, a hard deal to make even if it does lead to a more dynamic economy years down the road.

How else might we plan the post-pandemic economy? Now is the time for testing new ideas and reimagining entire industries. Many countries have put a premium on green infrastructure and growth projects that can boost employment and aid the recovery. Canada is planning on investing in electric vehicle charging facilities, improved water management, and clean-up projects. Meanwhile, some left-wing economists are thinking more seriously about universal basic income and job retraining to ease the pain of higher unemployment over the next few years. One thing is clear: governments all over the world have a lot of work to do if they want to support continued prosperity for their people. Funding for new business will be a critical part of the recovery—whatever that recovery looks like.

04.JAN.2021 . 8 MIN READ

06.MAR.2020 . 7 MIN READ

A Heated Debate

Europe depends on Russia for natural gas, the fossil fuel critical for heating homes, generating electricity, and powering the European economy. As the continent’s domestic gas production declines, Europe’s demand for gas is increasing as it transitions away from coal, oil, and nuclear energy. In 2018, Europe imported 321 billion cubic meters (bcm), 54 percent of the natural gas it consumed. Russia maintained its place as the continent’s preeminent supplier, accounting for over two-thirds of Europe’s gas imports.

European relations with Russia have soured, however, leading to calls for Europe to diversify its energy supply. The gas crises of 2006 and 2009 culminated in Gazprom, the majority Russian state-owned natural gas giant, momentarily ending gas exports intended for Ukraine in the middle of the winter due to a collapse in contract negotiations. Ukraine responded by siphoning off gas intended for other recipients in Europe, harming its reputation as a reliable transit country. Tensions continued escalating after Russia annexed Crimea in 2015, meddled in European elections, and conducted cyberattacks against Eastern European states. Amidst these controversies, some European politicians worry that Russia could threaten to withhold gas supplies in exchange for political concessions.

The most contentious issue of late is the Nord Stream 2 pipeline (NS2), which would circumvent Ukraine to provide 55 bcm of natural gas to Germany. While German Chancellor Angela Merkel and others see the pipeline as a means to providing energy security and meeting climate goals, Eastern European and American politicians largely see it as a means for Russia to control European politics via Gazprom. Estonia's Foreign Minister warned that gas suppliers such as Russia should be prevented from using “energy as a tool for political pressure." Meanwhile, Polish officials referred to NS2 as “a new hybrid weapon” and a “poisoned pill of European security.” Ukraine’s President Volodymyr Zelensky agrees, claiming that dependence on Russia would weaken Europe’s political power.

On the other hand, Gazprom insists that it has no intention of weaponizing energy against its clients. Its management notes that Russia and Gazprom are heavily reliant on Europe, which accounts for the overwhelming majority of its gas exports––and 20 percent of the Russian state budget. European energy and utility companies such as ENI or E.ON have had longstanding relationships with Gazprom, and their management reflect in interviews that Gazprom has been a reliable partner. With the exceptions of the two gas crises, which can be interpreted as the result of Ukraine refusing to pay higher prices, there is little evidence that Gazprom has acted as anything but a normal profit-maximizing company in its international markets. However, there is stronger evidence that Gazprom acts a political tool within Russia.

Injecting itself into the conversation, the American government took an extraordinary measure to sanction Nord Stream 2, thereby halting its construction. American opposition to the pipeline is vehement and bipartisan: a letter from 40 senators described Russia’s gas business in Europe as “coercion and malign influence” and Rick Perry, former Secretary of Energy, called NS2 “a stake through the heart of European stability and security.”

A Supercooled Entrant

Amidst the heated debate around NS2, liquefied natural gas (LNG) has fundamentally reshaped energy markets in Europe. Traditionally, gas is transported to its customers by pipeline, the way Europe has imported gas from Russia for decades. However, gas can be supercooled to -162ºC to become a liquid, which decreases its volume by a factor of 600 and makes shipping it in special LNG tankers economically feasible.

While Europe confronted a gas shortage, the United States transformed into an energy superpower and the world’s biggest producer of oil and natural gas in the last decade. With American gas supply exceeding demand as a result of fracking, US producers sought to export their gas to Europe and Asia where gas sold for higher prices. The Trump Administration has energetically marketed and encouraged LNG, referring to it as “freedom gas” or “molecules or freedom.” American LNG exports surged by 60 percent in 2019, and the United States is expected to become the largest exporter of LNG by 2024.

Moreover, America is not the only nation with a rapidly growing LNG industry—LNG trade has surged globally, growing at a rate of 8 percent per annum. Australia, Qatar, Russia, Mozambique, and Nigeria are also leading the charge. Global export capacity meanwhile has reached 534 bcm a year, with 141 bcm under construction—together enough to fill European demand two times over.

LNG competes directly with Gazprom for the European market. Conventional wisdom asserts that US LNG is too expensive because companies have to take the extra steps of liquefaction, shipping, and regasification. Yet, Harvard Business School models show that because of Gazprom’s price discrimination, US LNG can compete in Eastern Europe with Russian gas under the right conditions such as weak Asian demand, a high price of oil, and low charter rates. Moreover, Qatari and Nigerian LNG are much less expensive to produce than American LNG and can consistently outcompete Russian piped gas on a long-term marginal cost basis.

A More Energy Secure Europe?

Despite the contentious debate surrounding Nord Stream 2, LNG has meaningfully increased the security of Europe’s energy supply.

First, LNG has contributed to changes to Gazprom’s business strategy. Traditionally, Gazprom’s contracts calculated gas prices using formulas based on the price of oil and included controversial take-or-pay clauses where customers would pay for gas they did not want to receive. These contracts were thus removed from the laws of supply and demand for natural gas. Today, Gazprom’s contracts are shorter in duration, more flexible, and increasingly determined by the price of gas at natural gas hubs instead of the price of oil. In fact, in 2018, Gazprom began selling gas by making one-time deals at natural gas hubs via its Electronic Sales Platform, thereby receiving prices based solely on European market forces. In order to compete with other sources of natural gas such as LNG, Gazprom has adjusted its sales practices in ways that make natural gas prices based on supply and demand and therefore less prone to political involvement.

Moreover, LNG has flooded the European market with gas, dramatically decreasing the price of natural gas at hubs. The excess quantity of LNG is filling Europe’s underground gas storage facilities, which act as “savings accounts” for natural gas. Gazprom itself is continuing to partner with European nations to build more underground gas storage capacity, which should increase the security of supply.

The increase in global LNG supply has also encouraged European nations to build more regasification facilities where they can transform LNG back into regular natural gas. LNG import terminals are expanding rapidly, and Europe’s regasification capacity of 241 bcm far exceeds its imports from Russia. By 2025, the Baltic nations’ regasification capacity will be 266 percent of their domestic consumption. Europe has the infrastructure to import vast quantities of LNG in the unlikely scenario of a major gas crisis with Russia.

Finally, LNG has encouraged various pipeline projects that benefit European security. One such project is the Baltic Interconnector, which links Finland with the LNG importing Baltics. Poland is racing to become a natural gas hub by selling American LNG in Eastern European markets and is supporting various transmission projects to make its dream a reality. In summary, LNG is encouraging Europe to become more interconnected in terms of gas infrastructure—and thereby more secure since each nation can supply the others around it.

LNG is not a panacea for Europe’s energy challenges. Nonetheless, LNG has reshaped European energy markets by providing a feasible alternative and reliable backup to Russian gas. Overdependence on any nation for a good as important as natural gas is unwise, but the demonization of Gazprom appears to be more based on political agendas than reality. After all, if Gazprom were to cut off supplies to Europe for political reasons, its profits would immediately plummet along with the Russian state budget. In the long-run, such a measure would lose the trust built over decades of its most important market and send the Russian economy into recession.

In addition to harming the Russian economy, any decision to weaponize energy would result in political consequences detrimental to Putin’s goals. Depriving European nations of gas for an illegitimate reason would likely unite Europe against Russian aggression and disadvantage Putin-sympathetic candidates like France’s Marine Le Pen. Moreover, such a decision could result in NATO stationing more troops in Eastern Europe, an outcome Putin has publicly criticized.

The United States’ sanctions against NS2 are unlikely to prevent the pipeline’s completion, but the sanctions are likely to further fray transatlantic relations. If the United States is concerned about Europe’s energy security, it should instead encourage Germany to proceed with its four regasification terminals to provide backups to Nord Stream 1 and Nord Stream 2. It should also encourage the expansion of underground storage facilities. However, the United States should be cognizant of the limitations of LNG: for countries like Germany, gas from Russia is much less expensive than American LNG. The United States would be mistaken to expect Germany to snub Russia as its main supplier of natural gas in favor of the United States.

As an alternative approach, the United States could pursue domestic reforms such as banning flaring, or the burning of excess natural gas. Energy companies in Texas acquire natural gas as a byproduct of oil drilling, and they often choose to set the precious natural resource aflame. In addition to contributing to the climate crisis, the 14 bcm of natural gas the United States flared in 2018 constitutes enough energy to power the Baltics three times over. The United States government should create incentives to export this natural gas to places like Europe instead of wasting it and creating unnecessary carbon emissions.

In the end, LNG has provided a superb opportunity for Europe to increase its energy security and for the United States to assert its role as the world’s newest energy superpower. American LNG is nonetheless a small part of US-Russian relations and will not fundamentally alter the interactions between the two countries, though sanctions on NS2 undoubtedly antagonize Russia. Neither complacency nor Gazprom-phobia should dictate European energy policy. Instead, sober analysis of what LNG can and cannot accomplish will strengthen transatlantic relations and provide a more stable future for Europe’s energy economy.

This article is a continuation of a Harvard Business School case study co-written by the author.

10.OCT.2020 . 6 MIN READ

Anatoliy Amelin, Andrian Prokip and Andreas Umland

Over the last several years, the future of the European energy supply has become an increasingly geopolitical topic. It has become more and more linked to the questions of security, competing gas transportation routes, and continuously tense Ukrainian-Russian relations. In late 2019, Kyiv concluded a new and beneficial transit agreement with Moscow for the transfer of Siberian gas to the EU, in part due to fresh US sanctions against Russia’s off-shore pipeline projects. This 5-year deal is currently securing the continued use of a part of Ukraine’s large gas transportation system, and as long as Gazprom’s Nord Stream II pipeline through the Baltic Sea does not go forward, the Ukrainian gas transportation system will have some prospect, use, and income.

These well-known confrontations and negotiations concerning different routes of Russian gas supply to the EU, however, diverted attention from the potential of Ukraine’s own gas and oil reserves, as well as the associated storage facilities. The considerable natural resources in Ukraine’s energy sphere remain underexplored and underused today despite the fact that their use could spur economic growth not only in the energy sector, but also in other industries of the country.

Untapped Potential

Excluding Russia’s gas reserves in Asia, Ukraine today holds the second biggest known gas reserves in Europe. As of late 2019, known Ukrainian reserves amounted to 1.09 trillion cubic meters of natural gas, second only to Norway’s known resources of 1.53 trillion cubic meters. Yet, these enormous reserves of energy remain largely untapped. Today, Ukraine has a low annual reserve usage rate of about 2 percent. Moreover, more active exploration may yield previously undiscovered gas fields, which would further increase the overall volume of Ukraine’s deposits.

In spite of this hopeful situation, Ukraine still depends substantially on gas imports. When the USSR started large-scale gas extraction in Western Siberia in the 1970s, much of the relevant expertise and capacity in the sector of Soviet gas exploration and production were transferred from the Ukrainian to the Russian Soviet republic and some other East European states. As a result of this outflow of expertise, Ukraine’s remaining gas resources have remained insufficiently developed, largely underused, and partly unexplored.

Until recently, Ukraine’s total average annual consumption amounted to approximately 29.8 billion cubic meters (bcm). Of this entire yearly need, approximately 14.3 bcm consists of imports. Thus, unlocking its unused reserves would provide for a revolutionary future for Ukraine’s gas sector and energy consumption.

Resolute development of the already explored and accessible Ukrainian resources could result in a substantial increase of Ukrainian gas production. The boost would not only enable the country to fully cover its domestic gas needs, but also make Ukraine largely self-sufficient from an energy perspective. In a best-case scenario, increased production could even allow Ukraine to start exporting gas to or via neighboring European states. This would be feasible because Ukraine’s substantial gas transportation system means that the necessary infrastructure is already in place to bring large amounts of gas to the EU.

According to some estimates, the EU will import around 90 percent of the gas it consumes by 2030. Thus, during the next decade, Brussels will be increasingly eager to diversify the origins and routes of the European gas supply. In this context, smaller or even prospective gas exporters like Ukraine become more attractive to policymakers in Brussels: such new participants in the European market would lower EU dependency on the large players in the field, thus strengthening the European negotiating position.

Despite the enormous potential of Ukraine’s energy reserves, there are non-trivial costs to developing Ukraine’s capabilities. According to an assessment study by the Ukrainian Institute for the Future, a transformation of Ukraine into a self-sufficient energy consumer and potential exporter would require a number of investments amounting to approximately US$19.5 billion. Of this amount, about US$3.5 billion are needed for developing gas fields and building pipelines, US$14 billion would have to be invested into oil extraction, and US$2 billion would go toward oil refining.

The overall size of the investment needed to achieve the goal of full energy independence constitutes a considerable amount compared to Ukraine’s relatively small state budget and GDP. Nevertheless, the sum only equals the approximate costs for current Ukrainian energy imports over the span of two to three years. Thus, the relatively high absolute cost would amortize itself quickly.

Moreover, financial investment in Ukraine’s energy sector is increasingly attractive. Over the last few years, Ukraine has (often under IMF pressure) gradually reduced distortive governmental interventions into the gas market. Kyiv has introduced market prices for households and no longer provides subsidies for all consumers indiscriminately. This relatively new domestic market should make financial engagement in Ukrainian gas production and exploration more attractive than it had been in the past, and the investment climate will improve once European energy markets recover in the aftermath of a likely global containment of the COVID-19 pandemic in 2021.

The Road Ahead

Ukraine’s gas transportation system will continue to play a key role for the future of Ukraine’s energy sector. Ukraine has one of the most well-developed and all-encompassing gas transportation infrastructures of any country in the world, in terms of both domestic deliveries and export facilities. The Ukrainian gas transit system constitutes a heritage of the Soviet energy expansion to Europe, as a partial result of the German Neue Ostpolitik (New Eastern Policy) of the 1970s. For a long time, Ukraine served as the main corridor for the transfer of Soviet and later Russian as well as Central Asian gas to numerous European states. The current usage of this capacity is much lower than a decade earlier due to the completion of the first Nord Stream pipeline in 2012, the growing introduction of renewable energy resources, and the current economic downturn; however, Ukraine’s pipelines and compressor stations are still ready to be used, and have significant capacity beyond merely delivering Russian or Turkmen gas to the EU.

A significant part of the multidimensional Ukrainian gas infrastructure is the huge underground gas storage facilities that the country controls. Only partially used, Ukrainian capacities to store natural gas amount to more than 31 bcm. If fully exploited, Ukraine could hypothetically add almost one third to the approximately 100 bcm of storage space that EU member states currently hold as a whole. Thus, it is no surprise that the energy consultancy Wood Mackenzie recently suggested that Ukraine holds the key to Europe’s gas current storage crunch. As a result of the COVID-19 pandemic, world gas prices plummeted, but the EU’s storage facilities do not have enough space to take full advantage of the situation. To ease foreign concerns about investing in Ukraine, the country adopted some amendments to relevant laws and directives in late 2019—regulatory modifications that should make it easier for foreign firms to use available storage capacity. In response, during the first nine months of 2020, foreign energy firms pumped 7.9 bcm of gas to Ukraine for storage, an amount several times higher than the volume of foreign gas stored in Ukraine during the entire year of 2019.

Hydrogen is another new horizon for Ukraine’s underdeveloped energy industry. Today, various gas distribution companies are examining Ukraine’s pipeline capacities with the hope of converting some of the existing infrastructure to deliver hydrogen to their customers in the future. The EU has identified Ukraine as a priority partner for future collaboration in the use of hydrogen to enhance the Union’s energy supply and security.

Yet another energy form of high potential in Ukraine is biogas. Currently, the country has sufficient capacity to produce circa 10 bcm of biogas annually, a volume that is roughly equivalent to the amount of natural gas that Ukraine imports every year. In view of Ukraine’s currently growing agricultural sector, its capacity to produce biogas may grow further. This capacity is quite future-proof: mixing biogas with hydrogen generates biomethane, an environmentally friendly form of energy that does not contain carbon dioxide.

Boosting Ukraine’s domestic production of natural gas, biogas, hydrogen and biomethane would not only lower or even abolish Ukrainian dependence on energy imports. It would also create a new and potent export-oriented branch in Ukraine’s economy, while also providing impulses for stronger growth in other sectors. At the same time, the EU would benefit from a diversification of its gas supply sources, and from obtaining a new major energy partner in its immediate vicinity. Moreover, such cooperation would strengthen Brussels’ economic ties with Kyiv, and lower the need for Western support for the Ukrainian state. A resolute development of Ukraine’s untapped reserves in the production, export and storage of energy would be in the interest of all sides involved.

Anatoliy Amelin is one of the co-founders of the Ukrainian Institute for the Future in Kyiv, and its Director of Economic Programs.

Andrian Prokip is an Energy Expert at the Ukrainian Institute for the Future in Kyiv, and Senior Associate of the Kennan Institute in Washington, DC.

Andreas Umland is a Senior Expert at the Ukrainian Institute for the Future in Kyiv, and Researcher with the Swedish Institute of International Affairs in Stockholm.