COVID-19 is a sharp reminder of why trade and climate policy matters. How can governments maintain access to critical goods and services, and ensure global supply chains function in times of crisis?

The timing of many trade negotiations is now increasingly uncertain, as are the UK’s plans to host COP26 in November. Policy work continues, however, and the EU has released its draft negotiating text for the new UK-EU trade deal, which includes a sub-chapter specifically devoted to climate. 

This is a timely reminder both of the pressing need for the UK to integrate its trade and climate policymaking and to use the current crisis-induced breathing space in international negotiations - however limited - to catch up on both strategy and priorities on this critical policy intersection.

The UK government has moved fast to reset its external trade relations post-Brexit. In the past month it formally launched bilateral negotiations with the EU and took up a seat at the World Trade Organization (WTO) as an independent member. Until the COVID-19 crisis hit, negotiations were also poised to start with the US.

The UK is also in the climate spotlight as host of COP26, the most important international climate negotiation since Paris in 2015, which presents a vital opportunity for the government to show leadership by aligning its trade agenda with its climate and sustainability commitments in bold new ways.

Not just an empty aspiration

This would send a signal that ‘Global Britain’ is not just an empty aspiration, but a concrete commitment to lead.

Not only is concerted action on the climate crisis a central priority for UK citizens, a growing and increasingly vocal group of UK businesses committed to decarbonization are calling on the government to secure a more transparent and predictable international market place that supports climate action by business.

With COP26, the UK has a unique responsibility to push governments to ratchet up ambition in the national contributions to climate action – and to promote coherence between climate ambition and wider economic policymaking, including on trade. If Britain really wants to lead, here are some concrete actions it should take.

At the national level, the UK can pioneer new ways to put environmental sustainability – and climate action in particular - at the heart of its trade agenda. Achieving the government’s ambitious Clean Growth Strategy - which seeks to make the UK the global leader in a range of industries including electric cars and offshore wind – should be a central objective of UK trade policy.

The UK should re-orient trade policy frameworks to incentivize the shift toward a more circular and net zero global economy. And all elements of UK trade policy could be assessed against environmental objectives - for example, their contribution to phasing out fossil fuels, helping to reverse overexploitation of natural resources, and support for sustainable agriculture and biodiversity.

In its bilateral and regional trade negotiations, the UK can and should advance its environment, climate and trade goals in tandem, and implementation of the Paris Agreement must be a core objective of the UK trade strategy.

A core issue for the UK is how to ensure that efforts to decarbonise the economy are not undercut by imports from high-carbon producers. Here, a ‘border carbon adjustment (BCA)’ - effectively a tax on the climate pollution of imports - would support UK climate goals. The EU draft negotiating text released yesterday put the issue of BCAs front and centre, making crystal clear that the intersection of climate, environment and trade policy goals will be a central issue for UK-EU trade negotiations.

Even with the United States, a trade deal can and should still be seized as a way to incentivize the shift toward a net zero and more circular economy. At the multilateral level, as a new independent WTO member, the UK has an opportunity to help build a forward-looking climate and trade agenda.

The UK could help foster dialogue, research and action on a cluster of ‘climate and trade’ issues that warrant more focused attention at the WTO. These include the design of carbon pricing policies at the border that are transparent, fair and support a just transition; proposals for a climate waiver for WTO rules; and identification of ways multilateral trade cooperation could promote a zero carbon and more circular global economy.  

To help nudge multilateral discussion along, the UK could also ask to join a critical ‘path finder’ effort by six governments, led by New Zealand, to pursue an agreement on climate change, trade and sustainability (ACCTS). This group aims to find ways forward on three central trade and climate issues: removing fossil fuel subsidies, climate-related labelling, and promoting trade in climate-friendly goods and services.

At present, the complex challenges at the intersection of climate, trade and development policy are too often used to defer or side-step issues deemed ‘too hard’ or ‘too sensitive’ to tackle. The UK could help here by working to ensure multilateral climate and trade initiatives share adjustment burdens, recognise the historical responsibility of developed countries, and do not unfairly disadvantage developing countries - especially the least developed.

Many developing countries are keen to promote climate-friendly exports as part of wider export diversification strategies  and want to reap greater returns from greener global value chains. Further, small island states and least-developed countries – many of which are Commonwealth members – that are especially vulnerable to the impacts of climate change and natural disasters, need support to adapt in the face of trade shocks and to build climate-resilient, trade-related infrastructure and export sectors.

As an immediate next step, the UK should actively support the growing number of WTO members in favour of a WTO Ministerial Statement on environmental sustainability and trade. It should work with its key trading partners in the Commonwealth and beyond to ensure the agenda is inclusive, supports achievement of the UN Sustainable Development Goals (SDGs) and helps developing countries benefit from a more environmentally sustainable global economy.

As the UK prepares to host COP26, negotiates deals with the EU and US, and prepares for its first WTO Ministerial meeting as an independent member, it must show it can lead the way nationally, bilaterally, and multilaterally. And to ensure the government acts, greater engagement from the UK’s business, civil society and research sectors is critical – we need all hands on deck to forge and promote concrete proposals for aligning UK trade policy with the climate ambition our world needs.

In the face of the COVID-19 pandemic, many global leaders have invoked war analogies – from the Pearl Harbor attack to the collective spirit on display during the Second World War – to highlight past lessons learned or rally their populations.

For Iran’s leadership, more recent war analogies hold resonance and help explain the ideological and political conundrum limiting an effective COVID-19 response. While the Islamic Republic has weathered a multitude of challenges, COVID-19 is putting unprecedented strain on Iran’s already fragile, heavily-sanctioned economy and further exposing domestic political fissures amid ongoing international tensions.

Iran has been identified as the regional epicentre of the pandemic with a steadily rising number of deaths, including several of the country’s political and military elite. Yet the Iranian government has not evoked the collective memory of the war as an opportunity for national resistance and mobilization.

Sluggish and poorly managed

This is unsurprising, because thus far the Iranian government’s response to COVID-19 has been sluggish and poorly managed. After an initial slow response, Iran then attempted to downplay the impact of the virus, covering up the number of cases and deaths and blaming the United States, before implementing a poorly coordinated action plan marred by government infighting.

For the Iranian leadership, the Iran-Iraq war has been the single most influential and defining period – it has impacted its political ideology, domestic and security policies and international relations. More than half a million Iranians died, and a paranoid worldview and sense of isolation was cemented among many elite leaders such as Supreme Leader Ali Khamenei.

The war created a valiant culture of leadership from Qassem Soleimani to presidents Mahmoud Ahmadinejad and Hashemi Rafsanjani and, over time, has resulted in the development of Iran’s asymmetrical defense capabilities.

The war enabled a dark purge of political opponents and the gradual birth of Iran’s reformist faction, all while the ethos of sacrifice and martyrdom was linked to the collective notions of resistance.

These would be carried forward in other resistance campaigns both regional and economic. Most defining was Ayatollah Khomeini’s infamous 1988 decision to ‘drink the poisoned chalice’ and end the long war. Three decades later, Iran continues to contend with those outcomes.

To acknowledge that the COVID-19 crisis could have equally profound consequences would add further pressure to the Islamic Republic at a time of incomparable vulnerability. Even before this crisis, the Iranian government linked sanctions to economic warfare, making future negotiations conditional on sanctions relief.

Iranian hardliners used the opportunity to promote Iran’s subsistence-based resistance economy designed to insulate Iran’s economy from external shocks such as sanctions. While both groups recognize the economic urgency, their contending strategies help explain the muddled government response and the ongoing ideological competition between the political elites.

Rouhani has argued that a full lockdown of the Iranian economy is impossible because it is already under significant strain from sanctions - the Iranian economy experienced a 9.5% contraction in 2019 and is expected to worsen in the coming year.

That said, through Iran’s New Year holidays the government did take action to slow the spread of the virus, discouraging travel and shutting schools, pilgrimage sites and cancelling Friday prayers. Finally, on 4 April, after receiving permission from Khamenei to do so, Rouhani withdrew $1 billion from Iran’s National Development Fund and is distributing the money through loans and credits to 23 million households.

Aid from a number of Iran’s parastatal agencies was also announced. Conversely, in his annual New Year’s speech the supreme leader securitized the crisis by laying blame on the United States for spreading the virus as a form of biological terrorism. Iran’s army chief of staff Major General Bagheri was tasked with building hospitals and the Islamic Revolution Guard Corps given authority to clear the streets.

The recent expulsion of Médecins Sans Frontières from Iran highlights the mix of paranoia and resistance culture still on display. US sanctions on Iran have significantly weakened Iran’s economy and limited Tehran’s ability to purchase much needed medical supplies and equipment. Unable to access its foreign reserves due to sanctions, the Rouhani government has applied for a $5 billion loan from the IMF.

European countries alongside a number of US members of congress have appealed to the Trump administration to ease sanctions on humanitarian grounds. While Washington continues to pursue its steadfast approach, referring to Iran’s campaign as a ‘sanctions relief scam’, Germany, France, and the UK have offered $5 million in aid and launched INSTEX – a trading mechanism designed to circumvent sanctions to allow non-sanctioned humanitarian trade.

The impact of coronavirus on Iranian society remains to be seen. But the impact of sanctions has placed heavy economic and psychological burden on the people. Feeling abandoned by the Iranian state and the United States could produce a mix of contradictory nationalistic and independent impulses.

The social contract – already fragile amid protests and government repression – reveals declining trust. Without national mobilization and calls for unity reminiscent of the war period, Iranians have stepped in, highlighting the continued resilience of civil society. Support for the medical establishment has been celebrated throughout the country and on social media. Charities, the private sector - through one initiative known as Campaign Nafas (Breathe) - and diaspora groups have initiated fundraising drives and assistance measures.

Iran’s relations with the international community, and specifically the United States, remain an unresolved consequence of the war. The 2015 Iranian nuclear agreement was the closest Tehran and Washington came to resolving decades of tensions, containment and sanctions.

COVID-19 has further heightened the trajectory of tensions between Tehran and Washington suggesting that any new deal, while necessary, is not on the cards. Tit-for-tat military exchanges have been on the rise in Iraq and Yemen while American and Iranian leaders issue threats and warnings of potential escalation.

Abdullah Nasseri, an advisor to Iran’s reformists, recently stated that in order to manage the coronavirus crisis, the Iranian government needed to make a decision akin to the 1988 United Nations resolution 598 that ended war hostilities. Ayatollah Khomeini famously commented on that ceasefire, stating: ‘Happy are those who have departed through martyrdom. Unhappy am I that I still survive.… Taking this decision is more deadly than drinking from a poisoned chalice. I submitted myself to Allah's will and took this drink for His satisfaction’. 

While a similar compromise today might appear deadly to the political establishment, it is clear that a paradigm shift away from the shadows of Iran’s last war is urgently needed to manage the challenges stemming from COVID-19.

Nigeria is better placed than many to respond to the arrival of the coronavirus disease. In 2014, it successfully contained a deadly Ebola virus outbreak and the country’s current score on the Epidemic Preparedness Index (38.9 per cent) is higher than the African and global averages.

But the outbreak is compounding Nigeria’s numerous pre-existing crises. It was already grappling with a Lassa fever outbreak that has claimed more than one hundred lives in 2020, the aftermath of recession, and conflict and insecurity within its borders.

Effective leadership to build confidence will be vital. However, President Muhammadu Buhari has made few appearances, delivering his first speech on Nigeria’s response more than one month after the country’s first recorded case. And the indefinite suspension of meetings of the Federal Executive Council has raised questions on the efficacy of the response.

Extended lockdown imposed

The recent loss of President Buhari’s steadfast chief of staff Abba Kyari as a result of contracting COVID-19 is a further significant setback for the presidency. But the administration has established a presidential task force to develop a national strategy and an extended lockdown has been imposed on the most affected states – Lagos, Ogun and the Federal Capital Territory of Abuja. The country has also closed national borders and is expanding testing capacity to 1,500 per day.

However, when Nigeria’s first case was recorded on February 27 it was state governments that initially took action – shutting schools, closing state borders and imposing lockdowns. Going forwards, the 36 state governments will have a key role to play although their governance capacity and commitment varies widely.

The federal government has released $2.7 million to support the Nigeria Centre for Disease Control (NCDC), and promised an additional $18 million – but this falls well short of the estimated $330 million needed to tackle the coronavirus disease in Nigeria. The government is looking to its private sector to help make up the difference. The country’s finances are under severe pressure with Nigerian crude oil – the main source of government revenue and foreign exchange reserves – selling for as low as $12 or $13 a barrel (with production costs of around $22 per barrel), and a debt servicing to revenue ratio of more than 50 per cent even before the oil price crash.

Facing its second recession in four years, with -3.4 per cent GDP growth forecast by the IMF, the country has little economic resilience. Nigeria will not be able to sustain restrictions on its 81.15 million-strong workforce, 83.2 per cent of which operate in the informal sector. One area at particular risk is food security, as the pandemic is disrupting farming, supply chains and trade. By building on past benefit programmes, the federal government is providing cash and distributing food to vulnerable households, but this important effort is being hampered by poor communication, inefficiencies and a lack of transparency – longstanding challenges in many aspects of public service delivery in Nigeria.

In the absence of a reliable social safety net, Nigerians trust and rely on their families, communities and the informal economy to see them through difficult times. It is these informal mechanisms that lend Nigeria its oft-referenced resilience, which has enabled society to function and continue while a largely disconnected political class has focused on self-enrichment.

It is through these traditional channels that the government will need to deliver information, support, testing and treatment. But without high levels of trust, the administration may find it difficult to do so. Many Nigerians initially considered the pandemic a hoax, some describing it as a ‘rich man’s disease’, while others see it as another conspiracy by politicians to loot the treasury.

Lockdown measures have also heightened tensions across the country. Some citizens are rebelling and in one instance burned down a police station in response to the closure of mosques in Katsina state. Marking a further breakdown in the relationship between the population and its leaders, the Nigerian National Human Rights Commission (NHRC) recently reported security services enforcing the lockdown have extrajudicially killed 18 people, while, so far, COVID-19 has killed 25 people in Nigeria.

Mitigating the spread and worst consequences of the virus will depend on the state rebuilding trust with its citizens through effective communication and action. It is particularly important that the community mechanisms of support are protected as they come under growing pressure as communities become increasingly affected by the virus.

The stark choice facing most Nigerians – between risking starvation and risking contagion – means a sustained lockdown is not a tenable option. People will choose to go to work. This will especially be the case as people grow weary of measures imposed upon them by a state that the vast majority of the population believe does not serve or care for them.

Having largely ignored the needs of Nigeria’s citizens for decades, the political class face an uphill battle in building trust with the population. Earning this trust is not only crucial for the struggle against COVID-19 but also for Nigeria’s longer-term progress and system of political governance.

In the COVID-19 crisis so far, Cyril Ramaphosa has been widely praised for displaying the decisive leadership so many hoped for when they cast their ballot for him in May 2019. Buttressed by others such as health minister Dr Zweli Mkhize, and on a simple objective to prevent transmission, South Africa has been a lesson to the world. Act fast. Act hard.

Former president Thabo Mbeki’s disastrous response to the HIV crisis cast a long shadow over his legacy, and Ramaphosa has taken note. South Africa has had one of the tightest lockdowns in the world. No exercise. No cigarettes. No alcohol.

The lockdown was imposed when the country had only around 1,000 recorded cases and just two deaths. As a result, transmission from returning travellers has not yet led to an exponential infection rate within the community. The government’s swift reaction has bought much needed time with the peak now seemingly delayed to September or October.

Continental and national leadership

Ramaphosa has also emerged as a key focal point for Africa-wide responses. As current chair of the African Union (AU) he leads the continental engagement with the World Health Organization (WHO), and the various international finance institutions, while South African officials are working with the AU and the United Nations Economic Commission for Africa (UNECA) on a push for African debt restructuring.

He has also been active in trouble shooting to unlock external assistance to the continent, including from China and Russia. Appointing special envoys is typical of his boardroom-honed leadership style.

International and regional partnerships are vital for resilience and the arrival of 217 Cuban doctors to South Africa is strongly reminiscent of the liberationist solidarity of the Cold War era. And regional economies remain dependent on South Africa to protect their own vulnerable citizens. Following the 2008 financial crisis, it was South Africa’s regional trading relationships that remained robust, while trade with its main global partners in China and the US dropped.

Despite the plaudits, Ramaphosa remains vulnerable to challenge at home, notably around his failure to stimulate South Africa’s moribund economy. On the eve of lockdown, Moody’s joined its peers Standard and Poor’s and Fitch in giving South Africa a below investment grade credit rating. The move was a long time coming. Long mooted economic reforms were slow to materialise, and South Africa had fallen into recession.

Ramaphosa depends on a small core of close advisors and allies, initially united in apparent opposition to the kleptocratic rule of President Jacob Zuma and the deep patronage networks he created within both the party and the state. But this allegiance is being tested by economic reality. Support within the party was already drifting prior to the crisis.

Disagreements are not just technocratic – there are big ideological questions in play around the role of the state in the economy, the level of intervention, and its affordability, with key government figures sceptical of rapid market reforms. Energy minister and former union stalwart Gwede Mantashe is wary of job losses, and minister of public enterprises Pravin Gordhan protective of state-owned enterprises (SOEs). Before coronavirus hit, Ramaphosa seemed content to allow these policy disputes to play themselves out with little decisive intervention.

Slow progress on reform, against worsening economic performance, left Ramaphosa and his allies exposed. In January the president missed the UK’s African Investment Summit in order to assert control over a party meeting at which it was expected his detractors would seek to remove Gordhan.

COVID-19 has sharpened thinking

As the independently assertive - and eminently quotable - pro-market reformist finance minister Tito Mboweni stated, ‘you can’t eat ideology’. Accelerated reform and restructuring is required if the government turns to the International Monetary Fund (IMF) for assistance.

For the first time, Gordhan has been forced to deny a bailout to beleaguered state airline South African Airways (SAA), and the government’s lockdown bailout of R300 billion has been applauded by business. Much like the fiscal stimulus and recovery plan of 2018, it relies on smart spending, targeting sectors with high multiplier effects. It also includes significant reserve bank loans.

But it has been criticised for not doing enough to help the most vulnerable. There is considerable fear of what could happen when the virus takes hold in South Africa’s townships and informal settlements where social distancing is almost impossible, basic toilet facilities are shared, and HIV and TB rates high.

There are mounting concerns of the humanitarian cost of a prolonged lockdown, and the government has been faster than others in implementing a tiered lockdown system, trying to get people back to work and keep the economy afloat.

South Africa has been criticized by the UN for the use of lethal force by security forces in enforcing lockdown and, in a society plagued by corruption, there are fears legislation to stop the spread of false information could be used to restrict legitimate reporting on the virus response or other issues.

COVID-19 shines a spotlight on societies’ fault-lines worldwide. South Africa is often touted as having one of the highest levels of inequality in the world but, in a globalized economy, these divisions are international as much as they are local.

Resilience comes from within, but also depends on regional and global trading and financial systems. South Africans and international partners have long recognised Ramaphosa’s leadership qualities as an impressive voice for the global south.

But he must also be an advocate for South Africa’s poor. This crisis could accelerate implementation of his landmark pro-poor National Health Insurance and Universal Health Care programmes. Or the hit of COVID-19 on top of South Africa’s existing economic woes could see them derailed entirely. Ramaphosa must push through economic reforms at the same time as managing COVID-19 and rebuilding trust in his government.

One of the key messages at the heart of Volodymyr Zelenskyy’s presidential campaign in 2019 was a very simple one: peace in Donbas, the war-torn region of Ukraine where Russian-supported separatists continue to fight a war against the Kyiv government. Zelenskyy’s message was based on the assumption that if a ceasefire could be respected, and all Ukrainian prisoners-of-war could return home, then peace would have been achieved.

Nine months after Zelenskyy’s inauguration and two months after his first Normandy Four summit (which brings together Germany and France with Ukraine and Russia to discuss Donbas), it appears more likely that this approach will lead Ukraine into a Russian trap.

Zelenskyy’s very immediate objectives and the tactics used to achieve them contrast with those of the previous president, Petro Poroshenko. Zelenskyy has pointedly avoided naming Russia as an aggressor and has focused on humanitarian issues and seeking compromise wherever possible, including in legal cases that Russia has already lost in international courts.

In contrast, President Poroshenko prioritised the security agenda as a precondition for any political settlement, encapsulated in the notion of ‘no elections without security guarantees’. This focused on regaining control of the border and the demilitarization of the separatist-controlled territories. At the same time, Poroshenko sought remedial action for Russian aggression through international courts. 

Kyiv is testing the Kremlin’s real intentions with a series of small steps without clearly communicating its overarching objectives. This has triggered considerable social disquiet, manifested by demonstrations in Kyiv and other cities as part of the ’No capitulation’ campaign. This wave of criticism forced Zelenskyy’s team to name certain red lines, which he promised he would not cross (‘we don’t trade territories and people’) in pursuit of conflict resolution.

Other key issues, such as Ukraine’s relations with the EU, future NATO membership, language issues and any possible ‘special status’ for Donbas, have been left undefined.

Two months since the Normandy summit, the number of casualties has not declined. It is increasingly difficult for Zelenskyy to argue that disengagement by Ukraine’s army from the contact line in three locations, which was a precondition for the December Normandy Four meeting, is a way to achieve peace.

The separatists continue to significantly impede the OSCE’s special monitoring mission, a full ceasefire is not being observed and there are numerous reports of heavy weapons movements closer to the contact line in the areas outside Kyiv’s control. These issues are particularly problematic as control over the border with Russia is essential for the demilitarization of the ‘people’s republics’, which is a prerequisite for the safe reintegration of these areas.

Conducting local elections in autumn 2020 is a top priority for the new team, but it is clear that even if Ukraine regains control of its border, the presence of Russian military personnel and weaponry in Donbas threatens the prospect of free and fair elections (which themselves raise the further issue of how to ensure the integrity of the votes).

Russia’s strategy

So despite Zelenskyy’s pacifist rhetoric, hopes and ambitions, his plans are far from being realized or, in fact, realizable. This is because these plans are at odds with Russia’s strategic objective, which is for Donbas to be conferred a status whereby it is de jure within Ukraine but de facto under Russian control and influence.

Zelenskyy’s media-friendly appearance in Paris in December 2019 could not mask the fact that the Normandy Four talks exposed the weakness of Ukraine’s position and the growing influence of Russia’s approach, particularly in the context of a disengaged UK and US, a Germany increasingly tired of this conflict, and a French president who is looking to accommodate Russian preferences.

Indeed, Vladimir Putin was able to exploit the opportunity to apply his favoured formula for conducting foreign policy: highly personalized informal interactions, which seek specific political concessions from a cornered partner and which are short on transparent, stable and law-based solutions. The Paris meeting of the Normandy Four in December 2019 clearly demonstrated that simply sitting down and talking to Putin is not a magic pill to end the conflict, an idea frequently expressed by Zelenskyy.

In 2020, the strongest clue as to what Putin’s plans for Ukraine might be is the appointment of Dmitry Kozak as the main curator of the ‘Ukraine file’ (meaning Donbas and Crimea), replacing Vladislav Surkov, his long-time competitor for the role. The next Normandy meeting is expected in April 2020, and Kyiv should be aware of the possible pitfalls.

While Kozak is perceived by some as a more pragmatic and less aggressive counterpart, his past tells a different story. In fact, he was the architect of the long-term strategy for Moldova, which centred on the federalization of Moldova and the reincorporation of the separatist region of Transnistria into Moldova.

The presence of Russian military forces stationed on the ground there amounts to ‘armed suasion’ – using a military presence to demand political concessions from Moldova. The so-called ‘Kozak memorandum’ – which de facto re-writes the constitution of Moldova – contains a detailed explanation of that strategy.

Kozak could try to deliver a similar situation for Ukraine. Less emphasis is being put on specific terms (federalization vs. special status) but the overarching aims are unchanged since 2014, in the same way they have been in Moldova since 2003. Kozak is a man who can play the long game, while the team of the Ukrainian president chases quick successes without calculating long-term risks. This could be a dangerous combination.

The ‘human-centric approach’ to resolving the conflict followed by President Zelenskyy is a double-edged sword. The focuses on humanitarian issues and readiness for big compromises are clear positive signals to Western partners and supporters of Zelenskyy’s Servant of the People party. But prioritizing humanitarian issues over national security considerations could easily lead Ukraine into a Russian trap, which does not so much rely on a massive military assault but envisages creeping control over Ukraine’s future as its ultimate goal.

After a tumultuous 2019 when Moldova witnessed the end of the Plahotniuc era, the country seems bound for an equally difficult year ahead.
 
Increasing international isolation, a temporary working coalition between the Socialists and the Democrats, concentration of power and resources in the hands of President Igor Dodon, and presidential elections in autumn are among the ordeals to be discussed at this event. Ms Sandu will assess how Moldova can move beyond these challenges and return to a path for sustainable democratic reform.