World

Crackdown comes in Hong Kong as Covid-19 lockdown set to ease. Oil price plummets as global economies tank. Vanuatu elects new prime minister. Netanyahu and Gantz agree to power-sharing deal in Israel. By Jonathan Pearlman.

Hong Kong emerges to new China threat

Carrie Lam, Hong Kong’s chief executive, speaks to the press on Tuesday about containing the spread of Covid-19.
Credit: China News Service / Li Zhihua

GREAT POWER RIVALRY

United States: On Monday, the price of American oil went into negative territory for the first time in history. Prices dipped to minus $US40.32 a barrel, which is the amount that producers were willing to pay buyers to take it from them.

The drop was caused by a collapse in demand due to the coronavirus pandemic, which has led to the grounding of flights, closures of factories and reduced car usage. The main storage facilities in the US are now full, forcing oil producers to pay to offload their supplies. Adding to the glut, Saudi Arabia and Russia, the world’s largest oil exporters, embarked on a price war before finally agreeing to cut output following pressure from Donald Trump, who wants to protect American producers. Trump said it was a “Great deal for all!”, although the Saudi–Russian cuts were probably not large enough to make up for the plunging demand.

But the negative oil price was not the only indicator of turmoil in the global economy since the onset of Covid-19. China’s gross domestic product dropped 6.8 per cent in the first quarter of the year, compared with the same period last year. This is the first time China has had a contraction since it began reporting quarterly figures in 1992.

Other worrying signals include the 22 million people who have made unemployment claims in the US in the past four weeks, lifting the jobless rate from 3.5 per cent to an estimated 14 per cent or higher. The US federal deficit this year is expected to be $US4 trillion, double the size of any deficit relative to the economy since World War II.

According to the International Monetary Fund, the global recession this year will be the worst since the Great Depression and “far worse” than the downturn caused by the global financial crisis.

THE NEIGHBOURHOOD

Vanuatu: Since its election last month, Vanuatu has declared a state of emergency due to Covid-19 and endured a devastating cyclone that has left up to a third of its 300,000 residents homeless. But, on Monday, the parliament finally elected a new prime minister, Bob Loughman, a veteran MP who received the support of 31 of the country’s 52 MPs.

Loughman’s immediate concern will be to ensure relief is provided to those affected by the cyclone. He will then need to focus on rebuilding as the country recovers from the dual shock of the cyclone and the virus, which has shattered the tourism sector and brought Vanuatu’s economy to a halt.

A doctor in Vanuatu, Jimmy Obed, who was dispatched to a cyclone-stricken area on the island of Espiritu Santo, told Radio New Zealand this week medical teams were seeing up to 200 people a day but had not yet been able to reach remote rural areas.

On Wednesday, Dan McGarry, a journalist in Vanuatu, said in a tweet: “Not sure how to process all this. So I’ll just say it: Lalwari village, less than 5km from Melsisi [on the island of Pentecost]. Everyone is living in 3 houses.”

DEMOCRACY IN RETREAT

Hong Kong: Since January, the streets of Hong Kong, which had previously been the site of mass pro-democracy protests and violent confrontations with police, have been largely empty due to the coronavirus outbreak.

But the city has begun winding back its Covid-19 lockdown and was this week preparing to end its ban on public gatherings of more than four people. The impending resumption of normality appears to have prompted a pre-emptive crackdown by police, who arrested 15 of the city’s best-known pro-democracy campaigners.

The alleged “radicals” included Martin Lee, an 81-year-old barrister and former legislator who is known as the “father” of Hong Kong democracy, and Jimmy Lai, a 71-year-old publisher of an anti-government newspaper. Lee has been campaigning for democracy for 40 years but had never previously been arrested. Police charged the group with organising and taking part in unlawful protests.

Rights groups said the Beijing-backed government was using the cover of the pandemic to take revenge on veteran democracy advocates and to send a warning to future protesters. In addition to the arrests, the new head of China’s office in Hong Kong, Luo Huining, has urged the city’s government to pass a national security law to combat radical violence, foreign interference and pro-independence forces.

But these moves are likely to only further motivate the pro-democracy protesters. Despite the lockdown, the movement has continued its activities in recent months, including organising a medical worker strike and importing and distributing medical masks.

The protests and mayhem in Hong Kong in the past year – along with a decisive victory for pro-democracy candidates in district council elections – have severely embarrassed Beijing.

China now appears to be signalling that, when the pandemic is over, it will continue to intervene, and possibly more forcefully.

SPOTLIGHT: ISRAEL’S TWO PMs

After three elections in a year, Israel has a new government.

On Monday, Benjamin Netanyahu, Israel’s longest-serving prime minister, signed a power-sharing deal with Benny Gantz, a former military chief. Netanyahu will remain in office for 18 months and is then due to hand over to Gantz.

The deal ends a long-running stalemate, in which neither leader was able to form a majority coalition. But it also marks a stunning turnaround by Gantz, whose entry into politics and successive election campaigns were based on his insistence that Netanyahu, who faces corruption charges, is unfit to rule.

Gantz previously refused to share power with Netanyahu’s Likud party unless it appointed a new leader. But he will now serve as Netanyahu’s deputy prime minister and defence minister.

Gantz said his backdown was prompted by the Covid-19 pandemic, which has led to a nationwide lockdown. But he faces an electoral backlash and his Blue and White party has disintegrated. Yair Lapid, a former ally, has broken away and now leads the opposition.

Netanyahu’s corruption trial is due to begin on May 24. The deal includes a provision that Israel will automatically hold another election if the Supreme Court rules that he cannot serve as prime minister while facing charges.

The deal also allows Netanyahu to push ahead from July 1 with a proposal to annex parts of the West Bank, a move that is opposed by much of the international community but was endorsed by Donald Trump’s peace plan. The Palestinians say annexation will end any prospect of a negotiated Israeli–Palestinian peace agreement.

Netanyahu insists he will hand power to Gantz as agreed. “No tricks,” he said recently. Gantz has tried to protect himself by including a provision that if Netanyahu reneges and calls an early election, Gantz automatically becomes prime minister for an extended transition period.

Still, an opinion poll this week found that just 31 per cent of Israelis believe Netanyahu will vacate the prime minister’s office as planned.

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This article was first published in the print edition of The Saturday Paper on Apr 25, 2020 as "Hong Kong emerges to new China threat".

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Jonathan Pearlman is The Saturday Paper’s world editor and the editor of Australian Foreign Affairs.