Continental shift: covid-19 grips Europe

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Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. Even before a global pandemic arrived in South America, coastal Colombia faced two crises. A flood of Venezuelan refugees and a costly war on drugs. We share a helicopter with the soldiers burning down coca almost as fast as the cocaleros are planting it. And most of the world's big sporting events have been canceled for the moment, leaving fans with even less to do during their time cooped up. We look into the wider costs of a world without sports and into the possibility of a virus free all star game. But first, The novel coronavirus is finding its way across the globe, but its grip on Europe seems particularly tight. In Italy, the death toll stands at nearly five and a half thousand. The country now has the highest number of fatalities in the world, well beyond the 3,200 deaths reported in China. Third on the list is Spain, where the situation seems to be deteriorating rapidly. More than 1,800 people have died. As with Italy and France, Spain is in strict lockdown. Other European governments are stepping up measures. Yesterday, Germany barred groups of more than two people from gathering, except for families. Meanwhile, Chancellor Angela Merkel isolated herself after discovering her doctor had tested positive for the virus. In Britain, much of the population increased, ignored social distancing advice and spent a sunny Sunday outside. In the evening, Prime Minister Boris Johnson issued a veiled threat of enforcement.

We will keep the implementation of these measures under constant review. And yes, of course, we will bring forward further measures if we think that is necessary.

Italy is simply further ahead in time than most of the world in terms of the virus spread. But even still, the situation there seems curiously dire.

Well, of all the countries in the world, Italy is clearly now the worst affected.

Christopher Lockwood is our Europe editor.

It's one of the great mysteries why the rate in Italy is so much worse than anyone else. The Chinese are using it as a propaganda weapon, in fact, and saying, oh well, that's because the virus actually began in Italy but wasn't reported. Rather than China now, nobody sensibly believes that at all. But it is an enormous mystery and it's particularly odd that it's happened in the very prosperous north of the country. That's where the outbreak has been concentrated, at least initially, which is the place with the best hospitals, well equipped, well resourced, plenty of hospital beds, all of that. It's now been spreading south quite fast and yet still we have this very high rate. Maybe it's because Italians are very tactile, very affectionate, lots of hugging and kissing maybe. But you know, you see that in quite a few countries as well. Not the British, of course, we don't believe in kind of thing. But certainly in other continental European countries you have the same sorts of cultures and we're not seeing it.

And much of the talk has turned to Spain where things seem to be taking a similar turn.

Yes, indeed. Now Spain is clearly now become the third worst affected country in the world. You have Italy first, then China, but then Spain. About half the number of deaths of China, but still substantially more than any other country, with the exception of Iran, which is only a, a bit behind. But it's not getting as much attention as other countries. I'm not quite sure why. I suppose because most of the focus is on Italy. But no, Spain is in a very serious plight. Yesterday the Prime Minister, Pedro Sanchez extended the state of emergency for another 15 days. The country's on pretty severe lockdown, although they haven't stopped all businesses from working. A few businesses are still able to work, but you are very locked down. You're only allowed to be out on the streets if you're traveling from home to, to a place of work. All parks have been closed. Movement is very heavily restricted. So it's got some of the toughest lockdowns of any country.

That does raise the question then of how lockdowns differ across countries. Is there no sense of coordination from Brussels in terms of tackling this in a unified way?

Absolutely. There's no sense in which Brussels is coordinating or uniting any of this? No, absolutely not. In fact, one of the things that will surprise Eurosceptics in Britain is that the apparently all powerful Brussels super state has sort of vanished from the scene here and is doing very little. The European Central bank is doing a lot, but that's another issue that the Brussels infrastructure itself not coordinating policy in any significant way. Now, partly that's because different countries are at different stages of infection, but also it's because when it comes to things like the health service, that's an area where countries have always very jealously guarded their own ways of doing things. And when you're talking about the right of people to move around the streets, to go to a park, to take exercise, you know, that's the sort of area where people very much feel, you know, each country should do it its own way. That said, you know, Britain, who is of course no longer a member of the eu, is way out on the limb on all of this with by far the least stringent measures currently in place of any of the major countries.

But what about aside from major countries where you expect flare ups to happen? Where are the countries that we're not hearing about yet that you expect we will in a bit big way?

Well, the most remarkable case of course the country that we've heard least from, but I'm sure we'll hear a lot from, is Russia. It has a tiny number of reported cases so far, only about 300, similar to Bahrain for example. And yet it's an enormous country, a vast country with 150 million people. And it is not, it's not reporting anything like what many people think must be the reality of the case. Now partly this will be because there isn't much testing going on. Secondly it will be because even if there were, the Russian state is quite good at suppressing unwelcome things and many people think that the true rate of infection is very high. You know, the Russians think they've only got 300 cases. Ridiculous. But maybe they really do believe that because they haven't tested anybody. But people will start dying and when they do, you're going to see this terrible uptick in numbers. And of course the Russians health service, not too bad, but not great by any means.

And so why is it, do you think that the outbreaks seem to be hitting Europe particularly hard or is it just a matter of a better awareness or just greater progression along the outbreak kind of timeline?

Well, I think it's all of those things. Clearly the virus began in China and actually of course you saw pretty rapid spread to some neighbouring countries, but it quite early on started in Europe, probably with this case in Italy, spreading from there. There are a lot of links between Russia and Europe and what you do have in Europe is a very well developed health system in, in many of the countries, good ability for testing. And so in terms of reported cases, almost certainly Europe will have been testing a lot more than most other countries and will therefore be be showing these high numbers at an earlier stage. It doesn't entirely explain why, you know, deaths would be higher in Europe other than that probably it did arrive a bit earlier in Europe than in some other places. We're now starting to see huge spikes in numbers in America too. So, you know, America probably caught the virus not so much after Europe and will catch up. If you look at the map of cases, it's very much clustered along the most economically connected bits of the world, centered on China, Europe, North America and that's where the cases are. Those are also some of the most prosperous bits of the world and therefore places where the testing is being done better.

Which is not to say that places that are less economically connected are going to be hit any less hard in the long run.

Absolutely not. In fact, my horrible fear is that they will be hit very much harder. I'm very terrified about what could happen in Africa and in India when the virus gets going there. It probably did reach there much more slowly. But once the virus arrives, as we see from what happened in Italy, it can begin with one case and then spread out. Now of course, viruses will spread a bit more slowly around the country because within any individual country there is less connectivity. But what you also have in Africa and of course in India is enormous cities. So once it gets into a city, it could spread quite rapidly. If it gets into a slum, it can spread very rapidly. And the slum, and as we know, medical facilities are few to non existent in a lot of slum areas. And certainly what you won't have is any intensive care beds at all. So when it gets into townships in South Africa, I have to fear very greatly for what might happen there.

Chris, thank you very much for your time.

Thank you.

To follow all of the economists coverage of the COVID 19 pandemic and how it's swiftly reshaping the world, visit economist.com Coronavirus.

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Colombia is grappling with two crises, neither of its own making, and the country is buckling under the pressure.

The United States is pressing Colombia to spend huge amounts of treasure and blood on pursuing an unwinnable war on drugs.

Robert Guest is our foreign editor.

At the same time, it's not helping very much with the much bigger crisis that really needs attention, which is the refugees pouring in from Venezuela.

Colombia has watched as neighboring Venezuela has fallen into dictatorship and economic ruin. It's welcomed 1.8 million refugees from the country with open arms. But dealing with the Venezuelan exodus humanely requires cash, and Colombia can't shoulder that burden alone. The COVID 19 pandemic will make matters even more desperate. But Washington wants to Colombia to focus on the drugs.

Colombia is trying to eradicate coca bushes from which cocaine is made. The coca growing takes place in the most lawless, remote parts of the country. We got a sense of what it was like when the Colombian police flew us in a couple of helicopters into one of the areas where they were doing coca eradication. So these are big military helicopters, and we got off and they had dozens of national police armed with automatic weapons to make sure that the drug gangs didn't try to stop the coca eradication process. They also had riot police with tear gas batons, shields and helmets in case any of the local farmers got upset about having their crops destroyed and tried to express themselves with machetes. It's a very high security operation. They have dogs in to sniff for the landmines that the drug gangs sometimes leave in the fields. And then finally the process of actually pulling out the crops, it's done by hand. Two people with spades having to yank and uproot the crops. It's immensely labour intensive. It's dangerous. About 10 people got killed doing it last year and it's completely pointless.

How do you mean? Why?

Last year the Colombian government put a huge amount of effort and they managed to eradicate 100,000 hectares of coca. The cocolaros replanted slightly more than that and they did it with higher yielding crops so that the actual production of raw cocaine went up by about 8%. It's an impossible task. Even if somehow the Colombian government did manage to make a dent on the supply of coca coming out of its country, that would raise the price and give the farmers an even bigger incentive to plant more.

And so why continue the fight then if all it does is spend a great deal of money and cause loss of life and frustration? Why bother?

Well, the Colombian government says that they continue the fight because they're determined to win and they believe in it. But it's more likely that they're doing it because the United States tells them they have to. There's a huge threat that if they are decertified as allies in the war on drugs, that could threaten the aid that they get from the United States and can cause them all sorts of diplomatic problems with their much larger and more powerful near neighbourhood. Donald Trump has expressed great enthusiasm for coca eradication and told the President, Ivan Duquet recently that they had to go back to aerial spraying, which has been stopped before because it's incredibly dangerous for the people on the land if you dump loads of pesticide from planes over fields without checking to see whether anyone's there.

And as you say, all of this effort, useless or not, is going on amidst another enormous crisis in the form of a flood of refugees from Venezuela.

Yes. So if you go to the other side of the country, Colombia has received something like 1.8 million refugees from Venezuela over the past few years. That's multiplied the number of foreign born people in Colombia 14 fold in a really short space of time. And the Colombians have handled it really well. They've let the people in, they've let them work, they've let their kids go to school, they've let them use the Colombian health system. I spoke to the Colombian finance minister and he said that because the Venezuelan refugees tend to work, they'll ultimately contribute to the economy. There's a lot of costs as the population comes in, but then that population gets built into the productive structure of the country and immigration is a net plus over the medium term, however, it's becoming a huge strain. They're coming in such large numbers so fast that it's very difficult for the social services to absorb them. And that's particularly true at a time of COVID 19.

And how is the COVID 19 pandemic affecting the dynamics there in Venezuela?

Because the economy has collapsed there, because the health system is absolutely atrocious. There's no possibility of anyone getting treatment for COVID 19. And that's why just recently, Ivan Duquet, the president of Colombia, closed the border. He said it was a temporary closure to avoid Colombia's health system getting overwhelmed by. And it'd be interesting to see whether that can be Enforced. Given that it's a 2,000 kilometer long border, most of which is pretty much unpolesable. The Colombians are as frightened as anyone about COVID 19 and the idea that they might have to cope with potentially millions of refugees. You know, they're a middle income country, they're not up to this.

So you went to the border and met some of the refugees coming in. I mean, what is the scene there these days?

The scene at the border is pretty tough. I mean, the scale of the economic collapse in Venezuela is extraordinary. During peacetime, the economy's collapsed by two thirds just in a few years. And so people are heading for Colombia. And you see them at the border, you know, some of them sleeping on cardboard and looking desperately for shelter. I was talking to a local Catholic priest running a feeding center there. He was saying he first understood how desperate they were when Venezuelan refugees came across the border and they picked up some dirty pans in his kitchen and he thought they were going to help clean them, but they started licking them instead, and that's how hungry they were.

So it sounds as if each of these crises is only increasing. I mean, how do you see this situation progressing?

It's a perfect storm of tragedies heading Colombia right now. So the pressure on the border is increasing enormously. The Venezuelan economic situation is getting much worse. And as Venezuela gets more desperate, we're seeing different people coming across. As Felipe Munoz Gomez, the Colombian President's advisor on the refugee crisis, told me, the early refugees tended to be healthy young adults who quickly found work. Now we're seeing people with pretty serious health problems. More children, more elderly people.

In the last year and a half, we have received the most vulnerable population, young men and women and children, with nothing.

The IMF calculates that it would cost about one and a half billion dollars a year to treat all the people coming to Colombia humanely. The outside world's contributing less than an eighth of that, and Colombia is doing its best, but it just doesn't have the resources.

And why do you suppose that is? Why is it that Colombia is having to shoulder so much of this financial burden?

The rest of the world pretty much ignored this crisis even before COVID 19 came along. Whereas Turkey can threaten to unleash all the Syrian refugees in Turkey on Europe if the Europeans don't pay them lots of money. Colombia doesn't have that kind of leverage. So it's pretty much been left on its own. And now that there's a global pandemic going on, everybody's attention is elsewhere. And Colombia's likelihood of getting help has just gone down a lot. It would help if they didn't have to spend so much time, effort and money on uprooting coca plants that then just get replanted again. They've got a real crisis going on on their border and in their clinics. They need to concentrate on that.

Robert, thank you very much for joining us.

Thank you.

From Major League Baseball to Premier League football, sports competitions around the world are being delayed or cancelled due to the COVID 19 pandemic, leaving athletes and sports fans wondering how they'll spend their time. Today, Japan's Prime Minister Abe Shinzo conceded for the first time that this summer's Olympics in Tokyo might not go ahead as planned. After he spoke, Canada announced it won't send its competitors and Australia told its athletes to prepare for a year's delay. The country's warned that due to risk of contagion from the virus, the games posed a serious risk to public health.

The events that have already been cancelled include the Euro 2020 international football competition that's postponed for a year.

Philip Coggan is the Economist's Bartleby columnist, writing about the world of work.

The US Masters golf, the French Open, tennis, the National Basketball association season, March Madness in the college basketball, Rugby Union, internationals as well.

And before we talk about anything else, that must have an enormous economic impact.

Yes, it does. There's a huge amount that goes in sports sponsorship. It's about $55 billion a year. Then there's the revenues that come in from watching the games live, but also on television. So it's around 2.3 billion pounds, $2.7 billion a season. Is the revenues for the Premier League football around a billion odd for a National Basketball association as well. And then of course, you've got all those other sports. And on top of all that, people are buying merchandise and they are traveling to the games and then spending money on hotel stays, on trains and planes to get there. So it's a big industry. That's why, of course, so many sports players are so well off.

But money isn't the principal reason that people take such interest in sport.

No, it isn't. I think it's a very important thing for people's sort of psychological well being. 59% of Americans are sports fans. You know, they have a real emotional attachment to their team. People, you know, dress up on the day to go to the game. They might go with their friends to a bar to watch the match. They might wear lucky underpants or, you know, have some other ritual to try and get their team ahead. And then when the game is over, they will either be elated or disappointed. So this is a big thing. And at a time when people are going to be laid off from work and stuck at home, and when there's virtually no alternative entertainment to go and see, cinemas have closed, theaters have closed, concerts are being cancelled, then you know, people are going to be lacking in the kind of entertainment that gives them morale.

And yet, given the situation we have, these kinds of cancellations are entirely understandable.

Of course, you don't want to put lots of people together in a crowd at a time when this virus appears very contagious. And of course nor do you want police, emergency, ambulance services and so on standby to deal with any accidents in the crowd. But Keynes talked after the Great Depression about animal spirits and how important they were. It's the animal spirits that caused businesses to invest and consumers to go out and buy some new consumer goods like a car. And animal spirits are very low at the moment. So finding something a bit more entertaining might be good. So sport can play its part in reawakening the animal spirits of the global public.

But how? With all of these games, all of these sports, all of these competitions cancelled, what's to be done?

Maybe there's a way of getting round the problem if we want to pick up morale. In the Second World War they eventually they came up with alternative ways of keeping everybody entertained. There was a women's league for baseball for example, because the men had been called up into the services and in the army and other services played games. My dad, for example, he played for the army against India in a hockey game in the mid-1940s. So there may be ways of entertaining people and now they can watch on the television or via the Internet. They can watch without actually socially mingling.

But still though you get any kind of team together to play any kind of team sport, that still puts the team at risk.

Yes, it does. So the answer, Tyler Cowen, an American economist, proposed this is that you get an elite group of players, you know, in the, say one league versus another in baseball, or as happens with an all star game, and then you test those players that they're not contagious. You keep them cocooned for a couple of weeks so they don't get infected by anybody else, and then you keep them in that state and you play them inside a closed door stadium so that everybody then can watch on tv. I'm sure it will take a bit of work, but it, it can't be beyond the wit of man, especially if this hiatus is going to go on for months. For example, people can't watch Netflix all day, or at least they will run out of interesting things to see on Netflix after a period. So, you know, some bit of sporting entertainment at a time when consumer sentiment is extremely weak might be just the tonic that we all need.

Phil, thank you very much for joining us.

Thank you very much, Jason.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple podcasts and you can subscribe to the economist@exterator.com radio. Offer 12 issues for $12 or 12 pounds. See you back here tomorrow.

Sam.