Published on: March 5, 2020
A second informal discussion between T&P Managing Director, Glenn Cezanne & Senior Strategic Advisor, Joachim Marnitz on questions people in public policy and politics are asking regarding COVID-19. This time on how countries are handling the crisis and where the lack of international trust and cooperation causes political self-quarantine.
Published on: March 5, 2020
G. Cezanne: Corona here, Corona there. The conversations are more and more dominated by this “pandemic”. I was thinking that it really is an opportune moment for a government to push through unpopular policy who has made their poster child the capacity to handle the crisis. Easily done if people’s trust is reinforced or media noise is swamped by discussions about the virus.
On the other hand, it seems that more and more countries are actually trying to keep the panic at bay with suppressed information. It makes sense to do so, no matter if I agree with it or not, but the virus is not working in their favour. The nature of it itself due to the long incubation period spells out difficulties in keeping track of who is infected; especially if you don’t have the infrastructure in place.
And, governments seem to have to cope with their reputation management, both inside the country and out, both as a political party and an export champion. “Everything is under control, people!” Realpolitik comes to my mind when I think about the capacity of a government to govern. Carl von Clausewitz once said: “Even with the violence of emotion, judgement and principle must still function like a ship’s compass, which records the slightest variations however rough the sea”. Is it too late for some countries?
J. Marnitz: Iran is an interesting case because they suppressed information as long as they could. The virus came to Iran very early, and most likely through the train route between Yiwu in China and Tehran. And, it has been spreading for a long time; probably longer than any other country outside of China. It has now gotten to the stage where it's obvious the country is falling apart. Just like in Wuhan, people are dropping in the streets, the metro system and on the side of the roads. If you check the hashtag #CoronaVirusIran on Twitter you will find disturbing video footage that is just like what we saw coming out of the Hubei Province.
We could tell early on that Iran had a much larger number of infected than they admitted to because it seems to be a key hub for export to many other countries. Interestingly the very same thing is now happening with Egypt.
G. Cezanne: What makes you think that?
J. Marnitz: Well, Egypt has only acknowledged two cases so far, but four different incidents with numerous cases outside the country have already been linked to visits there. This could be a coincidence, but it's statistically very unlikely. Egypt may however not necessarily be suppressing information like Iran did and probably still does. Maybe Egypt simply lacks the detection capability, or it's a mixture of both that and information suppression. Either way: There's a large problem boiling beneath the surface, and sooner or later it will become very obvious, just like with Iran. And if I were a betting man I'd say: Rather early.
G. Cezanne: If you were a betting man? (mutual laughter)
But going beyond the capacity of countries to control the disease, or the will to be open and honest, I am also looking at the effect the disease is having on cultural interchange, beyond, obviously tourism and ERASMUS. Nationalist factions will have a field day if they can harness the mistrust that is being invigorated or strengthened. I don’t tell you about the racism that is spiking towards the Chinese. Whether the racism was already there, or is being created, it has certainly manifested itself. And, even if it is not racism, fear of Chinese products, Chinese restaurants, Chinese holidays, all of that further segregates an already very dispersed world.
A physical and psychological self-quarantine to protect oneself rather than others.
J. Marnitz: Well I am self-quarantining, but only for physical protection. And about ERASMUS, what can I tell you? Spoiler alert: 2020 isn’t going to be big on travel.
G. Cezanne: Well, I didn’t think you were self-quarantining as a social-protectionist method considering the extent you are communicating with the Asian world. By the way, how is COVID-19 impacting the Asian betting markets?
J. Marnitz: So far not too much, but that could rapidly change, as soon as the Philippines, Hongkong and Singapur are majorly affected – as these hubs are were the main arteries of the betting world lie. So far Hongkong and Singapore look like they will be able to contain the outbreak, so that’s good news. The Philippines are more questionable, and this is where two of the biggest bookmakers in the world reside.
But the biggest threat to Asian betting markets probably stems from Europe.
G. Cezanne: Interesting. Why is that?
J. Marnitz: Asian betting markets are all about football, and mainly European Football at that. And as far as I can tell it is very likely that the EURO 2020 will fall through, as mass fan travel at the height of a pandemic isn’t going to be allowed. You can already see Serie A matches in Italy get postponed and played without fans. This won’t improve, and besides, if the pandemic gets as bad as I think a football celebration would simply be in poor taste. This in turn means that the Asian betting markets will lose a lot of revenue this year. I’d guess easily more than 50% of the earnings they expected going into this year.
G. Cezanne: You know, living in Europe, I am starting to wonder whether we are geared to face the future of Corona. Germany is saying that they are ready. Can one be ready?
J. Marnitz: Well, I wish I had better news.
G. Cezanne: You wish? Great…
J. Marnitz: Let me start by going a bit further West. In the US, the CDC produced faulty testing kits, which lead to them testing far fewer people than they should have. While South Korea ramped up their testing to 5000 people a day, it took the US about a month to test 500. So, basically the strategy has been: Can't have a pandemic if you're not detecting any cases! It’s only now that they’re planning to ramp up their testing considerably, starting next week.
Likewise, many countries in Europe make it very difficult to get yourself tested, even if you're trying to. There has been a German gentleman who went through the ordeal, and it took him eight phone calls and more than 24 hours just to get tested, even though he was a confirmed contact of an official COVID-19 case in Germany. Similar ridiculous experiences have been reported from Switzerland.
G. Cezanne: Yes, I am seeing this in more and more news reports. So, if the state doesn’t seem to be able to protect the individual any more, people start believing in their need to deal with the issues themselves. I wonder how that will manifest itself. Your positive view of it all really rubbed off on me Joachim. Thanks.