As stockmarkets in America experienced one of the worst days in their history, in many countries the incremental stepping up of relatively modest measures against the virus gave way to Draconian restrictions on travel and on daily life. This seemed to resolve a debate between advocates of two very different approaches.
Some Western governments, notably America’s and Britain’s, had adopted much milder measures. Britain’s apparently calculated that, since the worst was still to come, there was no point in sowing panic and resentment among its people by imposing restrictions that were still premature. Both countries were slow to institute widespread testing to get a better sense of how many people were already infected. “Relax, we’re doing great,” President Donald Trump told Americans on March 15th. In contrast, three days earlier, Boris Johnson, Britain’s prime minister, had called the pandemic “the worst public-health crisis for a generation” but his government’s response did not involve closing schools, as many countries had done, nor banning mass gatherings.
Other countries had already instituted harsher measures, and seemed to have had some success. The central Chinese province of Hubei, home to 60m people, had in effect been in quarantine for nearly two months. South Korea had tested hundreds of thousands of people and enabled people to check whether they might have had contact with the infected on a website showing their movements. European countries had begun also to shut down, starting with Italy, site of the continent’s worst outbreak.
In recent days, China has started easing restrictions and is cautiously hailing at least a partial victory over the virus. But that may be premature, as a second wave of infections re-imported from abroad remains possible. Hong Kong, Singapore and Taiwan have this week seen renewed infections after apparently suppressing the virus’s spread.
After March 16th, the differences between countries seem less stark. Mr Johnson told people to work from home if they can, not to hold big gatherings, to steer clear of pubs and restaurants and to quarantine their whole households for 14 days if one member shows symptoms of infection (schools remained open for the time being). The change in approach was justified by saying, “It looks as though we’re now approaching the fast growth part of the upward curve”, and, in other briefings, by alarm at new data showing the extent of the crisis in Italy. Britain is also discouraging non-essential travel, but has not banned it. The same day in America, Mr Trump issued tighter new guidelines, including that people should avoid gatherings of ten or more people. In France, President Emmanuel Macron declared “we are at war” with the virus.
Meanwhile, the number of countries closing their borders to arrivals from countries with infections has grown to over 80, including America, Australia, Canada, Japan, Russia. They also include members of the European Union and of the Schengen free-travel zone, which approved a 30-day closure of their external borders.
A joint statement on March 16th from leaders of the G7 seemed to herald a new phase of welcome international co-operation after a period when squabbling seemed more noticeable than co-ordination. It promised “a strongly co-ordinated international approach, based on science and evidence.” But even that appeared to want to make a political point, adding that the approach should be “consistent with our democratic values and utilising the strengths of private enterprise”, as if to add: “Are you listening, China?”
In fact, the boasts of international solidarity and a shared approach are hollow. Countries are still pursuing divergent strategies, and in some cases banning exports of medical supplies. They seem to be competing to show that their method stands the best chance of success. Not long after Mr Johnson announced Britain’s latest measures, for example, Mr Macron unveiled France’s much more sweeping approach. From March 17th nobody is to leave their home except to shop for essentials, attend medical appointments, or do jobs that cannot be done at home. Schools, universities, cafés, cinemas, hairdressers and museums had already closed.
The world’s two most powerful countries, America and China, are meanwhile indulging in a blame game. Also on March 16th Mr Trump irritated China’s leaders by referring to “the Chinese virus”. China’s foreign-ministry spokesman urged America to stop the “despicable practice” of stigmatising China. But Chinese officials have also been guilty, with one lending his name to a bizarre online conspiracy theory that the virus was made by the American army and brought into China. Tensions between the two countries worsened on March 17th when China announced it was expelling reporters from the New York Times, Washington Post and Wall Street Journal. It described the move as “reciprocal”—a response to Mr Trump’s decision last month to cap the numbers in America of journalists working for five state-controlled Chinese news outlets.
If international co-operation on the battle against the virus is going badly, then at least central banks and other monetary authorities are working in cahoots to contain the economic fall-out. The move by America’s Federal Reserve to cut interest rates to close to zero in an emergency intervention on March 15th is in lockstep with the decisions of many other central banks. The record-setting crash on the American stockmarkets the following day was a reflection of how little impact investors and traders think monetary policy can have on the recession—or even depression—that may be looming.
More important are central banks’ efforts to keep credit flowing before companies and the banks they owe money to seize up. On March 17th the Fed announced that, as during the financial crisis of 2008-09, it will start buying up companies’ short-term debt (“commercial paper”). But in the end, the banks and companies are probably going to need their governments’ help—either to spend directly to keep businesses open, or to provide guarantees to the banks.
Most big economies have announced—or are about to unveil—big spending packages to support the economy. Also on March 17th Britain’s finance minister, Rishi Sunak, promised £330bn ($400bn) in lending, grants and guarantees to keep businesses going through the virus-induced slump. France has promised €45bn ($50bn) to help businesses. Mr Trump’s administration wants Congress to approve $1trn in extra spending.
The plight of financial institutions is not yet nearly as bad as it was during the global financial crisis. But the disagreements over how to handle covid-19 and how to attribute blame for its spread do not augur well for future co-operation to stop financial systems sinking to those lows. And, in the meantime, every antiviral and economic measure governments introduce seems to serve partly to heighten the sense that policymakers are floundering against an adversary they still do not understand; and hence to worsen the mounting panic.
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