Financial Times Europe - 13.03.2020

8 ★ FINANCIAL TIMES Friday13 March 2020

What will happen if I try

to fly home to the US

next week, as planned?

Following President Donald Trump’s

nationalist address n Wednesdayo

evening, including the travel ban

which contradicts expert advice,

I woke up yesterday morning to 38

new text messages.

I am currently in Tbilisi, Georgia,

serving as a Fulbright Scholar. Why

38 messages? Friends and family back

home in the US had messaged me while

I was sleeping. They wanted to know,

would I be able to get home as planned

in a few weeks?

I quickly listened to Mr Trump’s

address. He said he was banning

travellers from Europe “with some

exceptions for Americans who have

undergone appropriate screening”.

I wondered, could I be one of those

exceptions? Could I undergo the

“appropriate screening” the president

referred to and get home?

Then, I wondered, should I go

home as planned? The 24 cases of

Covid-19 in the whole country of

Georgia, where a friend who had a

fever and cough got tested readily, are

fewer than the 28 cases in my home

region of Virginia, Maryland and the

District of Columbia, where another

friend who had a fever and cough

could not get tested. And, schools and

universities here in Georgia have been

closed or taught online for weeks

already, whereas US universities have

only just begun to follow suit.

Some of my morning’s messages

were from my son at University of

Michigan in Ann Arbor, which also

announced last night that all classes

will be online for the rest of the

semester. So, I question, is Georgia

or the US a safer place to go through

the pandemic?

Mr Trump said in his address:

“We are all in this together.” He was,

sadly, referring only to those in the US.

But we really are all of us in this world

in this together. The global experience

of this pandemic will be shaped by the

actions of each of us. I wish Mr Trump

would realise that. His policies

endanger us all.

His behaviour even makes me

worry that I might be jeopardising my

chances of getting back into the US by

writing this letter critical of him! Based

on my critique, will I be picked out for

extra screening if I try to fly home next

week? That’s not a question anyone

should have to ask.

Dr Susan H Allen

Director, Center for Peacemaking Practice,

School for Conflict Analysis and

Resolution,

George Mason University,

Arlington, VA, US

World Bank deserves to

be praised for its foresight

Hearing someone call theWorld Bank

pandemic bond “failure” (report,a

March 11) reminds one of a petulant

spouse complaining about his or

her partner’s expenditure on a fire

extinguisher when there is no fire.

Except this time there is a fire. And

this fire requires a more powerful

extinguisher than the one purchased.

Only a few institutions had the

foresight to buy protection against

an eventuality such as mutated

coronavirus back in 2016. They should

be congratulated. The World Bank has

issued or assisted in more than 20

protective issues since 2005, and by

my calculation the total interest paid

on this bond and all the other

catastrophe bonds, either facilitated by

or directly issued by the bank, is much

less than the recoveries they have

made. This includes the assumption

that the current bonds, A and B

tranches and swap arrangements

will all trigger.

Finally, neither recipient countries,

nor the bank, will be saddled with

debt repayment which is usually

associated with development or

reconstruction loans and, not

insignificantly, the bank preserves

its credit rating. Before too long I’m

sure that we’ll hear that it did not do

enough, possibly from the same critics.

Morton Lane

Clinical Professor, Dept of Finance,

University of Illinois at Champaign-

Urbana, US

It’s the world’s first

social media pandemic!

Coronavirus is the world’s first

social media pandemic, spreading

fear faster than fact.

Mark Peaker

London W1, UK

Europeans’ trust in

American leadership is

damaged beyond repair

Gideon Rachman is right that a

Biden presidency “could not turn

back the clock” on Donald Trump

(March 10). But it’s not the case that

Europeans just expect and hope “that

an administration led by the former

vice-president would effectively reset

the geopolitical calendar to January

20 2017”.

I recently interviewed European

ambassadors in Washington off the

record for a new Carnegie Endowment

study n transatlantic relations. Whileo

they predicted that Europe’s relations

with Washington would get worse

under a second Trump administration

— almost all said transatlantic relations

today were in worse state than under

any other recent US administration,

including during the Iraq War — they

expected tensions under a future

Democratic administration too.

While US co-operation with Europe

would improve on climate and

multilateralism, transatlantic tensions

over defence, trade and China would

remain, as these reflected a more

structural and longer-term divergence

of EU and US interests.

Many added that the Trump

administration’s focus on isolationism,

protectionism and burden-sharing

reflected wider changes in Americans’

view about the US’s role in the world.

These views, and US domestic political

polarisation, would continue, and

constrain whoever occupies the

Oval Office in 2021.

These senior European envoys

were not trafficking in hope. They said

that transatlantic relations couldn’t go

back to the pre-2017 period whoever

won in November: European trust in

US global leadership had been

permanently damaged.

David Whineray

Senior Fellow,

University of California, Berkeley, US

Fellow, Carnegie Endowment for

International Peace

Right on cue, a third

black swan appears

Peter Seilern’sletter March 12) poses(

the question “That’s two black swans —

is a third imminent?”, citing Covid-

and the collapse of the oil price

following the spat between Saudi

Arabia and Russia.

Well, what about a Conservative

chancellor ditching decades of Tory

small government and launching an

unprecedented programme of high

spending and high borrowing?

Paul Barrett

London SW4, UK

Holi isIndia’s joyous spring festival—

a carnival of colours to celebrate the

end of winter and onset of warmer

weather. Traditionally, it is a day of

fun and frolic — and a relaxation of

rigid social rules. People smear each

other with coloured powder and

splash coloured water, evoking the

games of the playful Hindu god

Krishna and his companion, Radha.

Holi has long been my favourite

Indian festival, although my

celebrations have evolved from the

raucous parties of my youth to gentler,

family picnics and water-balloon

fights since my daughter was

born. But this week, Holi — though

accompanied by a burst of beautiful

weather — brought little cheer. India

is reeling from the combined shock of

deadlycommunal riots, mounting

public anxiety over coronavirus, and

the collapse of the country’s fourth

largestprivate bank.

Together, these events have fuelled

mounting unease about what lies

ahead for the country, which was

already strugglingeconomically

before the latest shocks. With the

spectre of thecoronavirus pandemic,

Prime Minister Narendra Modi

discouraged large celebrations, seen as

fertile ground for the virus tospread.

Though there was no official ban,

the premiertweeted to his 53.5m

followers hat he would not attendt

any Holi celebration himself, since

“experts across the world have

advised to reduce mass gatherings”.

Many cabinet ministers echoed the

message. This high-profile nudge

seemed to have its desired effect, with

many celebrations — including the

community Holi I normally attend —

called off. In the past, my favoured

organic Holi colours have sold out

well before festival. But this week

they were in abundant supply when I

rushed into the shop the night before

the holiday to grab a few token

packets for a small gathering of other

friends with restless kids.

India so far has just73 confirmed

cases f coronavirus, of whom 16 wereo

Italian holiday-makers. But New Delhi

has also laid out a very narrow testing

protocol, in which only suspected

coronavirus patients returned from

the worst-affected areas — or the close

contacts of confirmed coronavirus

patients — are being tested.

That has raised concerns that the

government may be underestimating

the magnitude of the outbreak. But

Delhi’s government has ordered all the

city’s schools, colleges and cinema

halls to shut down until April 1, and

India just effectively closed its borders

to nearly allincoming foreign visitors.

“If it ever breaks through here, we

are in trouble,” says Naresh Trehan,

chairman of Medanta, a large private

hospital. “We should not let our guard

down.”

Each morning, I now supervise my

eight-year-old as she logs into online

classes that her teachers are valiantly

conducting as they try to minimise the

disruption to learning. I wonder about

leaving the city for a break. But across

town, many Delhi residents have far

more pressing concerns, as they reel

from the aftermath of last months’

deadly convulsion of communal

violence, which claimed 53 lives. The

three-day conflagration — in crowded

working-class neighbourhoods —

capped months of growing communal

tension, much of it actively stoked by

local leaders of Mr Modi’s Hindu

nationalist Bharatiya Janata party.

Along with the killings, scores of

homes, businesses, schools and

mosques were looted and burnt, and

hundreds of cars and motorbikes

were destroyed. Today, a Muslim

prayer ground in north-east Delhi is a

de facto refugee camp for around

1,300 people, mostly Muslims,

displaced by the riots. Some have

suffered severe damage to their

homes; others are too frightened to

return to the mixed neighbourhoods

where they lived.

They now sleep in large tents on

cots with virtually no space between

them. The coronavirus mantra of

social distancing does not apply here;

these are prime conditions for the

spread of the virus, should it appear.

At the camp, I meet Ramjano, 69,

who is sheltering with her family after

their home of 15 years was damaged.

“All we want is to go back, but we

want to be reassured we have nothing

to fear,” she tells me. “We want the

government or somebody to tell us we

will not be touched.”

In this strange, unhappy spring,

reassurances are in short supply. India

looks set for a hot, hard summer.

[email protected]

Deadly riots and

virus fears taint

India’s carnival

of colours

New Delhi

Notebook

by Amy Kazmin

There is much to be welcomed in

UK chancellor Rishi Sunak’sBudget,

particularly the response to the

coronavirus emergency and the

increased investment in science and

technology. However the Budget has

failed to treat the current climate

change emergency with the same

level of seriousness and response that

it is treating the coronavirus, despite

the former having a much larger

and longer impact on businesses,

investment, jobs, growth and the

environment.

What is needed is a multiyear

plan akin to the Marshall Plan that

mobilises people, capital, businesses

and supply chains to address a

multiyear and cross-generational

problem. Such a plan would give the

private sector the necessary signals and

certainty to join government funding

and make long-term investments, and

in turn allow the capital markets to

fund such a transition.

Yes, we need more research and

development, including new research

centres aimed at addressing climate

change, such as the proposed

International AI Centre for Energy

and Climate Change; but we also need

investment in practical measures that

can make a difference today, including

retrofitting energy efficiency and

upgrading new building standards to

make them both more energy efficient

and safer. The Budget was a missed

opportunity to accelerate our response

to the climate emergency.

Paul Massara

Oxford, UK

Former chief executive, Npower

Climate change needs its own Marshall Plan

Letters

FRIDAY13 MARCH 2020

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Many hospitals are worrying about
being overwhelmed by the corona-
virus. One healthcare provider, Abu
Dhabi-based NMC Health, is facing
a more familiar crisis: being laid low
by too much debt. The FTSE 100 group,
which operates hospitals in the Gulf,
admitted this week that it has almost
$3bn more debt than it previously
realised.Yesterday, the company
announced it had found evidence of
suspected fraud n its finances.i
These are the latest revelations in
what has rapidly become a corporate
scandal of significant proportions. The
company, a former stock market dar-
ling, has been in turmoil ever since a
highlycritical report n December byi
short-seller Muddy Waters raised con-
cerns about its cash and debt levels. Its
shares were suspended in late Febru-
ary and the Financial Conduct Author-
ity, the City of London watchdog,
launched a formal probe. The situation
has raised questions over NMC’s
finances, its governance and related-
party dealings, the competence and
accountability of its advisers, and the
standards of the London stock market.
This scandal cannot be swept under
the carpet. Such a serious breach of
investor trustneeds a thoroughprobe
that holds individuals to account. That
means involving the Serious Fraud
Office as well as the FCA. Regulators
have been far too slow toact.
There has been no shortage of red
flags. As the Financial Times has
reported for months,questions erew
being asked about the health of NMC
long before Muddy Waters went public
with its concerns in December and
even before the company graduated to
the FTSE 100 in February 2017.
It is fair to say that regulators cannot
police every initial public offering that
comes to the market, but the FCA’s full
investigation began only last month,
when NMC admitted it did not know

the exact state of its balance sheet or

indeed its shareholder list.

The scandal has exposed a lack of

oversight not just by the company’s

non-executive directors but by its

advisers. Questions should be asked

over the role of NMC’s brokers —

JPMorgan Cazenove, HSBC and Bar-

clays — whose job it should have been

to act as an intermediary between the

company and the stock market. NMC’s

public relations advisers, FTI Consult-

ing, should face scrutiny for its sup-

portive PR role as NMC aggressively

challengedreasonable reporting about

the company’s true financial health.

Even if the rules have been followed, it

is up to well-paid advisers toshow good

judgment. A rising share price is not an

excuse for turning a blind eye.

What makes an investigation into

this FTSE 100 company even more

imperative is the growing importance

of index membership amid theboom

in passive investing. Assets held in

exchange traded funds surged beyond

the $1tn mark for the first time last

year. Significant amounts of cash are

automatically being ploughed into

companies purely because they have a

premium listing on the London market

and are members of indices. Large

amounts of retirement money is

invested in tracker funds that do not

actively choose which stocks to buy.

Gaining a listing on the London

market used to be regarded as a badge

of honour for any company. It is not

that long ago that regulators tightened

the rules after a handful of commod-

ities companies controlled by foreign

tycoons damaged its reputation for

transparency.

As the FCA has itself noted in the

past: high corporate standards lead to

high levels of investor confidence and,

in turn, a vibrant market. It is up to reg-

ulators to ensure London’s reputation

forthe best standards endures.

Regulators have been too slow to act over scandal at FTSE 100 group

Fall of NMC Health risks

clouding London market

The “leader of the free world” is tradi-
tionally a source of reassurance in
times of crisis. But the current US presi-
dent, Donald Trump, is providing con-
fusion, not leadership. Instead of
damping down the flames of the coro-
navirus outbreak, his Oval Office
address on Wednesday poured fuel on
them. The mood was hardly helped by
the World Health Organization declar-
ing the virus a pandemic the same
evening. But Mr Trump’s30-day ban
on travel to America from most Euro-
pean countries triggerednew record
fallsin marketsyesterday. With the
global economy already struggling to
avoid a recession, it dealt another
sharp blow to confidence.
The US is not alone in imposing
travel restrictions. India on Wednesday
stopped issuingtourist visas. But WHO
recommendations re clear: restrictinga
movement of people and goods “is inef-
fective in most situations and may
divert resources from other interven-
tions”, as well as interrupting “needed
aid and technical support”.
It is far from clear, moreover,
whether Mr Trump’s ban will slow the
US spread of the virus. While the presi-
dent said a number of new clusters
there were “seeded by travellers from
Europe”, Covid-19 is already being
spread between Americans who have
had no connection with countries with
high infection rates. Excluding the UK
and Ireland from the travel ban, too, is
puzzling. They lag behind most west
European countries in infection rates
per head of population, but are on a
similar trajectory. Far more potentially
effective than banning travel would
have been steps to address the severe
shortage of virustesting kits n the US.i
One of the worst results of the presi-
dent’s move is to drive a wedge between
North Atlantic partners just when
international co-ordination is most
needed. Brussels said it “disapproved”

of a US decision taken “unilaterally and

without consultation”, a diplomatic

way of saying it was seething. Market

concerns over the economic fallout

were compounded by ECB president

Christine Lagarde whose ill-judged

comments in a press conference under-

mined a newstimulus package.

European shares had their worst day

on record, losing 10 per cent of their

value. The UK’s FTSE 100 index

plunged 11 per cent, its bleakest day

since Black Monday in 1987. Only after

the Federal Reserve flooded the

market with liquidity did US equities

recover some of an intraday loss that

had peaked at 8 per cent.

Businesses and investors have been

looking to policymakers to revivea

global economy that was already slow-

ing before the onset of coronavirus.

The White House’s announcement will

instead have a chilling effect on trans-

atlantic commerce, affecting 3,

flights a week and up to 800,000 pas-

sengers, according to Bernstein.

European airline stocks plunged by

up to one-fifth, with US counterparts

not far behind, as the industry faces its

worst downturn since the 9/11 attacks.

Travel and leisure stocks from cruise

companies to hotels and amusement

parks were also hit hard.

The dramatic reaction to Mr Trump’s

statement highlights the need for pol-

icy responses to the virus to be propor-

tionate, co-ordinated, and guided by

the best scientific advice. Yet one of the

most disturbing elements of the presi-

dent’s address was its appeal to nation-

alism. That the president no longer dis-

misses the virus as a “Democratic

hoax” is a step forward. But as well as

suggesting Covid-19 had been “seeded”

by travellers from Europe — who

picked it up from China — he insisted

the US was fighting a “foreign virus”.

Associating disease with outsiders is an

old practice that rarely ends well.

US president’s travel ban triggered record falls in global markets

Trump has poured fuel

on flames of coronavirus

Anti-virus economic

action is now a matter

of urgency for Europe

The health emergency triggered by

the coronavirus is already an

economic crisis, hitting a very fragile

international economy already

suffering from the unsolved

imbalances inherited from the great

recession. Although the prevailing

analyses tend to consider the economic

consequences of pandemics and

related quarantines as short-term

phenomena, this time is different: we

must admit the case of much more

intense and prolonged slowdowns.

At this stage, Italy represents a

trench of health and economic

emergency. Analogous problems,

however, will reoccur on a more or less

similar scale throughout Europe. In

this scenario, an “anti-virus” plan that

is up to this unprecedented turmoil

becomes a matter of urgency. In the

immediate term, a massive and rapid

intervention by monetary and fiscal

authorities is needed to control capital

markets, provide liquidity in order to

support private demand, and ensure

solvency in the banking and

production systems.

Further measures that shift tax

burdens to higher incomes, profits

and rents can help to reduce the

iniquities fuelled by the crisis.

Meanwhile, the central bank and

governments must co-ordinate to

prepare a huge public investment

plan primarily in the health sector and

more generally in areas where market

failures occur: welfare, infrastructures,

education, research, ecology. The

plan must intervene not simply to

support effective demand but also to

counter possible “disorganisation” in

the markets and bottlenecks on the

supply side.

What is difficult in adopting such a

plan promptly is that it would require

centralised financing and co-ordinated

action. As already pointed out in a

previous appeal ublished by thep

FT, the European Union and the

eurozone appear to be among the most

deficient institutions from this point of

view. It is no coincidence that once

again the response of the European

Central Bank, EU institutions and

governments has so far been hampered

by conflicts, slow, and completely

inadequate. If egoism and ineptitude

prevail also in the case of the

coronavirus, it would be a shame even

greater than the previous ones.

There must be no irrational or

selfish constraints on appropriate

economic policy action. If a Union

really exists, it must give us a sign now.

Otherwise, with or without Europe we

will have to do whatever it takes to

overcome the crisis.

Prof Emiliano Brancaccio

University of Sannio, Italy

Prof Riccardo Realfonzo

University of Sannio, Italy

Prof Mauro Gallegati

Università Politecnica delle Marche, Italy

Prof Antonella Stirati

Università Roma Tre, Italy

OPINION ON FT.COM

Hannah Roberts

With Italy in lockdown, conversations on

a quarantine bring Romans together

http://www.ft.com/opinion

Peter Sands

We must invest in health as we did in finance

to prevent a repeat of the 2008 crisis

http://www.ft.com/opinion

MARCH 13 2020 Section:Features Time: 12/3/2020- 18:39 User:dana.prince Page Name:LEADER USA, Part,Page,Edition:USA, 8, 1