Friday27 March 2020 ★ FINANCIAL TIMES 3

CO R O N AV I R U S

W

ithin 48 hours, America’s coronavirus

infections will surpass China’s total. The

US will probably replace Italy as the centre

of the pandemic. At just the moment Brit-

ain dropped its flirtation with “herd

immunity”, Donald Trump is embracing it.

This makes America exceptional on two counts. First, it

is the only nation whose leaderquestions the trade-off

between economic growth and saving lives. Second, Amer-

ica islacking a clear policy. Its federal system offers a menu

of epidemiological options. Viruses pay no heed to democ-

racy or autocracy. They do thrive on confusion.

Covid-19 has given Mr Trump licence to airalt-science

theories. Every day he airshomegrown ideas of how to

defeat the disease. This includes a cocktail ofanti-malaria

drugs, the imminence of a “miracle” vaccine, predictions

the virus will wash away by itself, change-of-season opti-

mism and a drip-drip of scepticism about social distancing.

The sight of experts around him is meant to reassure.

Their look of strained reticence prompts thoughts of sap-

pers navigating a minefield. Muammer Gaddafi used to

stage accompaniments like this. It takes some getting used

to in America. More than half the country says it approves

of how Mr Trump is handling the epidemic. Such polls

should come with a health warning. Ratings for leaders

across the west have risen sharply — as tends to happen in

the early stages of an external threat.

Rumours of Mr Trump’s re-election are thus premature.

Polls show Joe Biden beating him by an average of 7 per-

centage points in a presidential election. That lead has not

narrowed in the past

three weeks. But the gulf

between the federal gov-

ernment and the largest

states is widening.

Such mixed signalling

poses two threats to the

US. The first is an à la

carte grade of serious-

ness. Some states, such as

New York, California, Washington and Connecticut, are

enforcing lockdowns. Most are Democratic. Exceptions

include Ohio and Maryland, with Republicangovernors.

Others, such as Texas and Florida, are taking a far more

relaxed approach, makingit easier for the virus to spread.

The fact that Florida is packed with retirees from New

York was until this week treated with remarkable insouci-

ance. Before Tuesday Florida put no barriers to stopping

the flow of people south nor 14-day quarantines for those

who have made the trip. One of America’s great strengths

— its laboratories of democracy — is becoming a liability.

Mr Trump’s timing is menacing. He wants to lift federal

restrictions by Easter, which is in about two weeks. That

coincides almost exactly with the expected peak of the epi-

demic in New York, the centre of the US outbreak. No

state, including New York, has to follow Mr Trump’s lead.

Nor are the majority of Americans likely to cram on to aer-

oplanes against scientific advice.

But he is giving dissenters an alternative path. The battle

against socially communicable disease is as strong as its

weakest link. America’s president is making it much

weaker. He is also politicising social behaviour. Liberals

want to shut down the economy to stop his re-election, he

says. Conservatives must therefore do the opposite.

Mr Trump’s ambivalence is also hurting New York and

other viral hubs. Under the Defense Production Act, he can

direct the private sector to make what is lacking — ventila-

tors, protective gear and surgical equipment — then send

the materials to where they are most needed. Mr Trump is

refusing on the grounds that he is not a “shipping clerk”.

Material is going to the highest bidders, who are not nec-

essarily those most in need. Mr Trump’s passivity reflects

what he is hearing from chief executives rather than gover-

nors, who know what their hospitals lack. States are com-

peting with each other for scarce goods. Another of Amer-

ica’s great strengths, its vibrant private sector, is therefore

becoming a weakness.

The second threat is to America’s global power. The virus

originated in China but it will probably do more damage to

the US. It is China, not the US, that is shipping ventilators

to Europe, Africa andAsia. China’s face-mask diplomacy is

breathtakingly opportunistic. But it meets a need.

America’s abdication of leadership is an act of self harm,

which threatens to make it an object of mockery. There are

no do-overs on pandemics. To borrow from Talleyrand, Mr

Trump’s response to the coronavirus is worse than a crime.

It is a mistake.

[email protected]

GLOBAL INSIGHT

WASHINGTON

Edward

Luce

The wrong kind

of American

exceptionalism

Material is going to

the highest bidders,

who are not

necessarily those

most in need

K I R A N STAC E Y— WA S H I N GTO N
A N D R E W E D G E C L I F F E- J O H N S O N
N E W YO R K
R I C H A R D WAT E R S— S A N F R A N C I S C O

A little-used piece of wartime legislation
has taken centre stage in the attleb
between Donald Trump and critics who
accuse the president of not doing
enough to fight coronavirus.
As supplies of equipment such as pro-
tective masks and hospital ventilators
have run low, senior Democrats and
even some Republicans have criticised
the president’s reluctance to use the
Defense Production Act, under which
he can compel companies to make cer-
tain products.
On Wednesday, 100 national security
experts called for Mr Trump to use the
act immediately, warning the private
sector “lacks the ability to process
incoming requests, prioritise the most
urgent needs and co-ordinate with
other companies without more con-
certed government involvement”.
US unions added their voice yester-
day. “The administration’s current
piecemeal efforts to increase the pro-
duction of N95 masks and ventilators
have not worked and quite frankly will
not work,” said Richard Trumka, presi-
dent of the American Federation of
Labor and Congress of Industrial Organ-
izations.
Their intervention comes after simi-
lar warnings from Joe Biden, the front-
runner in the Democratic presidential
primaries, and Andrew Cuomo, the gov-
ernor of New York.
The act, which was passed in 1950
during the Korean war, enables the fed-
eral government in effect to take over
parts of the industrial base.
Under the terms of the act, an admin-
istration can compel companies to pri-
oritise government contracts over pri-
vate ones, make them send equipment
to certain areas ahead of others, and
provide loans and grants to encourage
certain forms of manufacturing.
Mr Trump has given Alex Azar, the
health secretary, the authority to imple-
ment the act. But while the Pentagon, in
particular, regularly uses the act to
make sure suppliers prioritise certain
contracts, Mr Trump has been reluctant
to use it for coronavirus because he says
companies are already doing all they
can and he does not want to nationalise
parts of US business.
Large companies agree. Ford,which is
working ith 3M and GE to make venti-w
lators and respirators, told the Financial
Times: “We continue to pursue these
efforts voluntarily, and while we are
co-ordinating closely with the federal
government, we are not being asked
to manufacture medical equipment

under the Defense Production Act.”

Other companies have also said they

will convert manufacturing processes to

make products that can help fight the

disease, from General Motors making

ventilators to Pernod Ricard, the drinks

company,producing hand sanitiser.

Neil Bradley, chief policy officer at the

US Chamber of Commerce, said: “No

one has identified anything that could

be done right now that is not being done.

If you invoke it to tell a company to do

what they are already doing, all you are

doing is creating confusion.”

Many smaller companies, however,

say they want stronger guidance from

the Trump administration on exactly

what is needed and where it should go.

“Everyone wants to help, but there’s a

lot of chaos out there,” said Carl Bass, a

manufacturing expert and the former

chief executive of the design software

company Autodesk.

“It needs government leadership.

This government is putting $1tn into

economic recovery but they’re leaving it

to open auctions around medical equip-

ment.”

Blankie Tails, a US company which

makes blankets in the shape of mer-

maid tails and Disney princess dresses,

is now using its network of suppliers in

China to source suppliers and storage

space to supply masks and ventilators to

the New York State government.

Hattie Grace Elliot, its founder, said:

“Time is ticking... It would be great if

we could have [the DPA] but in the

meantime you’ve just got to keep mov-

ing forward and do what you can do.”

Defence officials say they are looking

at using certain provisions within the

act to provide loans and grants to com-

panies that could manufacture masks

and other medical equipment.

But they insist they are not planning

to use more heavy-handed powers to

take over parts of the defence industrial

base unless mandated to do so.

Ellen Lord, the under-secretary for

acquisition at the defence department,

said: “[Mr Trump] is talking about

broadly using DPA to take over private

industry — that’s what he has clearly

said he is not going to do.”

Other departments seem more

ambivalent about whether to use such

powers or not. On Tuesday Peter

Gaynor, the administrator of the Fed-

eral Emergency Management Agency,

said on Tuesday his agency would use

the act to buy “about 60,000 [coronavi-

rus] test kits”.

But later that day, a spokesperson for

Fema said: “At the last minute we were

able to procure the test kits from the pri-

vate market without evoking the DPA.”

But the reality is that the more the

president continues to talk of control-

ling coronavirus as being akin to a war

effort, the stronger the calls are likely to

become for him to use the powers avail-

able to a wartime president.

Additional reporting by Katrina Manson in

Washington and Joshua Chaffin in New York

Trump urged to use wartime act

to convert manufacturing output

Pressure builds on president to compel private sector to prioritise government contracts

H E N RY F OY —M O S C O W

Measures introduced by Russian presi-
dent Vladimir Putin to soften the eco-
nomic blow of thecoronavirus pan-
demic willbe partly funded by a levy
on bank deposits, tapping nest eggs
held by the country’s pensioners and
middle-classhouseholds.

The Kremlin’s decision contrasts with
other governments, which have
announced large rescue packages to
help companies and taxpayers weather
a sudden loss in revenues or incomes
but in doing so have refrained from
increasing taxes. Russia has outlined
handouts to families, tax holidays for

small businesses and reductions in

employers’ state contributions.

Mr Putin announced the scheme in a

solemn national address n Wednesdayo

that signalled a shift in his attitude

towards the spreading respiratory dis-

ease caused by the Sars-Cov-2 virus.

After insisting for weeks that the disease

was “under control” the Russian leader

said it was “impossible to stop” the virus

spreading in the country.

Mr Putin pledged that just “1 per

cent” of depositors would be affected by

his decision to fund the measures

through a tax on interest earned from

deposits worth more than Rbs1m

($12,900). But the measures will affect

millions of Russians, including pension-

ers using savings to supplement small

state pensions.

At the start of this year, 55.3 per cent

of all Russian bank deposits were worth

more than Rbs1m, according to data

from the country’s Deposit Insurance

Agency, which covers 234.2m deposi-

tors, both individuals and companies.

Previously, deposit interests were

exempt from taxation.

The DIA statistics imply that “a large

amount of deposits will be taxed”, said

Luis Saenz, co-head of equities at BCS

Global Markets in London.

The measure, which will impose a 13

per cent tax on interest earned on the

deposits, comes despite two years of

budget surpluses in Russia, a national

wealth fund worth about $150bn and

foreign reserves of $570bn.

Svetlana, an 82-year-old pensioner

from Moscow, said she had amassed her

savingsto pay for a carer, her funeral

and a gravestone.

“This incredibly upsets me,” she said.

“Everyone in my circle, my friends and

acquaintances, everyone has Rbs1m.

We live off the interest from this deposit

added to our pension.”

“We would love to see money taken

from the rich instead of the poor,” Svet-

lana said. “But what can we do? They

decided to take money from us.”

Kremlin

Russia offsets cost of pandemic with tax on bank deposits

N E I L M U N S H I
W E S T A F R I C A C O R R E S P O N D E N T

A10-minutecoronavirustestthatcosts
less thana dollar to produce is being
rushed into trialling by a Senegalese
research institute working with a
Britishcompany.

The prototype being produced by
Dakar-based diaTropix and Mologic of
the UK, which uses technology similar
to a home pregnancy kit,began a valida-
tion processyesterday and the test
could be rolled out by June if the trials
are successful.
While the pocket-sized test would be
made widely available, it is aimed at
stemming the spread of the virus in
Africa in particular. Only about 2,
cases have been reported across the con-

tinent, but many health experts believe

its fragile health systems could leave it

particularly vulnerable. Testing is

widely viewed as key to containing out-

breaks.

Joe Fitchett, Mologic medical direc-

tor, said that while many companies

were working on virus diagnostics, “the

difference we are trying to make here is

to ensure this is not a commercial

opportunity.

“This will be made available at cost of

goods to low-income settings. That’s a

fundamental difference that most oth-

ers will not be doing.”

DiaTropix, which is run by leading

virologist Amadou Sall, is affiliated with

Dakar’s Institut Pasteur, which created

one of the world’s first yellow fever vac-

cines. Along with Mologic, it has the

capacity to produce 8m of the new tests

a year and plans to offer them directly to

governments, the World Health Organi-

zation and the Global Alliance for Vac-

cines and Immunisation.

Thetest, to be trialled at laboratories

in Senegal, the UK and the Chinese city

of Wuhan where the pandemic began,

employs a saliva-based virus antigen

test and a blood-based antibody test. It

produces an easily readable result — a

line appears if the patient is positive.

Mr Fitchett conceded that the trade-

off for increased speed, low cost and

ease of use would probably be a drop in

performance but said it would be

important to determine whether the

drop was meaningful, which was some-

thing the prototype testing process

would help them understand.

Africa

Quick and cheap test for virus begins trials

L E O L E W I S A N D K A N A I N AG A K I— TO K YO

Panic buying has left many of Tokyo’s

store shelves empty after a record rise

innewcoronavirus asespromptedthec

city’s governor to ask residents to stay

athomethisweekend.

Yuriko Koike, whose overnight

announcement came less than 24 hours

after Tokyo and the International Olym-

pic Committee agreed topostpone het

summer Games, warned that the

world’s biggest city could be on course

for an “explosive spike” in new cases.

On Wednesday, there were 41 new

infections in Tokyo, a record one-day

rise after 17 cases were reported on

Tuesday and 16 on Monday. There are

212 cases in total in Tokyo.

Ms Koike, citing medical experts,

requested that residents work from

home and refrain from dining out in the

evenings. She also called on universities

to delay the start of classes from early

April, the start of the new school year for

Japan.

“In order to avoid an explosive growth

in infections, the co-operation of every-

one is critical. We ask that each of you

act with a sense of urgency,” Ms Koike

said.

After Ms Koike’s appeal, Tokyo resi-

dents rushed to hoard preserved food

such as instant noodles and pasta. One

of Japan’s largest retailers said it would

increase supplies in anticipation of

another surge in demand.

Japan has taken a different approach

to many other countries in its battle

against the virus. Until recently, it tested

very selectively, arguing it had to focus

on the critically ill.

But 1,300 infections in a population of

127m have raised questions over

whether its strategy was a success orjust

disguising the breadth of the crisis.

“We are not heading for an immediate

lockdown,” Ms Koike said. “But concern

has risen this week about an explosion

in infections and we are now entering a

critical phase.”

Her decision to stop short of declaring

the kind of lockdown mposedi inother

countries ame as Japan’s foreign minis-c

try raised its warning level,advising

against on-essential travel outside then

country. Prime minister Shinzo Abe,

however, has not declared a state of

emergency,meaning shops, restaurants

and bars have remained open.

Japan

Panic buying hits Tokyo as spike fears grow

Changing gear:

a General

Motors plant in

Michigan. The

car company

says it will

convert its

manufacturing

processes

to make

ventilators

Paul Sancya/AP

Grim: Vladimir

Putin outlined a

plan that would

see pensioner

nest eggs tapped

to help fund

a rescue package

MARCH 27 2020 Section:World Time: 26/3/2020- 18:36 User:john.conlon Page Name:WORLD2 USA, Part,Page,Edition:USA, 3, 1