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A midlife crisis takes shape in the US

Demographics is destiny. For decades, America has enjoyed the economic and geopolitical fruits of its high birth rate. Between 1990 and 2010, fertility levels in the US were higher than the average for any developed country with the exception of Israel, Iceland and New Zealand.

So what does it mean that the US birth rate is on track to plunge below the recent trend rate of Europe? In 2007, just before the great recession, the US total fertility rate, meaning the number of births that a woman is expected to have in her lifetime, was 2.12. By 2019, just before Covid-19 struck, it had fallen to 1.71.

Provisional CDC data from 2020 shows that the total fertility rate has since dropped to a record low of 1.64, roughly the rate in Europe over the past five years. If the current trend holds, as it is likely to given last year’s lockdown (it’s a bit tougher to get pregnant during a pandemic unless you were already with a partner), then the New World may have lower fertility than the Old as soon as this year. 

So much for what the economist Nicholas Eberstadt dubbed America’s “demographic exceptionalism”. For decades, the US birth rate helped buoy growth, which is a function of people and productivity, and global status. But according to a new report by the Global ageing Institute and the Terry Group, entitled “The End of US Demographic Exceptionalism”, all the factors that have propelled America’s outlier fertility — from immigration and religious faiths to long-term economic optimism — are now in decline.

The report’s author, Richard Jackson, head of the GAI, notes that a degree of humility is required among demographers (“nobody saw the Baby Boom coming”). Yet there is little reason to think that the birth rate in the US is going back up any time soon.

Yes, the massive post-Covid stimulus has buoyed animal spirits. But the Millennials “are a scarred generation”, says Jackson, having come of age during the great financial crisis of 2008 and the pandemic. “People tend to have children when they feel they are economically secure,” he notes. For young people loaded with debt, unable to buy homes and start families on the same timetable as their parents, that feeling is elusive.

The decline in birth rates has been particularly steep among Hispanics, which Jackson and some other experts attribute to a feeling of economic and cultural vulnerability, which was certainly heightened during the xenophobic years of Donald Trump’s presidency. Net immigration, which bolsters the overall fertility rate, has declined to roughly half of what it was five years ago, even as the cost of having a child and caring for it has increased.

President Biden has, of course, made healthcare, education and childcare a huge priority for his administration. This is good for job creation and productivity, and may also help the birth rate at the margins if women feel that it’s easier for them to balance work and family.

But the record of “pro-natal” policies to increase fertility is spotty. Many countries in Europe, for example, have a far better social safety net and state-funded childcare systems than the US, and yet smaller families have become the new normal.

It may be that bolstering growth in general, and thus a sense of economic optimism, is ultimately a better way to kick up the birth rate, an argument that Republicans concerned about the Biden stimulus plan have been making.

This goes to the fact that the US will need creative, bipartisan thinking to address the magnitude of its demographic slowdown, and the potential economic and geopolitical consequences. Declining demographics, and the costs associated with them (such as caring for the elderly and the debt burden from Medicare and Social Security), are a big reason that the Congressional Budget Office predicts lower productivity and slower growth for the US in the future.

Getting women who’ve taken a disproportionate hit from Covid-19 related unemployment back in the workforce is an important way to shift the tide. But so is making immigration less restrictive, and finding ways to put older people who have high levels of education and experience back into the labour market. “Older people are not only America’s greatest underutilised resource, but also the fastest-growing segment of the population,” says Jackson.

We need them, and they need work. The post-pandemic asset boom coupled with labour force disruptions have led many boomers to retire earlier than they might have. But given that the median retirement savings in 2019 for Americans between the ages of 55 and 65 was a mere $144,000 per household, it’s hard to imagine that working longer isn’t the new normal.

The public sector could help to nudge older people into the workforce with policy tweaks like reduced payroll taxes for the elderly, or by making Medicare, rather than private insurance, the priority healthcare for older Americans.

Currently, private insurance is the first port of call for those still employed. This creates costs for companies, which might be willing to hire more older people if they weren’t also taking on the direct burden of their healthcare costs.

For most of its history, the US has been obsessed with youth. Its future may be defined by how well it ages.

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Israel crisis tests rapprochement with Arab countries

When the United Arab Emirates shocked the Arab world by normalising relations with Israel it said the move would help ease the protracted Arab-Israeli conflict. But nine months later, the wealthy Gulf state finds itself in a difficult position as its newest ally bombards the impoverished Palestinian territory of Gaza.

Israeli war planes and artillery have been pounding Gaza while Hamas, the group that controls the territory, has fired rockets into Israel. Some 174 Palestinians, including 76 women and children, have been killed, according to health officials in the enclave. Ten people have died inside Israel, including two children, local medics have said.

While almost a third of Arab countries now have relations with Israel, this week’s bloodshed shows that diplomatic ties ushered in by last year’s so-called Abraham Accords have given them little leverage and done nothing to ease the root cause of the protracted crisis — the Jewish state’s conflict with the Palestinians.

“They [the UAE] are clearly in a very difficult position. On one hand, the UAE’s interests with Israel are long term and strategic, so ideally their relations should be resilient to shocks,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations. “At the same time, the UAE obviously claimed that the Abraham Accords would give them leverage to also support the Palestinians and rein in Israel’s aggressions against them.”

So far, Israel has rejected all international efforts pushing for a ceasefire. But Bianco said Abu Dhabi could still deploy diplomatic leverage to pressure the Jewish state to limit the scale of its retaliation. Such intervention, however, could jeopardise progress on joint projects of strategic value to the UAE, she added. 

Recent collaborations include plans for Emirati and Israeli defence manufacturers to develop a system to counter drones.

The normalisation of relations between Israel and the UAE under the Abraham Accords was quickly followed by similar moves from Bahrain, Sudan and Morocco, that marked a radical departure from the established Arab stance towards the Jewish state.

The Arab position before the accords was that they would recognise Israel only if there was a just settlement with the Palestinians that led to the creation of a viable Palestinian state. The transactional deals brokered by the Trump administration, which pursued an overtly pro-Israel stance, left the Palestinians feeling isolated and betrayed. Critics said Arab states had given up a bargaining tool and gained little in return.

Like other members of the Arab League, the UAE endorsed an appeal on Tuesday to the International Criminal Court to “investigate war crimes and crimes against humanity” committed by Israel against the Palestinians.

“The UAE stands with the rights of Palestinians, for the end of the Israeli occupation and with a two-state solution with an independent Palestinian state with East Jerusalem as its capital,” said Anwar Gargash, diplomatic adviser to the UAE president, this week. “This is a historic and principled position that does not budge.”

The UAE foreign ministry was last month quick to condemn Israeli plans to evict Palestinians from their homes on land claimed by Israeli settlers. And when clashes broke out between armed Israeli police and rock-throwing Palestinian youths, the UAE urged Israeli authorities to reduce tensions.

The UAE’s clear public stance has given cover for Emiratis and residents in the autocratic state to condemn Israeli actions and express support for the Palestinians, after any local anger at the earlier decision to normalise relations was suppressed at the time. Apart from a fringe of Emirati online activists who have sided with Israel, most social media reaction — even from some ministers — has been pro-Palestinian.

“Normalisation [of relations] is irreversible but it is very difficult to defend and even talk about in these circumstances,” said Abdulkhaleq Abdulla, a Dubai-based political science professor.

After the UAE signed its accord, there was speculation about whether Saudi Arabia, Israel’s main prize, would follow suit. Like Abu Dhabi, Riyadh has been covertly co-operating with Israel on intelligence and security matters as they share the goal of countering Iran.

But this week’s Israeli assault on Gaza makes that appear ever more remote. Saudi foreign minister Prince Faisal bin Farhan on Sunday said the kingdom “categorically rejects the Israeli violations against Palestinians”, while calling for an immediate ceasefire. 

In Morocco, which established relations with the Jewish state in October in return for US recognition of Moroccan sovereignty over the disputed territory of Western Sahara, the foreign ministry said it was watching events “with deep concern”.

In 2014, during the last major war between Israel and Hamas, thousands of protesters, including government ministers, took to the streets across Rabat, the capital. This time Moroccan police dispersed a small pro-Palestinian protest in the city this week. The newly formed Morocco-Israel Business Council was also reported to have postponed a virtual meeting aimed at encouraging Moroccan investment in Israel.

Public sentiment in the Arab world remained strongly pro-Palestinian, said HA Hellyer, senior associate fellow at the Carnegie Endowment for International Peace. “The absence of protests isn’t an absence of the desire to protest but an absence of permission to protest.”

Restrictions on freedom of speech across the region made it harder to gauge the extent of public anger, Hellyer said, but social media and the extensive coverage on mainstream television showed the “Palestinian question” was still close to Arabs’ hearts.

“Almost half of the messages I received on Thursday for the religious festival marking the end of Ramadan, show pictures of the Dome of the Rock in Jerusalem,” he added.

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Europe looks hopefully past infection rates to reopen economies

The EU’s biggest countries are lifting coronavirus restrictions in the hope that accelerating vaccination programmes will allow a speedier return to normal life. But epidemiologists worry the shift is coming too soon and that progress could yet be reversed.

Over little more than a week, France lifted its travel ban, Spain allowed its six-month old “state of alert” to lapse and Germany eased lockdown. Italy has also steadily loosened restrictions over the past month, with people anticipating returning soon to gyms and indoor pools.

Although the EU’s infections have roughly halved from early April, they remain high in some places, with hospitals under pressure and deaths per week still numbering roughly 1,500 in France and Italy, 1,000 in Germany, and around 600 in Spain.

Antoine Flahault, director of the Institute of Global Health at the University of Geneva, warned the goal “should be to get the virus to a low ebb” across Europe before the summer travel season.

“We need to get to lower levels if we don’t want to restart the problems again too quickly,” he said. “If some places get stuck on a moderate to high plateau, the summer and autumn will be very complicated.”

Overall, the 14-day case notification rate stands at 277 per 100,000 people in the 30 countries tracked by the European Centre for Disease Prevention and Control, down from 489 on April 1. 

The fall has come as vaccines have arrived en masse, and as the EU’s rollout has largely focused first on the most vulnerable people in society rather than those at greatest risk of infection.

About 30 per cent of the EU population has received at least one dose, according to Our World in Data — twice the level of a month ago, although still well below rates in leading countries Israel, the UK and the US.

But many health professionals worry that the level of protection remains too low to guard against further increases in infections as curbs are relaxed. 

It takes about two weeks for rule changes to show up in infection data and hospitalisations and deaths take longer still. So it is still too soon to tell which trend will win out: vaccinations pushing rates down or looser restrictions pushing them back up.

The one thing people can agree on is that the next month will be crucial. 

In France, Lila Bouadma, who heads an intensive care unit at Bichat Hospital in Paris and advises the government, expressed concern about her country’s plan to reopen by June 30. “The fact that the plan has very specific dates without any health metrics or criteria attached to them makes us very worried,” she told France Info radio.

France will reopen outdoor bars and restaurants and non-food retail outlets on Wednesday. It is still logging around 14,000 infections daily, but Flahaut’s model predicts that will fall to around 11,000 by reopening.

Prime minister Jean Castex defended France’s scheme as gradual.

“We are finally making our way out of this crisis once and for all,” he told Le Parisien newspaper. “There will be measures taken if the situation gets out of control locally,” he added, without giving specifics.

But the country’s scientific advisory panel has called — so far without success — for France to adopt a similar approach to Germany, which requires infections to fall to set levels before each phase of reopening.

A reopened Bavarian beer garden in Inning on the Ammersee near Munich © LUKAS BARTH-TUTTAS/EPA-EFE/Shutterstock

This month, German authorities relaxed the country’s six-month lockdown after incidence dropped to 96.5 cases per 100,000 people over seven days, the first time it has dipped below 100 since March 20. In Bavaria, for example, beer gardens, cinemas and theatres have been allowed to reopen since May 10. 

But if the metric rises above 100 cases again, an “emergency brake” will automatically come into force, with restrictions such as night-time curfews.

Even so, Lothar Wieler, head of the Robert Koch Institute, Germany’s main public health authority, warned that incidence remained “still too high” with about 173 of Germany’s 412 districts remaining above 100. 

Jens Spahn, health minister, added that while the latest numbers were “gratifying”, Germans should “take great care not to let this confidence turn into recklessness”. 

Similar concerns have been voiced in Spain, where the legal order that underpinned national coronavirus restrictions ended on May 9, sparking public jubilation and bitter political disputes. With its passing, some regions have scaled back restrictions while others face legal challenges over keeping curbs in place.

Many people’s initial response was to party: police broke up a mass gathering of young people in Madrid’s central Puerta del Sol the night before the change and there were similar scenes in Barcelona and elsewhere in the country.

Politicians have been less festive. The opposition People’s party has fiercely criticised the leftwing government’s refusal to replace the state of alert with new legislation.

But prime minister Pedro Sánchez has justified the decision by saying the country is less than 100 days away from inoculating 70 per cent of the population. “The state of alert is the past,” the prime minister said. “The future is called vaccination, vaccination, vaccination.”

Indeed, while the state of alert was allowed to expire without clear metrics, infections in Spain have recently been running below other major EU economies.

But in Spain, as elsewhere, what really matters is the course of the disease over the next few weeks.

Bruno Lina, a virologist in Lyon who advises the French government, described what he called a “critical juncture”.

“It could really get much better from here — that is a real possibility given the vaccination campaign and lower infections,” he said. “But we have to convince the public to continue being careful.”

Additional reporting by Miles Johnson in Rome

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Vittorio Colao vows to fix Italy’s red tape bureaucracy

Italy’s minister for technological innovation and digital transition has vowed to simplify red tape by accelerating the rollout of a nationwide digital platform for citizens, as part of a €248bn recovery plan designed to reignite the eurozone’s third-largest economy.

Vittorio Colao, a former chief executive of Vodafone, said the online portal will allow Italians to do everything from paying taxes to booking vaccines and simplify overlapping regional and national state competencies.

It will act as a catalyst for the revamp of the pandemic-hit economy led by prime minister Mario Draghi, he added.

“If I had to say why Italy is behind today, it is because of legal and administrative complexity, which as a government we are determined to simplify,” he told the Financial Times. 

He added: “This is the moment to do this. It has not happened in the past because, probably, the urgency was not felt, or probably the resistance was strong. The sad story of Covid is it has not only taken away lives, but hit the economy in many important ways. Now the sense of urgency and need is higher.”

Draghi, former president of the European Central Bank, was tasked by Italy’s president earlier this year to form a government of national unity after its last coalition collapsed. Colao was the chief executive of the British telecoms group Vodafone between 2008 and 2018 and, until becoming a minister, lived in London. A political novice, he is one of several business experts appointed by Draghi.

He said he was determined to extend the use of the administration’s existing online portal to the whole population before upgrading it into “a notification platform that includes everything from fines, taxes, court orders and vaccinations.”

“It looks like science fiction but it is not. We already have 20m people on this platform today”, he said.

About a third of Italians have signed up to the existing platform, called Spid. Colao said that, in the first quarter of this year, the digital service had processed 120m transactions, against 143m for all of 2020.

Colao said that increasing the amount of digital interaction Italians had with the state through the website would facilitate the government’s plans to invest in education and digital skills.

Use of online services in Italy is among the lowest in the EU. Only 38 per cent of Italians aged between 16 and 74 bought goods and services online in 2019, the third lowest share in the EU — on a par with Bulgaria and Romania, according to Eurostat.

Half of Italians aged between 16 and 74 used a portable computer or handheld device to access the internet away from work or home in 2019, compared with 73 per cent of all Europeans on average.

The size of the EU-backed investment package is “eye popping”, Colao said, “but the real core of our plan are the reforms, and investment in people. Italy now wants to invest in its own people and talent, and improve the opportunities for those who are here”.

He added: “You have to invest in the whole conveyor belt, from kindergarten to PhD research. This country has been very erratic in the past and this is not an area where you can be erratic. You have to be systematic because the production cycle for intellectual innovation is 15 to 30 years.”

Colao said these efforts would help the country create conditions to stop the exodus of talents abroad and attract foreign investors.

“The two things foreign investors in Italy always say are: we cannot find the right people, and the system is horrific,” he said. “Am I a hundred per cent confident that we will reach all of this? Well, we have to be ambitious. Maybe we will miss some parts, but if we reach 90 per cent that would put Italy at the front of the race.”

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Pandemic lays bare constitutional power struggle in Brazil

It took just five days for Brazil’s supreme court to spring into action when the Jair Bolsonaro administration last month cancelled the census, citing the Covid-19 pandemic and budgetary constraints.

Justice Marco Aurélio ordered the government to reverse course and conduct the constitutionally mandated decennial survey, which had already been postponed once last year. “It is up to the supreme court to impose the adoption of measures to make the demographic research feasible,” he said.

For many, the ruling — like scores of others taken by the top court during the coronavirus pandemic — was a welcome one in favour of scientific and evidence-based decision-making. But it was also a reminder of how active the top judicial body had become in Brazilian politics.

Since Bolsonaro — a far-right former army captain — came to power more than two years ago, the court better known as the STF has emerged as a bulwark against what some claim are the excesses of the populist leader.

For the justices and those close to the court, this activist stance is permitted by Brazil’s far-reaching constitution and warranted by the president’s autocratic tendencies and denialist attitude towards the pandemic. For critics, the justices are engaged in “judicial activism” that delegitimises the decisions of the court.

Those in between see a vicious cycle, with each side feeding off each other and gradually weakening Brazil’s already fragile institutions.

“It is quite obvious that the STF has been activist for some time [and] has become more and more so. The fundamental problem right now is we have an executive that is just below any standard, that is totally dysfunctional,” said Filipe Campante, a professor at Johns Hopkins University.

“When you have the executive completely unable to perform basic functions, then the other powers are forced to step in. But that feeds back into the dysfunction because they’re not supposed to do it. It feeds the antagonism that Bolsonaro lives off.”

Campante says an example of this is the census, which is an “extremely basic function of the state [that] the executive has proven unable and unwilling to do”.

But the tension between the 11-member supreme court and the executive branch has been laid bare in even starker terms by the Covid-19 pandemic, which has already claimed the lives of 430,000 Brazilians.

In the past year, the STF has made 9,000 decisions related to the pandemic, according to a tally by the court. Most of these rulings backed mainstream scientific approaches to tackling the virus, including the use of lockdowns and social distancing and the importation of vaccines.

They have, however, irked Bolsonaro, who has consistently played down the severity of the disease and attempted to reopen local economies shuttered by state governors. Tensions reached a peak last year when the populist leader joined rallies calling for the closure of the court. He has since pushed congressional allies to try to impeach STF justices.

“In Brazil, we are living in a very unique moment with a lot of conflict and this has been greatly enhanced by the pandemic. There is a clear divide between people who tried to minimise the disease, including those close to the government, and those who recommend caution,” Justice Gilmar Mendes told the Financial Times.

“The court has been the target of much criticism from people who support these denialist measures. They say that we usurp competencies that should be of the executive power, but we are sure that we have fulfilled our role within the framework of the constitution,” said Mendes, who is himself accused by critics of politicising the job.

Brazilian supreme court judges are nominated by the president and serve until retirement at the age of 75. Of the 11-member bench, seven were appointed by former leftwing Workers’ party administrations. One was appointed last year by Bolsonaro.

Much of the court’s power stems from the size and scope of Brazil’s constitution, which at more than 70,000 words is one of the world’s longest and most detailed. The breadth of the charter allows the STF to judge the legality of a vast array of issues.

“This puts the STF at the centre of the Brazilian political debate. If a president — who can even count on the support of the legislature — attacks the constitution, it is the role of the court to impose limits,” said Eloísa Machado, a constitutional law professor at the Getúlio Vargas Foundation.

Opponents say, however, that the court’s interpretation of the constitution increasingly amounts to “judicial activism,” which delegitimises its authority.

Uziel Santana, the president of Anajure, an evangelical lawyers association, said that a decision by the STF last month allowing state and municipal authorities to prohibit in-person religious services during the pandemic was “flawed from a technical and legal point of view”.

Brazilian Supreme Court Judge Edson Fachin Edson Fachin annulled the graft convictions of former president Luiz Inácio Lula da Silv. © AFP via Getty Images

“It is not for the supreme court to act as a legislator, [but] increasingly in recent years it has been legislating. This activism ends up interfering too much in the sphere of another power, and this is not a good thing in a democratic state of law,” he said.

For Santana, one specific problem was the frequency of so-called monocratic decisions, where a single justice can rule on issues with wide-ranging ramifications for society. Between 1988 and 2018, more than 72 per cent of cases ended with a monocratic decision, according to data from the Getúlio Vargas Foundation.

Most recently, justice Edson Fachin single-handedly annulled the graft convictions of former president Luiz Inácio Lula da Silva, restoring the leftwing leader’s political rights ahead of elections next year. The decision was then upheld by a full plenary vote following an appeal by state prosecutors.

“The supreme court in the US has become deeply politicised at some level, but Brazil is even worse because you don’t have parties, you have interests. The justices have political interests and make decisions according to political interests,” said Campante.

“You reach a situation where anything they decide loses legitimacy. You think: ‘what are the political interests behind this’?”

Additional reporting by Carolina Pulice

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UN Security Council to meet over Israeli-Palestinian crisis

International efforts to de-escalate the biggest military confrontation between Israel and Palestinian militants in seven years intensified ahead of a UN Security Council meeting following another night of fighting.

The UN, Egypt and Qatar were negotiating a short ceasefire to get fuel for Gaza’s only power plant into the Mediterranean enclave, blockaded by Israeli since 2007, two western diplomats told the Financial Times. The Gaza Strip, home to 2m people, will run out of fuel by Monday at the latest, an Israeli official estimated. The UN Security Council, chaired by China, is due to meet in New York later on Sunday.

Israel is also due to hold a security cabinet meeting to discuss Hamas’s offer of a long-term truce, an Israeli government aide told the FT. The military wants the Palestinian group to return the bodies of two soldiers. Also at stake is the fate of two Israeli civilians held in Gaza, the aide said.

Meanwhile, the bombing continued unabated for a seventh day. Israel’s military said it had struck the homes of Hamas leader Yahyeh Sinwar and his brother. Sinwar was released from an Israeli prison in 2011 during a prisoner exchange and has since risen to the top of Hamas’s leadership. An Israeli official described him as “the biggest threat”.

Hamas fired rockets at Tel Aviv at around midnight on Saturday and at towns near the Gaza Strip on Sunday morning.

The death toll in Gaza stood at 181 dead, including 83 women and children, Gaza health officials said.

Israel has reported 10 dead, including two children, local medics said.

“We are still in the midst of this operation, it is still not over and this operation will continue as long as necessary,” Israeli prime minister Benjamin Netanyahu said on Saturday night.

Netanyahu defended the biggest military campaign against Hamas since Israel’s 2014 war with the Islamist group as a “just and moral war.” He added: “We are doing everything, but everything, to avoid or limit as much as possible harming civilians.”

His comments came after Israel destroyed the al-Jalaa residential and office block that hosted US news agency Associated Press and Qatari television network Al Jazeera. The bombing raised “concerns about the safety and security of journalists” and “reinforced the need to ensure their protection”, US president Joe Biden told Netanyahu in a phone call on Saturday, according to the White House.

“In recent years . . . the UN Security Council resolutions have not been earnestly implemented and, in particular, the Palestinian right to build an independent state has been continuously violated,” Wang Yi, China’s foreign minister, was quoted as saying by Chinese state media.

Hamas has fired about 2,500 rockets deep into Israel © Getty Images

In the occupied West Bank, which was relatively quiet until Israeli security forces killed 11 Palestinians on Friday, Arab protesters burned tires and threw Molotov cocktails at Israeli soldiers during night protests. Two Palestinians were killed overnight, including one shot by Israeli forces in the abdomen.

The territory, which Israel has occupied since the 1967 war, is the seat of Fatah, Hamas’s rival Palestinian faction, and is home to about 650,000 Jewish settlers, including at least 200,000 in East Jerusalem.

Israel is also seeking to quell riots pitting Jews and Arabs across the country, arresting nearly 900 people.

Israeli Arabs account for about one-fifth of the Jewish state’s population, carry Israeli passports and have the right to vote. But they say they suffer discrimination and are a target for rightwing Israeli politicians.

A man walks past a destroyed building in a heavily damaged residential neighbourhood of Gaza City on Sunday
A man walks past a destroyed building in a heavily damaged residential neighbourhood of Gaza City on Sunday © AFP via Getty Images

The crisis erupted after weeks of tension in and around Jerusalem when police used rubber bullets, tear gas and stun grenades against Palestinian protesters in the compound of al-Aqsa mosque, Islam’s third holiest site. More than 600 Palestinians were wounded.

The al-Aqsa mosque lies in a compound — known to Muslims as the Haram ash-Sharif, or Noble Sanctuary, and to Jews as Temple Mount — that is sacred to both religions.

Hamas entered the fray on Monday, firing rockets into Israel and demanding Jewish settlers in Israeli-occupied East Jerusalem stop harassing Arab residents who were awaiting eviction orders from Israeli courts.

Additional reporting by Katrina Manson in Washington and Primrose Riordan in Hong Kong

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Taiwan imposes strict social curbs to stem its worst Covid outbreak

Taiwan, which has been among the most successful globally at containing Covid-19, has introduced two weeks of strict social distancing measures as it reported more than 200 new cases in its first significant community outbreak of the virus.

The move was a shock for the country which has recorded some of the lowest case counts per capita, with just 1,682 cases and 12 deaths since the start of the pandemic. Its successful containment of the virus has afforded its residents largely normal lives amid the widespread disruption of coronavirus elsewhere.

But Tsai Ing-wen, Taiwan’s president, was forced to take to social media to urge people to stop panic buying as locals bought up staples such as instant noodles and toilet paper on the news on the restrictions.

An outbreak this month ballooned to 206 new locally transmitted cases on Sunday, the health ministry said, adding that 186 of them were in the capital Taipei and its outskirts.

On Saturday, when Taiwan reported 180 new local cases, the government banned indoor social gatherings of more than five people and outdoor gatherings of more than 10 in Taipei and the surrounding area. Mask wearing will be mandatory everywhere, and all shops and restaurants that remain open must register customers’ contact information.

Leisure and entertainment venues were forced to close across the country under the restrictions, which are scheduled to last until May 28.

Authorities further announced on Sunday that they were further stepping up testing and that hospitals will have to suspend all but the most urgent and critical surgery and treatments until the risk of infection has receded.

Taiwan had previously drawn accolades for its success containing coronavirus, recording just 1.682 cases and 12 deaths. It reported 206 new locally transmitted cases on Sunday © Reuters

Taiwan’s strong performance in preventing local outbreaks had buoyed public confidence and satisfaction with Tsai’s administration and her public health team.

That sentiment has now been shaken, particularly because of Taiwan’s slow vaccination rate — a shortcoming partly attributable to health authorities’ caution with vaccines as long as there was no local spread, and partly to the government’s struggle to close a vaccine deal with Pfizer over opposition from China.

Taiwan’s tech-heavy Taiex index dropped 8.4 per cent last week, suffering its worst intraday fall since 1969 on Wednesday as investors anticipated curbs on business to stem the worsening outbreak. Taiex futures were up 1 per cent on Sunday, according to Bloomberg.

Only 186,149 of the population of more than 23m have had their first jab as of Saturday. Health authorities only have about 130,000 doses of AstraZeneca vaccines left; 5.05m doses of Moderna’s shot are expected to arrive in June. Locally-developed vaccines are also scheduled to become available from July.

On Saturday, Taiwan announced the temporary suspension of its voluntary, paid Covid-19 vaccination programme, as it urged those in priority groups to get inoculated as soon as possible.

Tsai said Taiwan had a year of preparation under its belt, with sufficient supplies of protective and medical equipment, as well as consumer goods. “There is no need to panic, be sure to remain calm,” she said on Facebook as she reminded residents that stores would continue to operate as usual.

Government officials posted images of well-stocked warehouses of personal protective equipment and other essentials on social media in an effort to calm resident’s nerves. Carrefour said it would ration the sales of masks, toilet paper, alcohol and instant noodles to prevent hoarding.

Taiwan’s ability to avoid lockdowns and other restrictions during the pandemic has safeguarded the country from the worst of the economic pain experienced elsewhere.

Its gross domestic product grew about 3 per cent last year, before picking up to 8.2 per cent in the first quarter of 2021, a pace not seen in decades. The brisk economic performance has been driven by booming electronics exports and a net inflow of Taiwanese residents last year seeking refuge from the pandemic in other countries, notably the US.

The cabinet proposed a NT$210bn (US$7.2bn) financial support package this week to cushion any short-term blow to consumption from the outbreak.

“As long as we can quickly get things under control and effectively block the spread of the pandemic . . . a new wave of consumption will be stimulated after the situation calms down and this year’s economic growth can still be realised as forecast,” the government said in a statement after a meeting of top economic officials on Sunday morning.

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Zelensky risks Putin’s wrath with swoop against Ukraine oligarch

Volodymyr Zelensky has gone out of his way since becoming Ukrainian president to avoid provoking Moscow. But one action has enraged the Kremlin: Kyiv’s swoop against Viktor Medvedchuk, a pro-Russian Ukrainian oligarch and politician who made Russian president Vladimir Putin godfather to his daughter.

In February, the Ukrainian government placed Medvedchuk on its sanctions list, froze his assets and shut down three television channels under his control for allegedly spreading misinformation.

Zelensky’s move against the businessman, an expression of his frustration at a deadlocked peace process that has failed to end the war in eastern Ukraine, may have been a factor behind Russia’s sabre-rattling and massive troop mobilisation along Ukraine’s borders last month, analysts said.

Undeterred, Ukrainian prosecutors last week sought Medvedchuk’s arrest on charges of treason. On Friday, Putin hit back saying Moscow would respond “promptly and properly, bearing in mind all the threats posed to us”. Ukraine, he added, “is being turned slowly but surely into some antipode of Russia, some anti-Russia”.

Zelensky has come under pressure from the Biden administration to clamp down on Ukraine’s oligarchs and step up the fight against corruption.

Medvedchuk, 66, a former presidential chief of staff in the early 2000s, made his fortune as a lawyer before branching into banking and energy. He was used by Zelensky’s predecessors as a back-channel to Moscow and played a role in the Minsk talks that were intended to end the war between Ukrainian and Russian-backed forces in the Donbas region.

But more recently he has been regarded by Ukraine’s pro-western leadership as the voice of the Kremlin, relaying its views through TV channels owned by an associate and via his leadership of Opposition Platform — For Life, the largest of Ukraine’s pro-Russian opposition parties, which opposes the country’s future integration into Nato and the EU.

“Medvedchuk is not only an oligarch but is also the primary agent of influence for the Kremlin in Ukraine for decades,” an adviser to Zelensky said, explaining the crackdown as a pressing part of a broader effort to break oligarch capture of the country’s politics and economy.

“This makes him very dangerous for Ukraine’s national security,” the adviser added.

The businessman was not immediately available for comment.

Medvedchuk has echoed Moscow’s demands for ending the Donbas conflict, urging Ukraine to hold direct talks with the Russian-backed leaders of breakaway regions and to grant them autonomy that would potentially hand them veto power over future EU and Nato integration. 

“He is Putin’s asset inside Ukraine,” said Orysia Lutsevych, head of the Ukraine Forum at Chatham House in London. He is “like a magnet for all pro-Russian groups, for pro-Russian sentiments”.

Before they were taken off air, the TV stations under his control had for years aired narratives “almost the same as Russian state TV channels”, according to Natalia Ligachova, editor of Detector Media, a Kyiv-based media watchdog.

“Putin is presented as a hero, Russia is a friendly nation with which we need to have friendly ties, our enemy is the west, Ukrainians are fascists and . . . this is not a real nation after all.” 

Through its talking heads or through long monologues by Medvedchuk himself, the channels had spread the view “that Russia is not attacking Ukraine, that Ukraine attacked itself and is itself to blame, that this is a civil war”, Ligachova said. 

Medvedchuk has repeatedly denied owning channels 112, NewsOne and Zik. They belonged to Taras Kozak, an associate of Medvedchuk and fellow pro-Russian MP who was also last week charged with treason. Ukrainian authorities said he is in Russia. Medvedchuk said Kozak is in Belarus.

Addressing a court on Thursday which ordered his house arrest, Medvedchuk — who has been sanctioned by the US since 2014 for undermining Ukraine’s independence and territorial integrity — denied wrongdoing and described the charges as “a politically motivated accusation”.

Zelensky’s administration and independent experts have pointed to evidence that the Kremlin in effect financed the broadcasting and political activities of Medvedchuk and his associates by granting them lucrative energy business interests in Russia. 

The case is still being investigated, but Ukraine’s general prosecutor and state security chief said Medvedchuk and Kozak were for now being charged with treason related to two separate episodes. These include allegedly passing on to Russia information about a secret military unit, and engaging with Russian officials in offshore hydrocarbon transactions off the coast of occupied Crimea.

“Zelensky’s fight against Medvedchuk is a fight against Putin,” said Hanna Hopko, chair of Ants, a Kyiv-based national interests advocacy group.

The oligarch has meanwhile used his political position to undermine Zelenksy’s reform drive. The president has been struggling to overhaul a notoriously corrupt judicial system many of whose judges were appointed under Viktor Yanukovich, the former pro-Russian president who fled to Russia after being ousted by the 2014 pro-democracy revolution. 

In a bid to drive a wedge between Kyiv and its western backers and derail a $5bn IMF rescue, MPs allied with Medvedchuk last year applied successfully to Ukraine’s unreformed constitutional court to neuter recently established anti-corruption institutions. Fearing the court could next cancel farmland sales and other reforms that are conditions for continued western support, Zelensky sidelined its chief justice as authorities launched probes against him. 

Mykhailo Pogrebinsky, a political analyst who describes himself as Medvedchuk’s “friend”, said Zelensky was behaving like a “crook” by silencing critical media and trying to squash the leader of a party backed by 3.5m voters in the 2019 election.

But the rise in the president’s poll ratings in recent months suggested that “stamping out these Russian proxies in Ukraine is widely supported in Ukrainian society”, Lutsevych said.

“Its amazing that after the invasion of Crimea and the invasion of the east, that Medvedchuk still managed to operate for so long and strengthen his influence,” she added.

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UK withholds backing for Joe Biden’s minimum global business tax

Rishi Sunak is holding back support for Joe Biden’s plans for a 21 per cent minimum global business tax rate, as Britain pushes the US to ensure any agreement includes a fairer system for taxing digital technology giants.

The chancellor, who chairs the G7 finance ministers, said he would consider a global minimum levy only as part of a broader package, with Treasury officials fearing Biden is intent on compelling tech firms to pay tax “in California when it ought to be paid in the UK”.

Sunak has come under pressure from Labour to endorse the US plan for a 21 per cent global minimum corporation tax rate. Lisa Nandy, shadow foreign secretary, charged that Britain was showing hesitancy, not leadership.

But the chancellor’s allies argued that backing Biden’s plan would play into the hands of Washington, which wants an early agreement on a global minimum tax rate, not least because the US president is also seeking to raise domestic corporation tax rates to 25-28 per cent.

British officials feared that the US would be unwilling to accept a sufficiently radical shake-up of global tax rules — which date back to the 1920s — to reflect where multinationals make their sales, rather than where the groups have a physical presence.

The UK was also concerned that even if the Biden administration approved a global deal, it could still falter in Congress, leaving the UK high and dry.

Talks on a revamp of global taxation are taking place at the OECD and G20 levels, and the issue is certain to come up when G7 finance ministers meet in London on June 4.

Speaking at an online conference for Oxford university’s Centre for Business Taxation, Mike Williams, the Treasury’s director of business and international tax, said a deal that only looked at a global minimum tax was not politically acceptable. 

“The core UK proposition is that we’ve got to solve the digital tax issue, which we’ve been working on for years,” he said.

Britain has introduced its own digital sales tax, which is expected to raise about £500m per year from big US tech companies by 2024-5.

“It’s not primarily about a minimum tax,” Williams said. “Minimum taxes might help — so long as they work — to ensure businesses pay tax, but it matters as well where tax is paid.”

“In terms of providing schools for the children of Coventry, it is not actually tremendously helpful if more tax is paid in California when it ought to be paid in the UK,” he added.

But Britain is ready to do a deal that covers both pillars of Biden’s plan to overhaul global taxation: a global digital tax and the minimum global tax rate for multinationals.

The chancellor told a Wall Street Journal CEO summit last week that the digital tax was the UK’s priority: “It’s about finding a way of appropriately and fairly taxing large international digital companies.” He has promised to scrap Britain’s digital sales tax if a multinational deal is agreed.

Sunak also said a 21 per cent minimum corporate tax rate was “higher than where previous discussions were”, but that he was open to discussing it. Ireland, with a headline 12.5 per cent rate, is fiercely opposed; Sunak is set to raise the UK rate to 25 per cent in 2023.

Nandy said the Biden initiative on a minimum global tax rate represented a historic opportunity. She is working with Rachel Reeves, the shadow chancellor, to push Sunak to put the issue on the agenda of next month’s G7 leaders summit in Cornwall. “We have to avoid a race to the bottom,” she said.

Robert Palmer, director of campaign group Tax Justice UK, called on the UK to back Biden’s plan, saying the current position was “not a good look” for a government that has said it wants to tackle tax avoidance.

While the deal on the table was “not perfect”, a global minimum corporate tax rate of 21 per cent would be a “game-changer” in stopping companies from paying “ultra-low” tax rates, he said.

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Cairn Energy sues Air India in US over $1.2bn arbitration award

Cairn Energy is suing state-owned carrier Air India in the US to enforce a $1.2bn award against the Indian government, a process that could lead to it seizing planes and other assets as part of a long-running tax dispute.

The lawsuit, filed in the southern district of New York, seeks to establish that Air India is “the alter ego of the Republic of India and therefore jointly and severally liable for the debts and obligations of India itself”.

An international tribunal in December ordered India to pay Edinburgh-based Cairn $1.2bn in connection with a dispute over retrospective taxes New Delhi sought to levy on the company. 

Prime Minister Narendra Modi’s government has appealed the ruling, though it has said it is in talks with the UK oil and gas explorer.

Cairn previously warned that, if payment from New Delhi was not forthcoming, it would pursue Indian assets in jurisdictions around the world.

In the lawsuit, Cairn argued that any purported distinction between Air India and the state was designed to shield Indian assets from creditors.

A verdict in its favour would allow Cairn to seize assets including planes in the US, where Air India operates a number of long-haul flights. It could also complicate the Indian government’s hopes of privatising the flag carrier to help boost revenues squeezed by the pandemic.

India’s finance ministry did not immediately respond to a request for comment, though local media quoted an anonymous official as saying that India would take all steps to defend itself.

The dispute with Cairn, alongside a similar retrospective tax dispute with Vodafone, has proved damaging for India’s reputation as a foreign investment destination, an area Modi has sought to strengthen.

Under a law passed in 2012, India retroactively demanded $1.4bn in tax payments from Cairn related to the UK group’s flotation of its Indian subsidiary on the Bombay Stock Exchange in 2007. 

An arbitration tribunal found that India had violated its obligations under the UK-India Bilateral Investment Treaty in 2014 when tax officials seized Cairn’s residual 10 per cent stake in the subsidiary, which it sold to Vedanta.

Nirmala Sitharaman, India’s finance minister, last month pushed back against the tribunal’s judgment.

“I’ve recently had a meeting with a representative of Cairn, and we are talking,” she told an event hosted by the Financial Times and Indian Express. “However, the international arbitrations questioning India’s sovereign right to tax is a matter of concern, and to that limited extent, we are worried that it sets a wrong precedent.”

Cairn said it was “taking the necessary legal steps to protect shareholders’ interests in the absence of a resolution to the arbitral award”.

“Cairn remains open to continuing constructive dialogue with the government of India to arrive at a satisfactory outcome to this long-running issue,” it added.

Other companies have gone after state-owned assets in order to settle commercial disputes. ConocoPhillips in 2018 seized products from an oil refinery owned by Venezuelan state-owned oil company PDVSA after it failed to honour an international award of $2bn in compensation for the expropriation of Conoco’s assets in 2007.