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2020 Reports

Reports issued by the Office of Information Analysis of the State Department of the Federated Micronations.

Corona Crisis Analysis - 2020.04.14

This report will have to remain a "work in progress" for some time, but it is felt by the SD of the FM that it is necessary to collect and publish the thoughts and comments of the OIA to enable other entities and experts to discuss them.

There are several different aspects regarding the crisis which have to be analyzed:

• The practical questions of how the crisis will develop globally and locally, both regarding health issues and economic issues.
• The questions regarding the ability of societies and organisations to react to the crisis
• The interactions between the Corona crisis and the global Climate emergency.
• Options for international solidarity, especially focussing on European unity
• Possible demands or action items to improve international cooperation

Similar to the SDFM analysis of the election of Donald Trump as the President of the United States, we believe it is best to develop a number of scenarios which may partially overlap, and then try to assign a probabilty to these scenarios.

Regarding the development of the COVID-19 pandemic, the decisive factors are the speed in which a vaccine and/or a therapy will be developed and deployed, plus the ability of governments to limit the propagation of the virus.

Pandemic scenarios

An "optimistic" scenario assumes that in mid 2021, a vaccine will be available and tested, with widespread usage in the second half of that year. At the same time, a high level of social distancing will have avoided any "first wave" explosions or "second waves" in most countries. Rural populations in less developed countries would be protected by distance, and urban populations in these countries by their relatively young age, with a high infection rate but low number of fatalities. This scenario will be referred to as "O" for optimistic.

A pessimistic scenario would assume that vaccine development hits major difficulties, and no antivirals are found which could contain the illness. The timescale of this phase would be assumed to be about 5 years. Social distancing containment would fall in that period, with further waves raising the containment level again. The highly endangered groups of old and less healthy people would suffer a high rate of deceased. This scenario will be referred to as "P".

A "neutral" scenario could be envisioned, but will be ignored for the moment to simplify the analysis.

Economic consequences

Assuming the optimistic "O" scenario, what can be expected for the economies in various parts of the world? For classical economists, the situation already looks dire. After an anemic upswing which mostly was felt by large corporations and investors, the external shock will lead to a time-delayed wave of bankrupcies of smaller companies and of some large ones, those who are not protected by state governments. The risk to the stability of banks will lead to huge injections of liqidity by the central banks. In the less developed countries, the shock will be even harder, as exports will fall and raw materials revenues dry out, as we are currently seeing with oil. Food prices are expected to rise due to the combination of Corona caused reduced production and climate issues like the droughts in major producer countries and the locust plague. All countries and many companies will finance themselves with borrowing, with a rising debt level, both private and public.

But due to the relative short duration of the shock in scenario "O", debt levels will still be manageable in most cases. Central bank money will make sure the interests remain low. Due to the postponement of consumption, many parts of the economy will start running again in late summer. The travel and air transport industries will suffer most. At the same time, money saved here must go somewhere, which means "safe" assets like real estate and gold will continue to rise in value.

The political infighting over which industries should be protected with highest priority has already started.

Addendum - 2021.01.23

The report above was not completed or published by the SDFM, as the combination of crises (Shoolscath / Corona) stretched the ressources of the FM to the utmost at the time. Basically, it can be said that the "optimistic" scenario is coming true, with a handful of vaccines being deployed or under development. "Optimistic" in the limited sense that 100 million people have been infected and 2 million died from the virus. Those numbers might double until a sufficient level of vaccination has been reached.

The high number of infected people, in combination with limited immunity through infection or inoculation, exerts a high evolutionary pressure on the virus which already has resulted in markedly different strains, first detected in England, South Africa and Brazil. That means that the hope for a mid February opening of lockdowns is probably futile in many countries.

"Zero Covid" policies have been successful in relatively isolated countries like Taiwan, Australia or New Zealand. For Europe, those are very difficult to implement. Here, the only way would be a coordinated effort in all of Europe, with strict controls at the external borders. There is no chance, politically, to implement those in time.

The FM states are currently implementing a strict lockdown policy, but external circumstances like the Shoolscath situation require a reduction of this lockdown in certain situations, possibly extended by mid-February.

Addendum - 2021.04.29

Although the "optimistic scenario" may be seen as generally correct (e.g. most FM citizens have already been inoculated once), it has ignored one effect of the crisis. The occurrence of "deniers" or "lateral thinkers", as they tend to call themselves, is a natural thing which was also documented during the Spanish Flu in the early 20th century. But this time, it seems to run deeper, due to the effects of "social" media. While only a small proportion of the movement is active on the streets, they are highly aggressive and will physically attack anybody who is not agreeing with them.