Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

India's shot at diplomacy

Written by Li-Ann Chin, associate 
Edited by Tom Gillingham, associate partner
19 February 2021

Good morning,

As one of the world’s most in-demand commodities, Covid-19 vaccines appear to have become the latest currency in many nations’ foreign policy approaches. Infamous for its ‘mask diplomacy’ at the start of the pandemic, China moved on to offer countries in Africa and Southeast Asia priority access to its homegrown vaccines long before one was deemed safe for public usage elsewhere in the world.
 
China is not alone in wanting to use vaccine largess to boost its soft power, either. Based in the city of Pune, the Serum Institute of India – the world’s largest vaccine factory – churns out about 2.5 million doses of the AstraZeneca-Oxford vaccine a day. The speed of production has allowed India to dole out generous donations to its friends and rivals alike, effectively emerging as the latest global vaccine superpower. Since starting vaccine exports last month, the country has shipped approximately 23 million doses, with 6.5 million gifted to Seychelles, Afghanistan, Bangladesh and Cambodia.
 
India’s vaccine drive has provided it with a valuable new route to regional influence, after years of watching Beijing make political gains in its own backyard – in the Maldives, Sri Lanka and Nepal, to name a few. Prime minister Narendra Modi has emphasised that the nation will continue prioritising South Asian countries in access to its vaccine supplies, as part of its ‘Neighbourhood First’ policy.
 
Notably, one of India’s largest vaccine donations has been to Nepal, where diplomatic relationships are at an all-time low. The past five years have been marked by increasingly territorial border disputes between both parties, which culminated in India accusing the latter of cosying up to China.
 
Situated in the Indian Ocean and separated from peninsular India by the Palk Strait, Sri Lanka is yet another island sandwiched between China and India’s rivalry. In late January, a donation of 500,000 doses was received by the Rajapaksa government from New Delhi.
 
The extent to which geopolitical gains can be reaped from India’s vaccine diplomacy remains to be seen, but for now, the strategy appears to be proving a valuable tool in its efforts to suppress Beijing’s growing influence across South Asia. After years of playing second fiddle to its regional rival, this initiative currently looks like a win for New Delhi.

News

In a vaccine diplomacy move closer to home, prime minister Boris Johnson is expected to pledge to donate a majority of the UK’s surplus vaccine supply to the Covax programme – a global vaccine-sharing scheme aimed at securing doses for poorer nations – in a speech to a virtual G7 meeting today. Decisions on timing and the scale of any surplus will be decided later in the year once the UK’s domestic vaccination rollout is assured, it is understood.
 
Lockdown restrictions in Northern Ireland will be extended until 1 April, first minister Arlene Foster has confirmed. A gradual return of schools will begin on the week of 8 March, followed by a full-time return for students in exam years on 22 March. Ten people from no more than two households will also be able to meet outdoors from 8 March onwards.
 
Nasa has successfully landed its Perseverance rover on Mars, in a deep crater near the planet’s equator called Jezero. The six-wheeled vehicle will now spend the next two years drilling into the local rocks, looking for evidence of past life. This marks the second one-tonne rover that Nasa has landed on Mars.
 

Business and economy

In a bid to keep the City competitive post-Brexit, the UK Treasury is reportedly considering scrapping an EU regulation that limits banker bonuses to 100% of their salary. Peter Gibson, MP and chair of the All-Party Parliamentary Group on Financial services said, “with Brexit complete – and many regulatory powers returning to the UK for the first time in decades – it is crucial that we now get the new framework for financial services regulation right.”
 
Facebook is facing international condemnation for its decision to ban all news sites in Australia, with British MPs criticising the tech giant for showing a “staggering lack of respect” for democratic processes. Julian Knight, chairman of the digital, culture, sport and media select committee has cautioned that the actions of Facebook will lead to questions over whether the UK government should toughen its upcoming online harms legislation. (£)
 
Chancellor Rishi Sunak is expected to announce today that a final report on a review of business rates will delayed until autumn, which will consider the case for an online sales tax. In the meantime, he is expected to announce in the spring budget next month an extension of the year-long business rates holiday for retail, hospitality and leisure. (£)
 
The UK is set to launch a “high-risk” science agency designed to fund ground-breaking discoveries, which will sit within the department of Business, Energy and Industrial Strategy. The agency, Aria, is expected to receive a funding of £800m over four years and will be modelled on the US Advanced Research Projects (Arpa), which supported research that led to the internet and GPS. Recruitment for a chief executive and chair for the agency is scheduled begin in the coming weeks.

Columns of note

In The Guardian, Ros Coward offers up an alternative argument on how the government’s national planning system is destroying rural England, rather than protecting local communities and promoting the green recovery that Britain needs.
 
In December 2020, the European Commission launched two proposed laws to address the uncontrolled growth of the tech groups. Apart from the General Data Protection Regulation in 2018, this is the EU’s first real attempt to regulate the internet. In the Financial Times, Dita Charanzová likens this example Beijing’s internet censorship and argues that [f]it risks isolating the EU.

Cartoon source: The Times

Markets

What happened yesterday?

The FTSE 100 ended the session down 1.4% at 6,617.15, and the FTSE 250 was 1.02% weaker at 20,933.87. Sterling was in a strong position, by contrast, last gaining 0.71% on the dollar to trade at $1.3955 and advancing 0.36% against the euro to €1.1554.
 
Across the Atlantic, stocks on Wall Street closed in negative territory on Thursday, as the Department of Labour’s weekly jobless claims report fell short of estimates. At the close, the Dow Jones Industrial Average was down 0.38% at 31,493.34, the S&P 500 lost 0.44% to 3,913.97, and the Nasdaq Composite was 0.72% weaker at 13,865.36.
 
In company news

Barclays ended in the red by 4.44% even after it reinstated its dividend and said it would buy back up to £700m of shares, as it reported annual profit ahead of forecasts. Other banks followed suit, with NatWest down by 3.85% and Lloyds down by 3.7%.
 
Moneysupermarket rocketed 7.09%, while Hochschild Mining was 2.91% weaker, after both reported their full-year results. Elsewhere, Imperial Brands and GlaxoSmithKline fell by 2.47% and 1.15% respectively, as their stock went ex-dividend.

What’s happening today?

Finals
Natwest Grp
Segro
TBC Bank Group

Q4 Results
Natwest Grp
TBC Bank Group

AGMs
Watkin Jones

Annual report
Natwest Grp

UK economic announcements
(00:01) GFK Consumer Confidence
(07:00) Retail Sales

Int. economic announcements
(07:00) Producer Price Index (GER)
(09:00) Existing Home Sales (US)
(09:00) Current Account (EU)
(10:00) Consumer Price Index (EU)
(13:30) Building Permits (US)
(15:00) Existing Home Sales (US)

Source: Financial Times

did you know

As a result of vaccine donations from both India and China, the Seychelles now ranks third in the world in terms of the proportion of its population that has been inoculated, behind Israel and the United Arab Emirates. (Source: Wall Street Journal)

Parliamentary highlights

House of Commons

No business scheduled

House of Lords 

No business scheduled

Scottish Parliament 

No business scheduled

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on email