Round two of the “Paycheck Protection Program”: Another disaster for US small businesses and their employees

Barry Grey

The launch Monday morning of the second round of the US “small business” Paycheck Protection Program (PPP) was a debacle. Millions of family-owned entities, desperate for credit and tottering on the brink of permanent closure, were once again shut out from applying for, let alone receiving, government-backed forgivable loans.

As soon as the $310 billion program administered by the Small Business Administration (SBA) began taking loan applications at 10:30 am, its computer system, overwhelmed by the volume of requests, crashed.

Cynthia Blankenship, vice chair of Texas-based lender Bank of the West, told the Financial Times, “First the page would not load, and then it just showed us an error message.” The problems continued throughout the day. Blankenship said her bank was able to process only 15 applications.

TAB Bank in Ogden, Utah had prepared loan applications from 1,100 customers. Five hours after the start on Monday, the bank had gotten only seven loans processed.

The Washington Post quoted Paul Merski of the Independent Community Bankers of America as saying, “All of the reports I have around the country is that it’s been a disaster.”

The big Wall Street banks, which are making a killing off of the government loan program, having taken in $10 billion in fees in the first round, had warned the Treasury Department and the SBA that they had to prepare for a massive flood of loan requests, but nothing was done to avoid the logjam. The SBA said later on Monday that there were double the number of users accessing the system than one any day during the initial round of the program.

The banks have warned, moreover, that the $310 billion allotted for the restart of the program will likely be exhausted in less than a week.

The abortive start of the second round of the program immediately demonstrated that, like the first installment, part of the $2.2 trillion corporate bailout enacted in March, the vast majority of small businesses and their employees will receive little or nothing in relief from the economic collapse triggered by the coronavirus outbreak.

Big businesses were given top priority by the Wall Street banks administering program until the first allotment of funds ran out in less than two weeks. In round two, they will continue to grab a disproportionate share of the funds, while the vast majority of small firms, which employ 48 percent of the US labor force, will be left on their own.

The program, initially backed by $349 billion in taxpayer money, was presented by the media and both big business parties as a boon to businesses with fewer than 500 employees and their workers. Family-owned entities such as restaurants, beauty salons, barber shops, gas stations and small retail stores, as well as other small firms with little access to capital, could receive up to $10 million in government-backed loans that would be turned into grants if the businesses used 75 percent of the loans to rehire or retain their employees and spent the rest on rent and utilities.

Even if the reality lived up to the dishonest marketing spin, the program would do little to prevent a wave of small business bankruptcies and millions of job losses, since it is set to expire on June 30, many months before the economy can reasonably expected to recover from the steepest contraction since the Great Depression and the coronavirus pandemic is certain to continue causing death and sickness on a gigantic scale.

But even before the initial round of the program ran out of money on April 16, less than two weeks after it began, with only eight percent of small firms that applied for loans having received any money, it became clear that the entire operation was a corporate-government fraud.

Despite the fact that the CARES Act, passed last month with the unanimous support of the Democrats, did not require the SBA or the Treasury Department to disclose the identities of the firms receiving PPP loans, it emerged that billion-dollar publicly traded companies, including restaurant and hotel chains with thousands of employees, cruise ship lines, hedge funds, energy companies, medical device firms and other large businesses had received hundreds of millions of dollars in loans, while the vast bulk of genuine small businesses were shut out.

At his Monday press briefing, President Trump described the disastrous start of round two of the PPP as a “glitch,” and said the first round of the program had “worked out well.”

Indeed it had, for the banks and well-connected, large companies with hundreds of millions or billions in revenues and share values in the billions. Last week, press reports revealed that big restaurant chains such as Shake Shack, Ruth’s Chris Steak House, Potbelly Sandwich Shop, and J. Alexander’s had received loans totaling between $15 million and $20 million.

A group of hotel companies chaired by Monty Bennett, a Dallas executive and major Trump donor, received $53 million in loans. The firms control 153 properties, including luxury hotels such as the Ritz Carlton Atlanta.

Over the weekend, more damning revelations emerged. More than 40 hotels, including numerous Marriott and Hilton properties, received loans. AutoNation, Inc., a Fortune 500 company valued at $3 billion, the nation’s largest car dealership chain with 81 locations and 26,000 employees, received nearly $80 million from the PPP program.

The Los Angeles Lakers of the National Basketball Association, valued at $4.4 billion, received a loan for $4.6 million.

A number of large firms that have run afoul of the law were granted loans. MiMedx Group, an Atlanta-based medical device company with 700 employees, was approved for a $10 million PPP loan. Earlier this month, MiMedx entered into a civil settlement with the Justice Department, agreeing to pay $6.5 million to resolve allegations that it knowingly overcharged the Department of Veterans Affairs. Two of its former top executives were indicted last year by federal prosecutors in Manhattan on charges of accounting fraud. It was sued separately by the Securities and Exchange Commission and settled the case for $1.5 million.

Treasury Secretary Mnuchin as well as prominent Democrats, including Bernie Sanders and Elizabeth Warren, have feigned shock and horror over the insider dealing, corruption and lying in connection with the so-called “Paycheck Protection Program.” This is a fraud. They were perfectly aware from the outset that the program was designed, despite the deceptive marketing, to benefit big business and banks and shut down small business and their employees.

In fact, the provision in the CARES Act that allowed restaurant and hotel chains to evade the 500-employee limit, so long as none of their individual units employed 500 or more, was negotiated by Republican Senator Marco Rubio and Democratic Senate Minority Leader Chuck Schumer, known informally as the “senator from Wall Street.”

And all but one Democrat in both chambers of Congress—including Sanders and Warren—voted for the second round of the PPP last week, despite the stench of corruption and lying surrounding the program. House Speaker Nancy Pelosi hailed the bill’s passage as a “historic, bipartisan vote.”

That bill, with $174 billion in addition to the $310 billion for the PPP, did not allocate a penny to aid state and local governments facing massive deficits and preparing to carry out brutal social cuts. Nor did it provide any money for food stamps, under conditions where millions of laid off workers are running out of money for food and massive food lines are spreading across the country.

On the eve of the launch of phase two of the phony “small business” program, Mnuchin announced new guidelines that will supposedly exclude large publicly traded firms, as well as hedge funds and private equity firms, from participating going forward. He also called on big companies that received loans in round one to return the money, and a dozen or so businesses have complied. Among those who have refused to give back the money is Trump’s buddy Monty Bennett, the Dallas hotel magnate.

No one should be taken in by Mnuchin’s exercise in damage control. Behind the chaos and incompetence that abound in the PPP program is a deliberate policy, one that is shared by the entire ruling class and both of its political parties.

Under the cover of the pandemic, unlimited funds are being funneled to the corporate-financial oligarchy and the stock market, while unemployment benefits are withheld from laid-off workers and credit is denied to small businesses. The brutal aim is to use mass unemployment and the prospect of destitution, homelessness and hunger to force a section of workers back to work without any protection from the virus, while slashing wages, pensions and health coverage for the working class more broadly and eliminating millions of full-time jobs. Millions of small businesses are, in the process, to be driven to the wall while mega-companies gain an even greater stranglehold on the economy.

Millions of US workers blocked from applying for jobless benefits

Kevin Reed

While the US government has proceeded expeditiously to hand over trillions of dollars to the Wall Street banks and corporations, millions of workers who have lost their jobs during the COVID-19 pandemic have been blocked from applying for unemployment benefits.

A survey published Tuesday by the Economic Policy Institute (EPI) shows that the widely reported figure of 26.5 million workers who applied for jobless benefits over the past five weeks significantly underestimates the actual number of people who have lost their jobs since March 15.

The EPI survey reveals that for every 10 people who have successfully applied for unemployment benefits during the pandemic, three or four more tried to apply but could not get through to make a claim. An additional two people did not try to apply at all because the process was so onerous.

EPI summarizes the survey results in the following way: “When we extrapolate our survey findings to the full five weeks of UI [unemployment insurance] claims since March 15, we estimate that an additional 8.9–13.9 million people could have filed for benefits had the process been easier.”

The EPI further states: “These findings imply the official count of unemployment insurance claims likely drastically understates the extent of employment reductions and the need for economic relief during the coronavirus crisis.”

The inability of millions of workers across the country to even apply for unemployment benefits stands in stark contrast to the trillions of dollars that have been transferred from the US Treasury and the Federal Reserve to corporations, banks and the super-rich.

At present, the amount of “emergency assistance” provided to the corporations and banks by the US government—since President Trump signed the initial $2.2 trillion CARES Act on March 27—stands at between $4.2 and $6 trillion.

The denial of resources to unemployed workers while unlimited funds are made available to the ruling elite demonstrates that the officially stated purpose of the CARES Act—voted for unanimously by both Democrats and Republicans—as “fast and direct economic assistance for American workers, families and small businesses” is an utter fraud.

The unemployment benefits program included in the CARES Act has been, to a large extent, an elaborate exercise in deliberate mass deception. When Congress and the White House presented the additional 13 weeks of state-based unemployment insurance beyond the typical 26 weeks, plus an additional $600 weekly federal supplement through July 31, 2020, as a social safety net during the COVID-19 crisis, they knew very well that millions of unemployed workers would be unable to take advantage of it.

The Democrats and Republicans knew that many workers would not be able to get through to the antiquated systems in the state capitals across the country, which would be completely overwhelmed and unprepared for the number of people seeking to apply for benefits. They were counting on these systems being so backed up with delays and confusion that workers would give up and end up receiving little or nothing of the government money.

The banks, corporations and wealthiest individuals, on the other hand, were to get vast sums of money without delay.

In an example of the ease with which government money is flowing into the accounts of the largest corporations in America, the Washington Post reported on Monday that nearly half of the “payroll support fund” allocated to the airline and cargo industries had been disbursed. The Post report said: “As of this week, $12.4 billion of the $29 billion in grants has been paid out to 93 carriers to keep front-line workers on the job, Treasury officials said. In all, airlines and air cargo carriers are eligible for more than $50 billion in grants and loans.”

Additionally, the Federal Reserve will shortly begin buying $500 billion in bonds issued by large US corporations. Although this cash is being provided officially as a “financial lifeline” that is to be paid back, there are no provisions in the Fed’s credit program requiring companies to maintain jobs or restrict the funds from being used for executive compensation, stock buybacks or shareholder dividends.

The EPI survey, starting with 24.4 million people who applied for unemployment benefits between March 15 and April 18, shows that the actual number of unemployed workers in the US is somewhere between 33.3 and 38.3 million people. This means that between one-quarter and one-third of the workers who have lost their jobs during the pandemic (8.9 to 13.9 million workers) have been blocked from applying for benefits.

EPI explained the methodology behind its study: “To gauge how well the UI [unemployment insurance] system is handling the new caseloads, we used Google Surveys to ask 25,000 people, ‘Did you apply for unemployment benefits in the last 4 weeks?’”

EPI asked those who responded to this question which one of six different scenarios corresponded to their experience, such as, “I applied successfully,” “I tried but could not get through,” “I did not apply because it was too difficult.”

When added to the number of people who were officially without a job prior to the pandemic—7.1 million workers—the EPI survey results would put the jobless rate in the US at somewhere between 24 and 27 percent, eclipsing the highest rates of unemployment during the Great Depression of the 1930s.

In addition to jobless workers who have been prevented from applying for government assistance, a number of surveys have shown that substantial numbers of those who have successfully applied have not received any benefits.

A study by the Washington Post published on April 23 says that there is a backlog of three million unpaid jobless claims across the US, although “the true backlog is probably far greater.” A Pew Research Study showed that only 29 percent of the 7.37 million who filed for jobless assistance in March, or 2.1 million people, actually received the benefits.

Many states across the country are continuing to report “glitches” and “backlogs” in processing unemployment applications that have been successfully submitted. Among the states reporting delays in processing applications are:

• California: A report on Monday in the Los Angeles Times said that for Californians applying for unemployment assistance, “the last month has been a perfect storm of failures for a state government with a long history of technology problems.” Of the 3.2 million new unemployment claims filed in the last month, 76 percent of those applying have received benefits. This means that 768,000 applicants have not yet received an unemployment check.

• Florida: The state of Florida has published an online dashboard showing a total of 1.9 million applications for “reemployment insurance” since March 15. Because of confusion created by the state instructing applicants who had applied before April 5 to apply a second time, there are multiple applications in this total. Florida then reports 824,412 “Confirmed Unique Claims Submitted,” and of these, just 392,051 (47.6 percent) that have been paid any benefits.

• Oregon: A large percentage of the 300,000 unemployed in Oregon who have filed for government assistance have not received a check and cannot find out the status of their claim. The state’s antiquated systems have been overwhelmed by the volume of applications, and, according to a report in the Oregonian, thousands of workers have been given faulty information about their applications. “The department’s phone lines are overwhelmed, preventing callers from getting through,” the newspaper reports.

Amidst the dysfunction, chaos, incompetence and bureaucratic mismanagement of state unemployment programs in the US, there is a definite policy at work. The ruling class and both of its parties are intentionally withholding financial assistance from broad sections of the working class who are being devastated by the economic impact of the coronavirus pandemic, while offering up unlimited funds in the trillions of dollars to the corporate-financial oligarchy.

There is a deliberate policy of using mass unemployment and the prospect of destitution, homelessness and hunger to blackmail a section of workers into going back to work under unsafe conditions. This policy is, moreover, aimed at the imposition among all workers of a permanent restructuring of economic and class relations, such that full-time jobs, wages, health care, pensions and social services such as education are gutted.

It is becoming increasingly clear that the financial collapse of 2008 was a foretaste of the social and political assault on the working class that is now unfolding. At the same time, millions of workers all over the world are seeing the true reality of capitalism—the subordination of everything, including human life itself, to the ruthless drive of the parasitic elite to increase its wealth. The conditions are being created for revolutionary upheavals. The conclusion that must be drawn is the necessity for a unified international struggle of the working class to put an end to the capitalist system and establish socialism.

COVID-19: Calling an Olympic Truce on Global Conflict

Tanvi Kulkarni 

Calling for a global ceasefire on conflicts around the world, in March 2020, the Secretary-General of the United Nations, Antonio Guterres, said that the world is fighting a “common enemy” in COVID-19. However, this pandemic does not appear to have driven home the Secretary-General’s point, as war and armed conflict continue without pause in different pockets of the world and a global ceasefire is nowhere in sight yet. This article explores the logic, feasibility, and viability of a global ceasefire in a situation in which all bets are off.

Logic

A global ceasefire or truce essentially calls for a temporary cessation of armed conflicts around the world. It is governed by international humanitarian law and requires warring parties to pause active hostilities for a given period so that the international community can collectively address the most outstanding challenges they face at that time.

The logic of any ceasefire follows from the logic of war: the rationale or benefits from the ceasefire must be perceived to outweigh the costs of continuing aggression. In his March 2020 appeal to “pull back from hostilities” and “silence the guns,” Secretary-General Guterres expounded the immediate and long-term necessity for a global ceasefire.

The immediate logic is of course to have international attention and efforts converge to fight the spread of COVID-19 within and beyond national and local boundaries, prepare healthcare systems to cope with the pandemic’s onset and peak, and open corridors for health and economic aid to safely reach the most vulnerable of humankind, including children, women, the poor, those marginalised and displaced, and, in this case, healthcare professionals as well.

In war-ravaged places like Syria, Yemen, Afghanistan, and parts of Africa, where healthcare infrastructure has been significantly crippled by on-going conflict, and huge populations have been displaced, a pause in active hostilities is critical for facilitation of foreign aid. In his speech, the secretary-general also hoped that the cooling-off period offered by a global ceasefire could be used for diplomacy and building confidence, to pave the way for long-term conflict resolution.

Feasibility

It is not unusual for conflict belligerents to negotiate ceasefires for reasons other than crisis management or conflict resolution, such as religious, cultural, or humanitarian motivations. For instance, from 1965 to 1968, an unofficial ceasefire— the Tet Truce—was observed between the Viet Cong forces of North Vietnam and South Vietnam during the Vietnamese festival of Tet in February. Ramzan or Eid ceasefires have been observed occasionally in Afghanistan, Gaza, Syria, and Kashmir. After the 2004 Tsunami that hit in the Indian Ocean, the separatist Free Aceh Group (Gam) in Indonesia declared a unilateral ceasefire so that disaster relief could reach the rebuilding process.

An example that is analogous to a global ceasefire is the Olympic Truce. In 1993, the United Nations General Assembly adopted a resolution reviving the ‘Olympic Truce’; observed at the time of the Olympic Games in ancient Greece. In 776 BC, King Ifitos proposed a truce called 'Ekecheria' (Olympic Truce) for seven days before and after the Games so that sportspersons could travel without becoming collateral in the ongoing conflict between the Greek states. The modern Olympic Truce was adopted before the 1994 Winter Olympics and has been renewed before every Olympic Games. The truce facilitated humanitarian assistance to a conflict-ridden Sarajevo in 1994, and brought together the delegations of South and North Korea to march behind the flag of the Korean peninsula at the Sydney Olympics in 2000.

These examples, particularly the Olympic Truce, show that conflicting parties and countries can and have previously agreed to expressions of solidarity for a common cause. Given the multi-dimensional costs of armed conflict, a global humanitarian ceasefire during this pandemic, agreed to collectively by the international community, could bring much needed, albeit temporary, relief to governments and populations. The deadly conflation of war and pandemic allows governments to misrepresent or even hide information about one or the other. For instance, public memory about the Spanish Flu in Europe was weakened through heavy press censorship during the First World War, and led to the representation of pandemic deaths as war casualties.

A global ceasefire can avoid a similar fate in the time of COVID-19.

Viability

Whereas Guterres’ appeal has garnered a positive reception in many parts of the world,  fighting continues in Afghanistan, Libya, Myanmar, and Iraq. From March through April 2020, ceasefire violations have spiked on the India-Pakistan border in Kashmir amidst lockdowns imposed by both countries to tackle the pandemic.

It can be relatively easier to negotiate ceasefires than to sustain them. Temporary ceasefires are especially fragile. In the absence of formality, they can easily collapse. The local ceasefires declared recently have mostly been announced unilaterally, and could be violated as soon as one side sees benefit in an opportunistic strike. If the global ceasefire is to be a durable one, it should be endorsed by the major powers and monitored by an international body like the UN.  

The solidarity of the UN Security Council, which is responsible for international peace and security as per the UN Charter, is therefore crucial for a viable global ceasefire. The UNSC has been indecisive on the French proposal for limited ceasefires in conflict zones. Reports suggest that the US and Russia fear that a universal ceasefire would inhibit their counter-terrorism and counter-insurgency operations around the world. Current UNSC efforts to reach consensus on a global response to the pandemic have also been held up by the downturn in US-China relations. So far, politics has prevailed over the pandemic.

To rephrase Guterres, the fury of the virus also illustrates the folly of our times.

The Corporate Food System is Making the Coronavirus Crisis Worse

Walden Bello

The global food system has been very much front and center in the COVID-19 story.

Everyone, of course, is aware that hunger is closely tracking the virus as its wreaks havoc in both the global North and global South. Indeed, one can say that, unlike in East Asia, Europe, and the U.S., in South Asia, the food calamity preceded the actual invasion by the virus, with relatively few infections registered in India, Pakistan, and Bangladesh as of late March of 2020 — but with millions already displaced by the lockdowns and other draconian measures taken by the region’s governments.

In India, for instance, internal migrants lost their jobs in just a few hours’ notice, leaving them with little money for food and rent and forcing them to trek hundreds of kilometers home, with scores beaten up by police seeking to quarantine them as they crossed state lines. Estimated at as many as 139 million, these internal migrants, largely invisible in normal times, suddenly became visible as they tried to reach their home states, deprived of public transportation owing to the sudden national lockdown.

With people dying along the way, a constant refrain in this vast human wave was the desperate cry: “If coronavirus doesn’t kill us, hunger will!”

But the food question has been a key dimension of the pandemic in two other ways. One is the connection of the virus with the destabilization of wildlife. The other is the way the measures to contain the spread of the virus have underlined the extreme vulnerability of the global food supply chain.

COVID-19 and Wildlife: The Virus and Ecological Destabilization 

The story of how the novel coronavirus leaped from its animal host to humans in a wet market in Wuhan still has to be told in detail — and with the ruling Communist Party in China so sensitive about its bungling first efforts to contain the disease, this may never come to pass.

One hypothesis making the rounds is that the original host was a bat, while the intermediary host between the bat and humans was a pangolin or scaly anteater. Bats were also the original hosts for the coronavirus that caused SARS, the disease that hit humans in the early 2000s, and MERS or “Middle East Respiratory Syndrome” that made its appearance nearly a decade later. The intermediate hosts, however, differed, with the masked civet serving as the intermediate host for SARS and the dromedary camel in the case of MERS.

Virologists and biologists still have to come to a definitive conclusion as to the intermediate host of the Novel Coronavirus that leaped to some humans at the Wuhan Wholesale Seafood Market. What interests us here is the likely backstory. That background is likely to have involved ecological destabilization caused by the expansion of large-scale commercial poaching, industrial agriculture, residential expansion, and other forms of human invasion of the natural habitat of wildlife.

It is not surprising that the passage from pangolins to humans occurred in China — both in the case of the Novel Coronavirus and that of SARS, which started in Foshan municipality in Guangdong Province, for China is the global center of the wildlife trade, much of it illegal. As food systems expert Mahendra Lama points out, China hosts “scores of both licensed and illegal commercial breeding centers supply tigers, porcupines, pangolins, bears, snakes and rats.” A study by the Chinese Academy of Engineering stated that, in 2016, there were more than 14 million people working in the wildlife-related industry that fetched $74 billion.

The Global Food Supply Chain: The Weak Link 

The other food-related dimension of the COVID-19 pandemic of critical importance is the vulnerability of the global food supply chain.

With the COVID-19 pandemic poised to make its assault on South Asia and Africa, which health specialists thought to be the continent most vulnerable to the virus, the heads of the World Trade Organization, World Health Organization, and the Food and Agriculture Administration made a joint declaration in late March that since “millions of people around the world depend on international trade for their food security and livelihoods,” governments had to refrain from taking measures that would “disrupt the food supply chain.”

FAO chief Qu Yongdu warned, “Don’t let the COVID-19 crisis become a hunger game.”

What the international agencies feared was a repeat of the 2007-2008 food price crisis, when disruptions of the global food supply chain triggered by export restrictions by key grain supplying countries like China, Argentina, Vietnam, and Indonesia forced food prices to skyrocket — adding 75 million people to the ranks of the hungry and driving an estimated 125 million people in developing countries into extreme poverty.

But the current threat to the global supply chain is not just a potential one. The chain is already breaking down at one of its most critical links: migrant labor.

The pandemic has exposed the degree to which farming is dependent upon migrant workers, with more than 25 percent of the world’s farm work done by these itinerant laborers. In an excellent survey, Jean Shaoul tells us that some two-thirds of these 800,000 difficult and backbreaking jobs, whose main features are low pay and long hours, are filled in the harvest season in Europe by workers from North Africa and Central and Eastern Europe. But the Schengen area, comprising 26 European states, has banned external visitors for 30 days and closed many borders.

“Labor is going to be the biggest thing that can break” in the United States food supply chain as well,  Karan Girotra, a supply-chain expert at Cornell University told the New York Times. “If large numbers of people start getting sick in rural America, all bets are off.”

Indeed, belonging to an essential industry, farm workers and workers in the downstream food processing and food retail sectors are in the frontlines of the struggle to contain COVID-19. But many of them are deprived of the most basic protective gear, like facemasks, and work in crowded conditions that make a mockery of social distance rules.

But the global supply chain is not only threatened by problems at the production and processing ends, but by transportation bottlenecks, especially at key hubs. An FAO report vividly captures a developing problem in Rosario, Argentina, the world’s largest exporter of soymeal livestock feed:

Recently, dozens of municipal governments near Rosario have blocked grains trucks from entering and exiting their towns to slow the spread of the virus… Soybeans are therefore not being transported to crushing plants, affecting the country’s export of soybean meal for livestock. Similarly, in Brazil, another key exporter of staple commodities, there are reports of logistical hurdles putting the food supply chains at risk. Internationally, if a major port like Santos in Brazil or Rosario in Argentina shuts down, it would spell disaster for global trade.

There is no doubt that making sure the global food chain is free of disruptions is a short-term priority to prevent starvation and food riots. What is disturbing though is that FAO and other multilateral agencies can’t seem to get it into their heads that the global food supply chain is magnifying the COVID-19 fiasco — that its having displaced local and regional food production systems and making countries less self-sufficient in food has made many of them more vulnerable to pandemics and other emergencies.

Indeed, ships and planes loaded with food supplies have themselves become some of the most effective transmitters of the disease over long distances.

Extending the Chain

The 2007-2008 food crisis and the 2008-2009 global financial crisis should have shown the multilateral agencies the fragility of global supply chains — of the food system in the case of the first and the industrial system in the case of the second, when the financial crisis led to a global recession that closed down many global industrial subcontractors in China.

These developments should have triggered a serious interrogation of the resiliency of the global supply chain paradigm that had become the “business model” of western transnational corporations. Instead of being phased out, however, the food supply chain stretched farther and farther, and local and regional food systems withered even more.

The FAO estimates that global agricultural trade more than tripled in value to around $1.6 trillion from 2000 to 2016. More and more, local and regional food systems that used to provide most of domestic production and consumption of food have retreated in the face of these chains, which are dominated by large processing firms and supermarkets, are capital-intensive, and have relatively low labor inputs compared to smallholder agriculture. These international and regional giants now constitute roughly 30 to 50 percent of the food systems in China, Latin America, and Southeast Asia, and 20 percent of the food systems in Africa and South Asia.

Vertical integration and consolidation at the buyer end of export chains, says one influential study, “are strengthening the bargaining power of large agro-industrial firms and food multinationals, displacing decision-making authority from the farmers to these downstream companies, and expanding the capacity of these companies to extract rents from the chain to the disadvantage of contracted smallholder suppliers in the chains.”

What changes to the global food system does the COVID-19 debacle urge on us?

Destabilization of the Wildlife Habitat Must be Halted

First of all, China must stop destabilizing wildlife habitats.

It must be emphasized that China’s exotic culinary practices involving the illegal commercial poaching of wildlife have now produced two pandemics in less than two decades — SARS and COVID-19. Thus Beijing has a responsibility to ensure that China does not become a source for a third.

Acknowledging Wuhan’s illicit wildlife connection, China’s top law-making body, the Standing Committee of the National People’s Congress of the Communist Party of China, has now banned the wildlife trade. Also, Beijing is a signatory to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and has imposed wildlife crime penalties of $29,441 and life imprisonment.

However, as Mahendra Lama, tells us, the “wildlife trade continues unabated, and the use of more sophisticated e-commerce platforms with highly coded messaging keeps vigilance at bay.” Serious enforcement, involving high-tech methods and not just legislation, must be Beijing’s priority, “so that wildlife traders, supply chain managers, and global storehouses are treated akin to global terrorism actors, booked and dealt severely with when caught.” China, Lama rightfully stresses, “must realize that its status as a global actor has now become inextricably intertwined with local culinary and commercial practices in the wet markets of many of its cities.”

But there is an even bigger challenge that China has to meet, and that is, it must seriously rethink and possibly shelve its flagship Belt and Road Initiative (BRI). A massive trillion-dollar program of building roads and railways and constructing hydroelectric and coal power plants, and setting up mining ventures, BRI projects threaten over 1,700 critical biodiversity spots and 265 threatened species, according to the World Wildlife Federation.

One of these is Sumatra’s Batang Toru forest highlands, one of Indonesia’s most biodiverse regions, where a $1.6 billion hydroelectric power plant poses a danger to the rare Tanapuli orangutan and the critically endangered Sumatran tiger and Sunda pangolin. In the Philippines, the BRI-funded Kaliwa Dam in mountainous Eastern Luzon island is projected to displace some 20,000 indigenous people living in 230 hectares of dipterocarp forests,  as well as pose a threat to rare species of flora and fauna in the area — including the white-winged flying fox, slender-tailed cloud rat, civet cats, wild boar, Philippine eagle, and Philippine deer.

Many of these wildlife are hosts to viruses, like those causing SARS and COVID-19, and they are strongly suspected of transmitting them from bats to humans. Thus many projects connected with the BRI will destabilize local ecologies, posing the threat of triggering future pandemics.

Viral transmission is not the only threat posed by the BRI. According to one study, BRI’s network of roads, railways, and pipelines could introduce more than 800 alien invasive species — including 98 amphibians, 177 reptiles, 391 birds, and 150 mammals — into several countries along its many routes and developments, destabilizing their ecosystems.

The Chinese government must seriously rethink the BRI and radically modify, if not totally eliminate, many of the projects connected with it for public health and ecological reasons.

Adopt Food Sovereignty as the Paradigm for Food Production

Probably the most important measure that we propose is to move food production away from the fragile, corporate-controlled globalized food supply chain based on narrow considerations such as the reduction of unit cost to more sustainable smallholder-based localized systems. While, in the short term, global supply chains must be kept running to ensure people do not starve, the strategic goal must be to replace them, and some measures can already be taken even as the pandemic is at its height.

There are solid reasons for reversing the trend towards the globalization of food production and moving towards more food self-sufficiency. However, the rationale goes beyond just ensuring food self- sufficiency to fostering values and practices that enhance community, social solidarity, and democracy.

The movement towards an alternative food system has gained momentum over the last few decades owing to the growing realization that the way we produce our food is one of the keys to overcoming the alienation of human beings from one another and the alienation of the human community from the planet.

Led by peasants and smallholders, who still produce some 70 percent of the world’s food, this movement proposes the alternative paradigm of “food sovereignty,” the cornerstone principles of which include the following:

+ Local food production must be delinked from corporate-dominated global supply chains, and each country should strive for food self-sufficiency. That means the country’s farmers should produce most of the food consumed domestically, a condition that is subverted by the corporate concept of “food security” that says that a country can also meet a great part of its food needs through imports.

+ The people should have the right to determine their patterns of food production and consumption, taking into consideration “rural and productive diversity,” and not allow these to be subordinated to unregulated international trade.

+ Localization of food production is good for the climate, since the carbon emissions of localized production on a global scale are much less than that of agriculture based on global supply chains.

+ Traditional peasant and indigenous agricultural technologies contain a great deal of wisdom and represent the evolution of a largely benign balance between the human community and the biosphere. Thus the evolution of agrotechnology to meet social needs must take traditional practices as a starting point rather than regarding them as obsolete.

To be sure, there are many questions related to the economics, politics, and technology of food sovereignty that remain unanswered or to which its proponents give varying and sometimes contradictory answers. But a new paradigm is not born perfect. What gives it its momentum are the irreversible crisis of the old paradigm and the conviction of a critical mass of people that it is the only way of surmounting the problems of the old system and opening up new possibilities for the fulfillment of values that people hold dear.

As with any new form of organizing social relationships, the unanswered questions can only be answered, and the ambiguities and contradictions can only be ironed out, through practice, since practice has always been the mother of possibilities.

It has been said that one should never let a good crisis go to waste. The silver lining of the COVID-19 crisis is the opportunity it spells for food sovereignty.

Public Health and Private Profits Under COVID-19 Pandemic

Prabir Purkayastha

During an interview with Jonas Salk, the creator of the polio vaccine, CBS newsman Edward R. Morrow asked who owned the patent for the vaccine. “Well, the people, I would say,” said Salk. “There is no patent. Could you patent the sun?” This is what drives science and scientists like Salk: that science must be for the public good and not the private profit of companies.

While public domain science—universities or public research institutions—creates the key components of knowledge for most medicines or vaccines, it is appropriated by private companies, and governed by the World Trade Organization’s patents regime. The global stock market may have completely tanked in the last few months, but Gilead Sciences, the holder of the patent on the drug remdesivir, currently in clinical trials against COVID-19, has seen its share price rise by a whopping 20-25 percent in the same period. This rise may not last if the drug trials fail to show significant benefits.

Coronavirus might be devastating to many countries—including their people’s health and livelihoods—but it seems that pandemics are good for some companies and their stockholders. Riding the pale horse of apocalypse are companies that hold patents on N95 masks, lifesaving medicines, vaccines, and more.

I am not going to get into the debate of how many people are likely to get sick, and how sick they are going to be. The simple answer is that the number of COVID-19 fatalities, already more than 200,000, is likely to be in the millions. As Chris Giles shows in a Financial Times analysis using UK data, the death rates are far higher for this current period than any flu epidemic we have seen recently. And according to the Financial Times analysis, a large proportion of extra deaths is COVID-19 related. Harry Kennard, a researcher at the Lancet Countdown on Health and Climate Change, in a series of tweets with telling graphs using the UK data shows us the story of extra deaths during the COVID-19 pandemic there.

The world has forgotten what a pandemic looks like, as plague and flu epidemics as virulent and deadly as the one in 1918 have not been repeated for about a century. Now that we confront the SARS-CoV-2 virus, we realize humanity is only one genetic mutation occurring anywhere on the planet away from a new pandemic. Medicines and vaccines against viruses and bacteria are not just for the poorer countries, but also crucial for countries who thought they had left this history behind them.

There are three broad areas that are critical in our battle against the COVID-19 pandemic. They are personal protective equipment, critically the N95 masks; the drugs that are currently being tested against the SARS-CoV-2 virus; and the vaccines that will probably take another 12 months before they are available for the general public.

I will start with N95 respirators or masks that the frontline health workers—including doctors, nurses and other health staff—have to use to protect themselves. It is the lack of N95 masks and other protective equipment that has seen infections among hospital staff, with hospitals themselves becoming hot spots for spreading the infections. In India, the Delhi State Cancer Institute shut down for two weeks as 27 of its staff members tested positive for the virus. In Italy, 20 percent of the health care workers in Lombardy became infected due to a shortage of protective equipment.

So who are the world’s largest manufacturers of N95 masks? Eight of the top 10 global manufacturers of N95 masks are U.S. companies, with 3M and Honeywell topping the list. 3M holds a number of patents—according to the Guardian, “more than 400 patents for respiratory protection”—on the N95 respirator. Its share price is doing comparatively well even under the current stock market meltdown.

We are already aware of the importance of N95 masks with stories of shipments being hijacked by the U.S. even from the tarmac, and Trump threatening 3M with dire consequences under the Defense Production Act established in 1950 during the Korean War. The U.S. asked 3M to stop exports to Canada and Latin America, and ship to the U.S. on a priority basis masks produced in 3M factories abroad.

While protective equipment is critical for health care workers, for the general public worldwide, the question is: Do we have medicine that can cure us if we fall sick?

The short answer is that there is currently no medicine available, and it is unlikely any medicine tailor-made for this disease will be developed anywhere in a short period. What we are doing instead is trying to repurpose existing medicines that are likely to have some effect on the virus.

The World Health Organization (WHO) is currently conducting Solidarity clinical trials on a set of antivirals to see if they provide relief in helping the body to fight the virus. The sets of medicines being tested are: a) remdesivir, originally developed for Ebola; b) chloroquine or hydroxychloroquine, currently making headlines thanks to Donald Trump’s dangerous misinformation, and widely used as an anti-malarial drug, as well as for lupus and rheumatoid arthritis; c) lopinavir with ritonavir, used as an anti-AIDS drug combination; d) lopinavir with ritonavir plus the antiviral drug interferon beta.

Apart from the old anti-malarial drugs chloroquine or hydroxychloroquine, all others are currently under patent protection. Hydroxychloroquine is known to cause heart arrhythmia and there are therefore known dangers associated with its use. Remdesivir was originally developed against Ebola but did not work well and was mothballed. It appeared to show some benefits in COVID-19 cases, though the evidence for benefits is similar to the small French trial that used a combination of hydroxychloroquine and azithromycin. The standard double-blind trials for drug development are currently underway, but the results for remdesivir do not look promising.

What is important about all the other combinations being tested in WHO’s Solidarity clinical trials is that they are all under patent protection. If any of them works—except chloroquine or hydroxychloroquine—the patent holders will make a windfall, barring a Salk-like epiphany of the madness of profiting from the cure for a disease causing a global pandemic.

The key battle over the Uruguay round of trade negotiations that gave birth to the World Trade Organization (WTO) and Trade-Related Intellectual Property Rights (TRIPS) was whether or not countries like India who had disallowed product patents for medicines could continue to do so. Unfortunately, India and other developing countries lost that battle. In 1994 the TRIPS regime came into existence, with countries like India getting a moratorium of 10 years, after which they had to grant product patents.

Given these restrictions, is it possible that India could act as the global pharmacy for a new COVID-19 drug like remdesivir, as it does with AIDS drugs? It is India’s ability to supply AIDS drugs at $350 for a year’s supply—less than one-twentieth the cost of the global multinational corporations’ cost of $10,000-$15,000—that made it possible for millions of lives being saved in the developing world.

The short answer is that it is still possible to break the patent held by Gilead or other private patent holders by compulsorily licensing the medicine under a sovereign right that a country has during health emergencies. Fortunately, India has strong provisions for compulsory licensing that the Left was able to retain when the Indian Patent Act was changed to conform to the TRIPS requirements. The Left held sufficient votes in the Parliament to force the Manmohan Singh-led United Progressive Alliance (UPA) government to accept its demands. While the case in which pharmaceutical company Novartis was denied a patent for Glivec, a cancer-treating drug, in India as it fell foul of the evergreening section patents of the Indian Patent Act is better known, the Patent Act’s compulsory licensing provisions can be particularly useful in the current context. This provision can be used against any patent holder by issuing a compulsory license to a domestic producer, while paying them some royalty. During pandemics, the WTO allows countries to issue compulsory licenses and even import essential drugs from other countries. This enables countries faced with the COVID-19 pandemic, and who might lack domestic manufacturing capability, to import such drugs from countries like India.

In the past, whenever India has considered the use of compulsory licensing for producing, for example, life-saving cancer medicines, the U.S. has threatened India with dire consequences under the Office of the United States Trade Representative (USTR) Special 301 Report provisions. In 2019, the USTR went so far as to put India on its Priority Watch List for intellectual property issues including pharmaceuticals.

An effective solution would be for governments to compulsorily license medicines that might have efficacy against COVID-19. Whether Modi, who rushed hydroxychloroquine to the U.S. under Trump’s threat, will be willing to consider such a move against the U.S. remains to be seen.

Finally, the vaccine. While in the short run, we have lockdowns, physical distancing, contact tracing and quarantine as our temporary weapons for prevention, the only long-term preventive strategy is a vaccine. Herd immunity is not achieved from the entire population (or about 70-80 percent) being infected by the virus, as UK Prime Minister Boris Johnson previously believed, but by widespread vaccination. No major infectious viral disease—small pox, polio or measles—has been eradicated or contained without a vaccine.

And there is a major problem with vaccines and the for-profit pharmaceutical industry. Once the genome sequences are put in the public domain by countries, the private companies use these sequences to develop the vaccines, and, if they are successful, they can fleece the people and countries. This is the battle over the flu vaccine, where countries’ health systems submit the flu genomes that are being spread in their countries to public flu databases, but receive no or little benefits for doing so.

According to the WHO, as of April 23, there are six companies that have entered phase 1 or 2 trials to find a coronavirus vaccine, and another 77 in various stages of development. While most of the vaccine development is either publicly funded or funded by philanthropic institutions, the patent holders are mostly private companies.

So will the COVID-19 vaccines also sell like the flu vaccine for $20 a shot—bankrupting poorer countries to protect their people? Or will we follow what Salk said about the polio vaccine—that it belongs to the people? The U.S. position is clear: vaccines belong to companies even if their research was publicly funded. And if other countries wish to compulsorily license a successful vaccine using the pandemic exception of WTO/TRIPS rules, the U.S. can still use USTR Special 301 and Super 301 sanctions against them as they are threatening to do with India. And as we know from the history of U.S. sanctions, the U.S. believes that it has a right to sanction any country in the world, even if such sanctions violate international humanitarian law.