I hosted an Instagram Live stream with my guest Dan Levent on Saturday night to discuss the latest situation in markets. This livestream with Levent has become a regular thing now. Joined by thousands, this meeting allows us to analyse not just gold, dollar prices, interest rates and stock exchange but also international current affairs.
As I mentioned in my previous article, the world witnesses some sharp government decisions right after Fed Chair Powell’s encouraging press conference. Germany, the United States and Australia declared that they will sue China over coronavirus and seek damages of up to billions of dollars.
Highly experienced market actor Dan Levent offered us a brief summary of the current situation: According to Germany’s largest paper Bild, Merkel demanded $165 billion coronavirus reparations from China, but the news could not create the intended impacted. However, a statement by Kudlow, Director of the United States National Economic Council and Trump’s top economic adviser, dropped like a bomb on markets on Thursday night. Just like Trump and Peter Navarro, Director for the Office of Trade and Manufacturing Policy in the White House said before him, Kudlow said that Trump demands China pay $160 billion coronavirus damages for not stopping the outbreak at the source.
“China can veto the demand for compensation but…”
Trump will quite probably launch major effort to make China pay for Covid-19 in order to win his voters back before the elections. US President will claim that China failed to stop the outbreak at the source and send tweets saying that he will pursue restitution down to the last penny. Well, he had already implied that this will be his course of action, as you may remember, Trump tried to blame China for the spread of coronavirus by using the phrase ‘Chinese virus’.
China will obviously object paying compensation. Nevertheless, this will not stop governments from continuing to demand restitution. The Washington Post has reported last Friday that administration was considering refusing to pay government debt held by China as retaliation for how poorly the country handled the outbreak.
In the meantime, tensions have further escalated when Australian government said they are ready to sue China as well over coronavirus. The fact that Australia has threatened China in six different ways on Friday didn’t go unnoticed either, causing rapid decline in markets.
I spoke to Prof. Dr. Çağrı Erhan about Dan Levent’s comments: In his Sunday column, Professor Erhan wrote, “Soon, the World might be divided in two fronts as the allies and the enemies of China”. I asked him whether international law really allows filing a lawsuit against China government over its handling of the coronavirus.
Professor Erhan said that China signed a treaty called the Biological Weapons Convention (BWC) on April 10, 1972 and ratified it on February 9, 1973. However, even if UN Security Council convenes to handle the issue, China can solely veto the allegations and avoid any future sanctions. However, if governments file a lawsuit against a specific company or companies, things might get out of control.
Thanks to Professor Erhan, I learned that it is possible for a government or for a company to sue the Chinese company or companies involved in the allegedly poor handling of the coronavirus outbreak. Obviously, this trial would take years. But, I think I would not be wrong in saying that Trump will not give up forcing China to pay compensation until the elections.
