An Oxford Analytica Briefing Book

Oxford Analytica's recent analysis May 2021

The Oxford Analytica Daily Brief ®

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

Table of Contents • p.3.....Demographic shifts still impacting political balance - May 11, 2021 • p.4.....‘Finishing line’ of pandemic will vary by country - May 6, 2021 • p.5..... will be selective in accepting aid - May 5, 2021 • p.9.....Climate talks highlight shortcomings in global efforts - April 26, 2021

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 2 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

May 11, 2021 Demographic shifts still impacting political balance

New data from the 2020 census will be used to reapportion seats in the US House of Representatives between states Source: US Census Population shi s between US regions have slowed recently but remain politically important

US congressional apportionment after 2022 mid-term elections States' net gains / losses in congressional seats, 1960-2020

Seat change 2020 vote Seat change -1 0 +1 +2 Trump Biden -16 0 +22

AK ME AK ME

VT NH VT NH

WA MT ND MN WI MI NY MA RI WA MT ND MN WI MI NY MA RI

ID WY SD IA IL IN OH PA NJ CT ID WY SD IA IL IN OH PA NJ CT

OR NV CO NE MO KY WV VA MD DE OR NV CO NE MO KY WV VA MD DE

CA UT NM KS AR TN NC SC DC CA UT NM KS AR TN NC SC DC

AZ OK LA MS AL GA AZ OK LA MS AL GA

HI TX FL HI TX FL

Number of seats reallocated after each census Regional seat allocation since 1930 30 400 South 25 350 20 300 250 15 West 200 10 150 Midwest 100 5 50 Northeast 0 0 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Although each state has two Senators, seats in the _ Changes to House districts after each census take House of Representatives are apportioned based on a place in two stages and the first, reapportioning seats state’s population, as measured by a national census between states, is now complete. once a decade. The number of House seats was last increased in 1910, when it was set at 435. Since then, _ State legislatures will now redraw the boundaries the average size of each House district has grown to of their House districts to bring each as close as include more than three quarters of a million people. possible to the national average.

_ The party controlling each state legislature As the population of the country shifted over the last century, states in the Northeast and Midwest lost House (Republicans have 30, Democrats 18) will redraw the seats to those in the South and West. This process lines to favour their own candidates. is still going on, albeit at a slower pace. Results from _ The process must be completed before the end of the 2020 census will see seven seats move between this year, in time for the 2022 elections, and will states, with New York again losing one and Texas produce some bitter political fights. gaining two.

See also: New US census data will drive redistricting -- April 27, 2021

© OxfordOxford Analytica Analytica 2021. 20 2All1 .rights All rights reserved reserved No duplicationduplication or ortransmission transmission is permitted is permitted without without the written the consent written ofconsent Oxford Analyticaof Oxford Analytica 3 Contact us: us: T +44T +44 1865 1865 261600 261600 (North (North America America 1 800 965 1 8007666) 965 or oxan.to/contact 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

May 6, 2021

Red: High COVID-19 mortality risk without NPIs ‘Finishing line’ of pandemic willOrange: vary Significant byCOVID-19 country mortality risk without NPIs Green: Low COVID-19 mortality risk without NPIs

With Israel showing what life is like after widespreadNon-Pharmaceutical Interventions vaccination (NPIs). against COVID-19, the question is who will be next UN World Population Prospects 2019, PopulationPyramid Sources: World Bank, World Health Organization, Our World in Data, Potential speed of exit from the pandemic phase of COVID-19 by country

Median age of Mortality risk without social distancing measures population vs share High Signi cant Low of population 15 15 Niger Niger: 4% of vaccinated with its population is over 60 first dose Zambia Cameroon Zimbabwe World Bank 20 20 income bands Namibia High-income Upper-middle-income Jordan Lower-middle-income 25 25 Low-income Bolivia Mongolia Ecuador South Africa Hospital beds India Mexico Morocco per 10,000 people 30 30 Kazakhstan Saudi Arabia 130 Bahrain Indonesia Israel Median Turkey Qatar Sri Lanka UAE age Brazil 75 Costa Rica 35 35 Armenia Kuwait 50 Ireland Uruguay 10 and New : Zealand China Countries that Australia Norway Russia United States have COVID-19 40 Slovakia Sweden 40 Serbia under control will Belarus Canada be in no hurry to Romania Hungary South roll out vaccines Ukraine Finland France 45 Latvia 45 Bulgaria Croatia Germany Japan Greece Japan: 34% of its population Italy is over 60 50 50 Excludes countries with 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% fewer than 1 million inhabitants Share of population vaccinated with rst dose The most influential factor in COVID-19 mortality is _ Even if countries vaccinate all their vulnerable and age. Once the majority of the vulnerable populations, older cohorts, they will probably still see localised including those over the ages of 50-60, are immunised, COVID-19 outbreaks. hospitalisations and deaths plummet. This allows the relaxation of strict social distancing measures. The _ Countries with low health sector capacity would speed with which countries reach this point will vary, need to vaccinate a higher proportion of individuals. depending on the number of older and vulnerable _ If COVID-19 variants lower the effectiveness of people each country has, its healthcare capacity, ability vaccines, they could derail current trajectories. to access vaccines, how fast it rolls them out and whom it prioritises for them. _ COVID-19 looks set to become endemic in many countries, raising the chances that consequential new Developed countries can complete vaccine campaigns variants will arise. faster than developing ones, even if they have larger older populations. Even slow starters like Japan could _ Endemicity in certain countries would mean travel advance rapidly once roll-outs gather pace. restrictions stay in place for some time. See also: Vaccine passports will come before global standards -- April 16, 2021 Variants may delay, not derail COVID-19 control -- February 15, 2021 Prospects for COVID-19 in 2021 -- November 19, 2020

© OxfordOxford Analytica Analytica 2021. 20 2All1 .rights All rights reserved reserved No duplicationduplication or ortransmission transmission is permitted is permitted without without the written the consent written ofconsent Oxford Analyticaof Oxford Analytica 4 Contact us: us: T +44T +44 1865 1865 261600 261600 (North (North America America 1 800 965 1 8007666) 965 or oxan.to/contact 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

India will be selective in accepting aid

Wednesday, May 5, 2021

The country is receiving overseas aid as it struggles to contain the second wave of its COVID-19 outbreak

India on April 30 received the first items of a USD100mn aid package from the United States, designed to help ease its deepening COVID-19 crisis. In recent years, it has refused foreign aid for disaster relief. In view of its worsening coronavirus outbreak, dozens of countries are now offering supplies Medical aid for India being loaded onto a cargo plane at Paris Charles de Gaulle Airport (Lewis such as medical oxygen and therapeutics. Joly/Pool/EPA-EFE/Shutterstock)

What next

India will be selective about the countries from which it accepts aid. It will reject offers from China, for example, although it will be ready to step up procurement from its strategic rival. More broadly, it will be quick to dismiss suggestions of any formal policy shift on foreign aid, insisting that it is acting simply to plug short-term supply gaps.

Subsidiary Impacts

◦ Pharmaceutical imports from China will surge in the immediate term.

◦ As India continues to rein in vaccine exports, its South Asian neighbours will become more reliant on Chinese-made jabs.

◦ Delhi will refuse aid offers from long-standing enemy Islamabad.

Analysis

India's second wave of COVID-19 infections began in late February. Up to that point, it had registered just over 11 million cases.

On April 30, it recorded more than 400,000 new infections -- a pandemic record. Its case tally is now approaching 21 million, with over 226,000 related deaths.

20.7mn India's COVID-19 case tally

The official data may understate the actual toll.

Several factors have likely contributed to the current crisis, including:

• widespread laxity towards social distancing protocols; • 'superspreader' events, such as election rallies and religious festivals; and • highly infectious COVID-19 variants.

The last shipment abroad of locally made coronavirus jabs was on April 22 (see INDIA: Vaccine diplomacy brings money and influence - March 18, 2021). The pace of India's 'vaccine diplomacy' began to slow a few weeks earlier as the country came under pressure to speed up its own roll-out (see INDIA: Vaccine roll-out faces key obstacles - January 12, 2021).

Domestic manufacturers have not managed to scale up vaccine production at the rate they envisaged.

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 5 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

Earlier this year, the chief executive of the Pune-based Serum Institute of India (SII) warned that US export restrictions were causing a shortage of key raw materials. The SII makes the Oxford/AstraZeneca jab (marketed locally as 'Covishield'), the main shot that India has been exporting and administering domestically.

The Hyderabad-based Bharat Biotech (BB) makes 'Covaxin', the jab it developed in conjunction with the Indian Council of Medical Research.

To date, only about 130 million of India's 1.3 billion people have received a first vaccine dose, and around 30 million a second.

Hospitals around the country are reporting severe shortages of intensive care unit beds, medical oxygen and therapeutics for coronavirus patients. Several states have implemented lockdowns in a bid to curb their outbreaks.

India's needs

Prime Minister Narendra Modi's administration is counting on increased procurement as well as aid to ease the situation. It has established working groups to coordinate:

• government-to-government supplies; • private sector aid and procurement; and • aid from chambers of commerce and community associations.

India has tended to turn down disaster-related aid since the 2004 Indian Ocean earthquake and tsunami, although there is no fixed policy on the matter.

Its priorities right now are to secure:

• liquid oxygen, oxygen concentrators, and oxygen generation and transportation equipment; • drugs such as Remdesivir, Tocilizumab and Favipiravir; and • vaccines and vaccine raw materials.

The health ministry, the military and the Indian Red Cross Society are distributing supplies as they come in.

Aid

Several small countries have offered aid, citing India's earlier provision of vaccines.

Major Western powers and Russia will make more sizeable donations.

United States

Washington has pledged the most aid to Delhi out of more than 40 donor countries. Its recently announced package underscores the growing importance of the bilateral relationship to both sides (see PROSPECTS 2021: India - November 12, 2020). It goes some way to easing recent frictions over vaccine-making supply chains.

The initial delivery includes:

• 1,100 oxygen cylinders, 1,700 oxygen concentrators and several oxygen generation units; • 15 million masks; and • 1 million rapid diagnostic test kits.

The United States has redirected an order of AstraZeneca-making supplies to India. This should allow its partner to produce 20 million doses of the shot.

It will likely give India many of the 60 million AstraZeneca jabs it is making available.

United Kingdom and EU

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 6 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

The United Kingdom was among the first countries to send India aid. It has announced dispatch of 1,200 ventilators, 495 oxygen concentrators and three oxygen generation units.

EU members state have combined resources to provide supplies. Some of the largest pledges include 425 ventilators and 1,250 oxygen concentrators from Ireland, and eight oxygen generator plants from France.

Russia

Moscow has sent Delhi ventilators, oxygen concentrators and drugs including Favipiravir.

Procurement

India is rejecting offers of aid from China -- while accepting them from Taiwan -- but some of its largest pandemic-related procurements in recent weeks have been from Beijing.

Delhi and Beijing have long vied for regional influence. Bilateral relations have been especially strained for the last year because of a border stand-off in the western Himalayas. The two sides have only partially disengaged (see INDIA/CHINA: War may be avoided but distance will grow - June 23, 2020).

India will not accept aid from its rival until ties are normalised. However, it has asked Beijing to keep transport corridors open.

China is emerging as India's largest supplier of oxygen-generating equipment on a commercial basis. More than 60 cargo flights operated between China and India during a two-week period last month.

Sun Weidong, China's ambassador to India, tweeted that Chinese firms have supplied some 5,000 ventilators, over 21,000 oxygen generators, more than 21 million masks and roughly 3,800 tonnes of medicines to India since the start of April.

Private Indian companies have ordered up to 40,000 oxygen generators from Chinese firms.

Separately, Indian officials are negotiating with pharmaceutical firms in several countries to source Remdesivir. The US-based Gilead Sciences is donating 450,000 vials of the drug and active pharmaceutical ingredients to expand Indian manufacturing of it.

Wider approach

India will emphasise that it is not soliciting aid. It will consider offers on a case-by-case basis.

Meanwhile, it will try to step up domestic manufacturing of medical oxygen, drugs and vaccines.

Ramping up vaccine production will be a key priority

The SII was by January producing 70 million Covishield doses per month. It had planned to increase this to 100 million by March but will now look to reach that target by June.

Washington's redirecting of AstraZeneca-manufacturing supplies does little to help the SII's efforts to start making 'Covovax', a shot developed by the US-based Novavax. It wants the US government to ensure that India can receive supplies of the raw materials needed for this.

BB will aim to make 100 million Covaxin doses per month by September.

Separately, a handful of Indian manufacturers will shortly begin production of Russia's Sputnik V shot. India is also importing doses of the jab.

Since May 1, all Indians aged over 18 have been eligible for vaccination.

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 7 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

Domestic vaccine makers can now release up to half their supplies to state governments and private hospitals at a pre-set price. This has raised concerns about whether prices for vaccines will be pushed up, hindering access for poorer people.

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 8 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

Climate talks highlight shortcomings in global efforts

Monday, April 26, 2021

Governments are striving to demonstrate their commitment to tackling climate change, but efforts are still insufficient

A virtual Climate Leaders’ Summit convened by US President Joe Biden on April 22-23, rebooted climate diplomacy after an interrupted 2020 and marked the return of the United States to the forefront of efforts to mitigate global climate change. Washington has re-joined the Paris agreement and World leaders virtually attend the Leaders’ Summit on Climate, April 22 (Mustafa announced new climate commitments, but still faces a credibility gap. It must demonstrate by Kamaci/AP/Shutterstock) November’s COP26 summit, how it can meet its new goals.

What next

Developing countries emphasise the need for increased and more accessible climate finance, but also broader support for pandemic economic recoveries. The G7 summit in June will be a moment for donor countries to unveil new plans, especially on debt relief and concessional finance, to alleviate fiscal crises and enable climate-friendly investments. The UN estimates that the vast majority of pandemic economic recovery spending has not been in environmentally sustainable areas.

Subsidiary Impacts

◦ Private sector companies will face increasing pressure to set net-zero targets.

◦ The use of natural gas as a transition fossil fuel will face greater scrutiny as pressure for drastic climate action increases.

◦ Fossil fuel subsidy reform is likely to return to G20 priorities after having been neglected during the US Trump administration.

Analysis

The International Energy Agency (IEA) projects that global emissions will increase by around 5% in 2021 -- one of the largest ever year-on-year increases -- bringing them back to near-2019 levels, after a pandemic-induced fall of 5.8% in 2020 (see INTERNATIONAL: COVID-19 climate impact may be brief - March 27, 2020). Considerable uncertainties remain in this forecast due to variables such as pandemic responses around the world, the pace of vaccine rollouts, and the extent to which air travel rebounds (see INTERNATIONAL: Developing nations risk a weak recovery - March 26, 2021).

5% Projected increase in global emissions in 2021

New pledges

Last week's summit saw several major economies update their 2030 emission-reduction pledges, but precise details of the policies that underpin their targets are still lacking (see PROSPECTS 2021: Climate change - November 25, 2020). Countries have also chosen different years as baselines to report pledges, aiming to portray their efforts in the most favourable light possible and making comparisons with other countries more complicated:

• Japan's pledge is now a reduction of 46% below 2013 levels (previously it was 26%); • the United Kingdom's pledge is now 68% below 1990 levels (previously 65%); and • Canada's pledge is now 40-45% below 2005 levels (previously 30%).

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 9 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

South Korea will end support for overseas coal development (see : Odds are against hitting 2050 carbon goal - November 5, 2020), while the United Kingdom will include international aviation and shipping emissions in its national carbon budget framework. These are not normally covered in national pledges due to disagreement over how to allocate emissions to different countries. This move may prompt other major economies to follow suit.

Australia made no overall change in its target, instead focusing on new funding for carbon capture and storage, and hydrogen, but these are not mature technologies, and their decarbonising implications are uncertain.

US efforts

The headline US pledge is to cut emissions to 50-52% below 2005 levels by 2030. This is a substantial improvement on the Obama Administration's 2015 pledge to cut to 26-28% below 2005 levels by 2025. The new target nevertheless still amounts to a reduction of just 43% since 1990, falling short of goals announced by the EU (55%) (see EU: Brussels is ramping up its climate legislation - January 14, 2021) and the United Kingdom (68%) on the same baseline.

Some of the underlying policies to achieve these goals have already been outlined by the Biden Administration in its infrastructure plan proposals. These address key emitting sectors, pledging, for example, USD174bn of investment in the electric vehicle sector, and setting the goal of reaching a fully carbon-free electricity sector by 2035. Climate-related spending accounts for up to half of the government's proposals, which amount in total to some USD2.3tn.

However, the proposals are still subject to thin majorities held by Biden's Democrats in Congress. The medium-term political context, including the 2022 mid-term elections, increases uncertainty surrounding the administration's ability to advance follow-on measures in areas such as agriculture and standard-setting mandates. The prospects of a federal carbon price, whether through a carbon tax or cap-and-trade scheme, still look bleak.

The administration had earlier announced a USD1.2bn commitment to the Green Climate Fund (GCF), but this falls short of the USD2bn Obama-era pledge that was discarded by former President Donald Trump (2017-21). With European countries having doubled their contributions in last year's replenishment round, the United States will be expected to make further GCF commitments within the next year.

The United States announced new climate finance efforts at the summit to double its public finance commitment to developing countries (currently around USD2.8bn per year) through channels other than the GCF by 2024, and to triple the share allocated to adaptation finance (USD500mn). These commitments also fall short of other donors' efforts, however. It remains unclear whether the United States will continue to support foreign gas projects.

The summit was preceded by climate envoy John Kerry's Asian tour, which saw a US-Chinese statement affirming both countries' commitment to cooperation on climate change. This was a major shift, at least in tone, from Trump-era approaches. Whether the countries can compartmentalise climate cooperation, and keep it separate from other areas of bilateral tension and rivalry, will be an ongoing question.

Secretary of State Antony Blinken has emphasised renewable energy investment as important in helping to deliver domestic jobs and fulfil climate promises, but also in ensuring that the United States does not fall behind China economically. China's dominance in global solar manufacturing makes any rapid scaling-up of renewables capacity almost impossible to achieve without reliance on Chinese industry.

The United States is also renewing diplomatic engagement with Brazil on environmental matters. Brazilian Environment Minister Ricardo Salles has called for international financing of USD1bn a year to support anti-deforestation efforts.

There are nevertheless major doubts over the Brazilian government's commitment to addressing the issue. It has expanded agricultural land conversions, hollowed out environmental agencies, and

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 10 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Oxford Analytica Daily Brief ® Oxford Analytica's recent analysis

dismantled a previous Amazon Fund, to which Norway and Germany contributed USD1bn over a decade. Within hours of promising to boost spending on tackling deforestation at last week's summit, President Jair Bolsonaro approved a cut to the environment ministry budget.

China plans

China did not make any substantial new announcements at the summit, but Beijing has developed a tendency in recent years to make major announcements independently to advance its own climate leadership claims; it made its pledge to achieve carbon neutrality by 2060 at last year's UN General Assembly (see CHINA: 2060 goal could change climate outlook - October 20, 2020).

President Xi Jinping did suggest coal use would decline after 2025 -- a seemingly positive development, but one that will do little to ease concerns surrounding China's latest Five-Year Plan, which does not rule out the continued construction of new coal power plants. China has previously stated intentions to reach peak carbon emissions by 2030, but quantitative targets have been lacking. The IEA expects that China will account for over 50% of growth in global coal demand in 2021.

>50% China's share of the growth of global coal demand in 2021

China's much-anticipated national carbon trading scheme is now online. This brings some 16% of global emissions within an emissions trading scheme (from 9% previously). The scheme imposes relatively light costs, does not have an overall cap, and only covers the electricity sector for now. However, it is likely to become more demanding.

© Oxford Analytica 2021. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 11 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact Master the macroeconomic and geopolitical environment

We enable the world’s leading organisations Our key services and governments to navigate complex global – The Oxford Analytica environments that impact strategy, policy, Daily Brief® operations and investments. – Global Risk Monitor What sets us apart – Navigator – In-house specialists harness our expert network – VAPOR Risk Ratings to client advantage – Advisory Services – Robust methodology and founding principles keep us impartial – Training and – The pioneers of Global Macro Diligence™ workshops – Founded in 1975, our track record is unrivalled www.oxan.com