The Middle East Plague Goes Global

A scary virus is sweeping Saudi Arabia. Six million religious pilgrims are about to descend on the country from across the world. The result could be disastrous.

When the Black Death exploded in Arabia in the 14th century, killing an estimated third of the population, it spread across the Islamic world via infected religious pilgrims. Today, the Middle East is threatened with a new plague, one eponymously if not ominously named the Middle East respiratory syndrome (MERS-CoV, or MERS for short). This novel coronavirus was discovered in Jordan in March 2012, and as of June 26, there have been 77 laboratory-confirmed infections, 62 of which have been in Saudi Arabia; 34 of these Saudi patients have died.

Although the numbers -- so far -- are small, the disease is raising anxiety throughout the region. But officials in Saudi Arabia are particularly concerned.

This fall, millions of devout Muslims will descend upon Mecca, Medina, and Saudi Arabia's holy sites in one of the largest annual migrations in human history. In 2012, approximately 6 million pilgrims came through Saudi Arabia to perform the rituals associated with umrah, and this number is predicted to rise in 2013. Umrah literally means "to visit a populated place," and it's the very proximity that has health officials so worried. In Mecca alone, millions of pilgrims will fulfill the religious obligation of circling the Kaaba. And having a large group of people together in a single, fairly confined space threatens to turn the holiest site in Islam into a massive petri dish.

The disease is still mysterious. Little is understood about how it is transmitted and even less regarding its origins. But we do know that MERS is deadly, with a mortality rate of about 55 percent -- a remarkably higher lethality than that posed by its close cousin, the severe acute respiratory syndrome (SARS) virus, which in 2003 terrified travelers across the globe but posed a fatality rate of only 9.6 percent. The MERS coronavirus is new to our species, so mild and asymptomatic infections seem to be rare, but the human immune response to infection is itself so extreme that it can prove deadly in some cases.

Like SARS, the MERS virus spreads between people via close contact, shared medical instruments, and coughing. Once inside the human lung, the MERS virus sparks a series of reactions that all but destroy normal lung function. Patients can descend into pneumonia so severe that they require machine-assisted breathing to stay alive, in as little as 12 days. Unlike SARS, the MERS virus is also capable of attacking the kidneys and can be passed on to others via exposure to contaminated urine. And for some of those who survive acute MERS, years of rehabilitation may be necessary, just like for some of the 2003 SARS victims.

And like back in 2003, when health officials worried about airplane travelers in confined spaces transmitting the virus across the globe, the hajj poses a unique risk of transmission, one that could catapult this still-small outbreak into a full-fledged pandemic. Containment will become nearly impossible as millions of pilgrims flock from virtually every country on the globe to the kingdom during the holy month. Indeed, MERS has already crossed continents; two suspected cases were reported in France as recently as June 12, and confirmed cases have been reported in Germany and Britain. The first patient in each of these cases had traveled in the Middle East before reaching his/her home destination, only then to be diagnosed with MERS.

Traditionally, the onus to protect the pilgrimage and prevent disease rests on the shoulders of the Saudi royal family. Today, that responsibility lies with the kingdom's Ministry of Health, which has deployed all its disease-fighting resources to tracking down MERS.

The ministry also must deal with the distinct possibility that pilgrims from abroad could bring other diseases to the kingdom, especially polio. (Saudi Arabia has been polio-free since 1995, but there was an importation as recently as 2004.) Polio is still endemic in several Muslim countries, including Nigeria and Pakistan, and outbreaks this year have surfaced in Somalia and Kenya. It has been eliminated in Saudi Arabia, but pilgrims from outside could carry the disease back into the region. Worryingly, live polio viruses identical to those circulating in Pakistan were discovered in the sewers of Cairo in January and in Israel in June.

Despite these risks of disease transmission, neither the World Health Organization (WHO) nor the Saudi government has placed explicit travel guidelines in advance of this influx. In spite of having previously predicted that the number of pilgrims would increase from 2012, Saudi Arabia's Ministry of Hajj has issued a directive to umrah visa operators to "cut down the number of foreign and domestic pilgrims by 20 and 50 percent, respectively," reported a local newspaper that was quoting an informed source. In an unprecedented move, Saudi authorities are urging pilgrims to postpone their hajj plans due to "ongoing expansion work" at the Grand Mosque. Saudi clerics have also approved of this decision. It is unclear whether the timing of these announcements is mere coincidence or a discrete Saudi effort to limit the number of pilgrims without causing panic. Either way, cutting down on the number of pilgrims would be a fairly effective way to prevent the spread of MERS or any other virus.

But even if pilgrims postpone their plans for pilgrimage, they are not the only mobile population in the region who could serve as global vectors. As of April 2013, there were an estimated 7.5 million migrant workers living and legally working in Saudi Arabia; this number does not include the many more thousands of laborers in the country illegally. Migrant workers come from across the world, including India, Indonesia, Pakistan, and the Philippines. According to a recent New York Times report, approximately 124,000 undocumented workers have left Saudi Arabia since April 1 under an amnesty program that lets them sort out their status without penalties for visa violations. The MERS outbreak also comes at a time when Saudi officials are looking to deport as many foreign workers as possible in order to free up the job market for Saudi nationals. This has caused tension -- and in some cases violence -- which increases distrust between the two groups and makes it less likely for an infected migrant worker to seek out medical care from, or to cooperate with, Saudi officials.

Fear of a MERS outbreak from migrant workers returning home has prompted other countries to take special precautions. In early June, the Philippine government began conducting thermal scans of incoming migrant workers from Saudi Arabia at the airport in Manila, and the Nepalese government wrote a letter to hospitals and laboratories, directing them to adopt precautionary measures when treating patients with respiratory illness. During the SARS epidemic, the WHO did release a travel advisory, and passengers going through Chinese airports were subjected to a temperature scan; thankfully, neither the Philippines nor Nepal has yet reported a case of MERS.

But another reason for concern over disease outbreak in this region is the huge -- and continually growing -- population of Syrian refugees, currently estimated at 1.6 million individuals by the United Nations' refugee agency, UNHCR. Add to that the almost 4.25 million internally displaced Syrians, living in overcrowded and unsanitary conditions within the country, and the scale of the problem grows. During humanitarian crises, the WHO works with member states primarily in an advocacy and planning role, helping to minimize suffering and death, as well as protect the country's health system. In this capacity, the WHO has already articulated its concerns about the potential for disease outbreaks in Syria and neighboring countries, particularly within the crowded refugee camps that have sprung up in Lebanon, Jordan, and Turkey, noting that the warm summer months bring a heightened risk.

MERS has proved difficult to control even in the most advanced, well-funded hospitals, with clusters of infections being reported in health-care facilities in not only Saudi Arabia, but also Jordan and France. This was highlighted in an epidemiological study of 23 cases in Saudi Arabia, published in the New England Journal of Medicine on June 19 by officials from the WHO and the Saudi Ministry of Health. Before this paper was published, officials from both organizations went to great lengths to limit concern over in-hospital spread, reassuring the public that MERS was not as in-hospital contagious as SARS. But this new study demonstrates the contrary: "A total of 21 of the 23 cases were acquired by person-to-person transmission in hemodialysis units, intensive care units, or in-patient units in three different health care facilities."

Controlling the spread of the virus is only half the battle. There is no MERS vaccine, drug, or simple diagnostic test available. And once MERS patients are identified, caring for them presents its own set of complications. Not only is the treatment for MERS intensive and complicated, but health-care workers must carefully protect themselves so as to minimize the risk of contracting or unwittingly spreading infection.

If in-hospital spread is occurring within state-of-the-art, high-tech hospitals, the potential for MERS transmission inside squalid Syrian hospitals and makeshift refugee clinics is significant. It would seem nearly impossible to mitigate in-hospital spread of MERS in Syria, where over a third of public hospitals are no longer in service and supplies of even the most rudimentary medicines and equipment are scarce. Should the MERS virus get a foothold in such settings, further international spread of MERS seems inevitable, especially amid highly mobile populations fleeing political instability.

Although the WHO has publicly praised Saudi Arabia for "urgently taking crucial actions" in this crisis, it is becoming clear that in spite of officials' cooperation, there are some real practical problems facing Saudi authorities.

First and foremost, the Saudi Ministry of Health is understaffed and in need of assistance. At least one foreign laboratory collaborating with the Saudis received samples of MERS that had deteriorated because they were packaged and shipped incorrectly, rendering them unusable. International collaborators who have been eager to aid the Saudis face staffing bottlenecks, causing delays that are agonizing in an outbreak context.

But that one foreign laboratory was fortunate to get the samples sent to it at all, since the Saudi Ministry of Health has also been embroiled in a "patent" dispute surrounding MERS that has reportedly stymied research efforts by foreign scientists. Last summer, a Dutch team from Erasmus Medical Center in Rotterdam received two patient samples from an Egyptian scientist working then in Jeddah, Saudi Arabia. The Dutch sequenced the MERS DNA and claimed ownership of the samples. All scientists hoping to work on the MERS problem must either obtain samples directly from the Saudi Ministry of Health or sign legal agreements with Erasmus. For example, the U.S. Centers for Disease Control and Prevention (CDC) is still waiting to receive samples of MERS for testing that were collected in October 2012 because the legal teams from the CDC and Erasmus cannot negotiate agreeable terms for a material transfer agreement. These legal delays are unusual, especially during a disease outbreak such as this, and Margaret Chan, director-general of the World Health Organization, publicly criticized Erasmus for putting patent laws ahead of protecting "your people."

Meanwhile, the WHO has its own institutional problems. The organization's emergency-response system is bankrupt (though it only needs $10 million to function for the rest of 2013). Despite these budgetary constraints, surveillance must be ramped up, particularly in the region itself. The WHO has also been trying to improve dialogue and information sharing about MERS, but the organization's efforts have fallen short. Its most recent attempt -- a three-day meeting in Cairo attended by 100 experts -- came up short; the result amounted to little more than language that in essence just reiterated pre-existing agreements about global standards for disease surveillance and reporting that took effect after the International Health Regulations (2005).

Participants at the meeting did recognize the urgency of the situation, however, and acknowledged that the world is at a critical point in the trajectory of the MERS outbreak. As Keiji Fukuda, WHO assistant director-general for health security and the environment, said: "We need to exploit this chance to agree and implement the best public health measures possible across the board, for in so doing, we stand the best chance of controlling this virus before it spreads further."

It wouldn't be possible -- or even desirable -- to stop the flow of people in and out of Saudi Arabia and the Middle East, be they migrant workers, refugees, humanitarian volunteers, or religious pilgrims. The immediate challenges are to identify the animal sources of MERS and stop its animal-to-human spread. In lieu of knowing the virus's origin, human-to-human transmission must be halted -- and the best first step to accomplishing this is through radical improvements in hospitals' hygiene practices and through swiftly identifying infected friends, family members, and co-workers of those who develop the MERS disease.

But that's only a stopgap solution. Unless the many barriers to a transparent international research and information-sharing system disappear, it will be exceedingly difficult to reduce the risk of infection. Otherwise, the world could be dragged into another Black Death, and MERS could easily spread far beyond the bounds of the region for which it is named.



Red Herring

The smart money wants China to slow its overheated economy. So why is everyone so freaked out?

For much of the past two decades, China's economic surge has been viewed with intense skepticism in the financial world and with substantial distrust in foreign-policy land. Yet at every turn, China has defied skeptics and continued to expand, albeit at a slightly slower pace than the near double-digit growth rates seen over the past decade. In fact, for some time, many observers -- as well as the government in Beijing -- believed that China's growth was a bit too strong. Yet the recent market blip has now just added to the widely held conviction that China's economic emergence is a chimera built on rotten foundations of too much real estate, too much credit, and too much government spending on infrastructure.

Last week, latent concerns erupted into a sudden surge of panic that the Chinese economic miracle is about to crash. China's stock market plunged to lows not seen since the heart of the financial crisis in 2009. More ominous, global markets reacted as well, taking seriously -- and not at all in stride -- the possibility that this time an implosion is imminent.

Before dealing with the specifics of the past week, let's stipulate the following: China has defied expectations because it has found, until now, a functional economic and political formula -- whether or not we like that formula. Moreover, despite some minor disputes over islands with Japan and the Philippines, its leadership has avoided drastic foreign-policy missteps that might endanger its domestic economic trajectory. That has been the case at each point of crisis over the past 20 years, and it is likely to be the case now as well.

There were two proximate causes of the recent panic. One, lending rates between Chinese banks soared to alarmingly high levels after China's central bank, the People's Bank of China, made murmurings that credit has gotten out of hand and needs to be curtailed. Second, an evaluation of China's credit system by a Fitch Ratings analyst named Charlene Chu noted that Beijing's official figures mask the vast expansion of shadow banking and credit in China and that the level has now reached a critical point. That followed on the heels of Fitch downgrading China's credit rating.

You may recall what happened almost exactly two years ago when Standard & Poor's (S&P) downgraded the U.S. credit rating: markets plunged, Washington politics turned even more nasty and partisan, and global players jumped on an "I told you so" bandwagon questioning the integrity of the American political system.

In many ways, this week's China plunge -- with its attendant global ripples -- is the same story, except this time it was Fitch rather than S&P. Chu delivered a devastating critique of the Chinese financial system, and by adding up not just official credit outstanding but off-balance-sheet transactions and a host of other less obvious metrics, she came up with a figure of $23 trillion of debt, compared with only $9 trillion four years ago. That also raised the ratio of overall debt, adding up government, companies, and individuals, to nearly 200 percent of China's GDP. The preponderance of that debt is China's corporate debt, much of it funneled through local governments and their banks to state-owned corporations.

According to Chu, the conclusion is obvious: "The credit-driven growth model is clearly falling apart. This could feed into a massive overcapacity problem and potentially into a Japanese-style deflation," she said in an interview with the Daily Telegraph. "There is no transparency in the shadow banking system, and systemic risk is rising."

The only way to describe the reaction to Chu's report is with a cliché: like a match on a tinderbox. Her report coincided with the lack of action taken by the People's Bank of China to ease the interbank credit crunch, and added to that combustible mix was the elliptical language used by U.S. Federal Reserve Chairman Ben Bernanke to suggest that the Fed might soon slow or even halt its $85 billion of bond purchases each month. And voilà, a financial perfect storm. Equities globally plunged 5 to 10 percent. Even more startling was the sharp rise in bond prices, especially in emerging markets that are seen as exposed to China.

At the time of the S&P's downgrade of U.S. credit in 2011, I asked how it happened that we had given so much power to a few analysts at a private financial enterprise. Back then it was a man named David Beers who headed the team that downgraded the United States. This time it is Charlene Chu. Both of them may be brilliant, acute -- and even correct. But it is absurd that their views carry such weight and that financial markets and the media behave like lemmings in according those opinions such respect.

China has indeed seen a substantial expansion of credit, much of it mandated by Beijing and local governments in the wake of the 2008-2009 global financial crisis. Because that credit is funneled through state-owned companies, it shows up as corporate debt rather than sovereign. This is why China has looked better on such metrics as government debt-to-GDP, a ratio so beloved by markets in the past few years. But China has done its own version of Keynesian economics, or government priming of the pump, to keep its economic growth engine humming along.

The new government of President Xi Jinping and his premier, Li Keqiang, however, appears determined to wean the Chinese economy off of easy credit and government stimulus as surely as Bernanke does in the United States. There is, of course, a world of difference between wanting to do that and being willing to accept the possible negative consequences of doing that. In the past few days, both Chinese officials and U.S. central bankers have attempted to calm markets by saying, in effect, "Don't worry; we want to reduce easy money, but we're not about to do it quite yet." Still, the seeds are being sown.

More to the point, in China -- as one friend who sits at the nexus of finance and government in Beijing told me -- Xi and Li are convinced that only a domestic economy built on a foundation of a vibrant middle class can thrive long term. Government infrastructure and housing projects cannot be the foundation, however successful those were in getting China to where it now stands.

You can read this situation in multiple ways. Chu's market-moving analysis is one way: that China is just a credit-sustained house of cards. Danger lies ahead. But another perspective is that Beijing's moves belie a deeper stability: that only because there is now an increasingly robust Chinese economy -- with a middle class in the hundreds of millions -- can the government insist on curtailing credit and speculation, whether in housing or financial assets.

That perspective deserves far more attention. Instead, this toxic brew of animosity about China's rise, pique at the sheltering of Edward Snowden, and frisson of schadenfreude at seeing Beijing's economic model hit a wall (thus demonstrating the superiority of American free market capitalism) makes the lions, and tigers, and bears argument much more convincing. The belief that China must follow the same downward pattern as other once-hot infrastructure- and export-led economies such as Japan also clouds perspectives. Those economies slowed precipitously, goes the argument, and so therefore must China.

Undoubtedly, China's economic growth rate will slow as the country becomes larger and more affluent, just as the United States did. But a China growing at 5 or 6 percent annually (if it even slows that much), fueled by domestic demand, is still a massive growth story: Hundreds of millions of people will enhance their material lives in basic ways and create market opportunities globally. A China growing at that rate organically is still the greatest economic success story in human history.

That is the direction China is heading, away from speculation and corruption and toward that organic domestic growth. Of course, it may not get there. Who knows? But nor can we so easily dismiss the potential that it will make that transition, especially given that it has confounded expectations routinely over the past 20 years. Rather than freaking out, financial markets would be wiser to see the shifts in China as unequivocally positive -- especially if Xi maintains his resolve in the face of significant domestic pressure to maintain previous policies, and in the face of tetchy global markets. But financial markets have exhibited a dearth of wisdom of late.

China remains a pivot of the global economy, and its stability and success are vital to prosperity across the world. Moreover, its economic success is central to its own stability, to how it behaves as an emergent military power, and to how it engages the world politically and diplomatically. A China in crisis will produce a Brazil in crisis, a sub-Saharan Africa in crisis, an East Asia in crisis, and likely a United States in crisis. That is to no one's benefit. The simultaneity of China's credit contraction and Bernanke's hints was greeted as a negative, but there are instead positive signs that organic economic activity in both countries is stable and accelerating sufficiently. The S&P was wrong about the United States in 2011, and Fitch will likely be wrong about China in 2013.