Editor's Note: The following is an internal STRATFOR document produced to provide high-level guidance to our analysts. This document is not a forecast, but rather a series of guidelines for understanding and evaluating events, as well as suggestions on areas for focus. We need to ramp up on a number of issues related to the H1N1 swine flu outbreaks. So far there are 1,663 suspected infections and 103 reported deaths. Nearly all of the infections and all of the deaths are in Mexico (98 percent of both have been in Mexico City itself). The high population density of Mexico City has allowed the new strain to spread very quickly and provided ample opportunities for it to be carried abroad. There are now suspected cases in Canada, New Zealand, Spain, France, Israel, Brazil and the United States. But before we delve deeper into this topic, we must clarify what this is not. It is obvious that we're not dealing with a 1918 style pandemic. The current H1N1 strain – "H1" and "N1" indicate certain proteins on the surface of the flu virus – was first detected in March. While there obviously have been deaths, we are not seeing numbers that indicate this is particularly horrible disease. Something like the 1918 avian virus would already be killing people in significant numbers in places as scattered as Singapore, Buenos Aires and Moscow. It appears that this H1N1 strain is simply a new strain of the common flu that is somewhat more virulent. All evidence thus far indicates that a simple paper mask is effective at limiting transmission, and that common anti-viral medications such as Tamiflu and Relenza work well against the new strain. That does not mean there will not be disruptions. Several governments already are banning the import of North American pork products. Considering that the human-communicable strain has already traveled to every continent, this is a touch silly, but governments must appear to do something — and there is nothing seriously that can be done to quarantine a continent from something as communicable as a flu bug. We expect limited travel restrictions to pop up sooner rather than later. EU Health Commissioner Andorra Vassiliou has already recommended that Europeans rethink any plans to travel to North America. This is not yet a ban or even a travel warning, but those are logical next steps for spooked governments. Several states have been using thermal scanners at airports to check passengers for fevers, and so isolate potential carriers (this measure is of limited use — once a carrier is in the airport, he has probably already spread the virus).
The busy folks at the Centers for Disease Control and Prevention (CDC) need to become our new best friends. The CDC is not like the Federal Emergency Management Agency (FEMA) — it is not tasked to provide any hands-on, local support. Instead, they are a sort of brain trust of researchers that decode the virus, and based on their findings, produce recommendations as to how to limit the virus' spread and mitigate the virus' effects. At present the CDC has not yet decoded the virus. We also need to touch base with various national health authorities the world over who were stressed about a possible H5N1 outbreak in 2007. Many of the procedures that were put into place to deal with a potential H5N1 catastrophe (information dissemination, vaccine dissemination, antiviral stockpiles, etc) remain applicable for combating this new H1N1 strain. We need to familiarize ourselves with what the thresholds are for the major health authorities. Some question to ask: At what point would you consider quarantines? At what point would you release antiviral stockpiles? How big are those stockpiles? What steps are you taking to detect new cases? Are there any travel or trade restrictions that you are considering or implementing? Are there any places in the world where H1 flu strains are not prevalent? Once you have the flu, you develop a natural resistance to not just that specific strain, but any strain that is somewhat similar. H1 has been present in the United States for years and H1 strains regularly make it into American flu vaccines. Since it is believed that it is the H1 portion of this new virus that has been tweaked, in theory this will provide Americans with some limited protection. Are there any national populations that lack this protection? We need to look at trade as well. Already Russia, China and the Philippines have barred pork imports of North American origin. (Incidentally, you are never at risk of contracting flu viruses from meat products unless you fail to cook it thoroughly.) We need to look at the trade question from two points of view. First, what trade flows (primarily pork) could be directly affected. Second, the global economy really does not need a major confidence hit right now. We need to be extremely vigilant of any indirect impacts this will have on capital availability, travel and consumer spending in the current fragile economic climate. Asian and European stock markets had a bad day today, but not inordinately so (Japan's Nikkei — one of the world's largest exchanges by value — actually rose a bit). But the biggest question is why have there been deaths in Mexico City and not anywhere else? The idea that the Mexican health system is subpar does not hold: most people do not seek medical treatment for flu symptoms, so medical quality does not yet seriously enter into the picture. The explanation could be nothing more complicated than the fact that the strain first broke out in Mexico City and has not yet advanced far enough elsewhere to produce deaths (and if that is the case we should be seeing some terminal cases in the United States in the next few days). So far the CDC does not have an opinion on this topic, but we need to discover if there is something fundamentally different about the situation — or the virus — in Mexico vis-a-vis the rest of the world.