The trends shaping the post-COVID-19 world
Six geopolitical lines will define the contours of the emerging global order
- The COVID-19 pandemic began as a global health crisis.
- As it spread rapidly across nations, country after country responded with a lockdown, triggering a global economic crisis.
- Certain geopolitical trendlines were already discernible but the COVID-19 shock therapy has brought these into sharper focus, defining the contours of the emerging global (dis)order.
Asia ascending, U.S. waning
- The first trend which became clear in the aftermath of the 2008 global financial crisis is the rise of Asia.
- Economic historians pointed to its inevitability, recalling that till the 18th century, Asia accounted for half the global GDP.
- The Industrial Revolution accompanied by European naval expansion and colonialism contributed to the rise of the West, and now the balance is being restored.
- The 2008 financial crisis showed the resilience of the Asian economies, and even today, economic forecasts indicate that out of the G-20 countries, only China and India are likely to register economic growth during 2020.
- European Union’s continuing preoccupation with internal challenges generated by its expansion of membership to include East European states, impact of the financial crisis among the Eurozone members, and ongoing Brexit negotiations.
- The trans-Atlantic divide is aggravating an intra-European rift.
- Rising populism has given greater voice to Euro-sceptics and permitted some EU members to espouse the virtues of “illiberal democracy”.
- Strains showed up when austerity measures were imposed on Greece, Italy, Spain and Portugal a decade ago by the European Central Bank, persuaded by the fiscally conservative Austria, Germany and the Netherlands.
- Further damage was done when Italy was denied medical equipment by its EU neighbours who introduced export controls, which led to China airlifting medical teams and critical supplies.
- Schengen visa or free-border movement has already become a victim to the pandemic.
- The EU will need considerable soul searching to rediscover the limits of free movement of goods, services, capital and people, the underlying theme of the European experiment of shared sovereignty.
- The World Health Organization (WHO) was the natural candidate to lead global efforts against the health crisis but it has become a victim of politics.
- Its early endorsement of the Chinese efforts has put it on the defensive as the U.S. blames the outbreak on a Chinese biotech lab and accuses Beijing of suppressing vital information that contributed to the spread.
- The UN Security Council (UNSC), the G-7 and the G-20 (latter was structured to co-ordinate a global response to the 2008 financial crisis) are paralysed at when the world faces the worst recession since 1929.
- Agencies such as WHO have lost autonomy over decades as their regular budgets shrank, forcing them to increasingly rely on voluntary contributions sourced largely from western countries and foundations. U.S. leadership strengthened the Bretton Woods institutions in recent decades (The World Bank spends 250% of WHO’s budget on global health) because the U.S.’s voting power gives it a blocking veto.
- The absence of a multilateral response today highlights the long-felt need for reform of these bodies but this cannot happen without collective global leadership.
The energy factor
- Growing interest in renewables and green technologies on account of climate change concerns, and the U.S. emerging as a major energy producer were fundamentally altering the energy markets.
- Long-standing rivalries in the region have often led to local conflicts but can now create political instability in countries where regime structures are fragile.
- A vaccine for the novel coronavirus, possibly by end-2020, will help deal with the global health crisis but these unfolding trends have now been aggravated by the more pernicious panic virus.
- Rising nationalism and protectionist responses will prolong the economic recession into a depression, sharpening inequalities and polarisations.