While coronavirus’ impact on the global economy remains dramatic and more deep-rooted than any other shock ever witnessed in recent economic history, the virus’s consequences for the geopolitical order could be far more consequential. It is almost certain by now that we are going to see a radical shift in the global political economy as each nation enters a post-COVID world. And, this will depend on two factors: a) the relative degrees of economic recovery seen in nations who are badly hit by the pandemic versus others who might have been hit with less costs surfacing; and b) the shifts seen in domestic political scenarios of all affected nations.
Well before the pandemic, a new wave of populism, with coercive-authoritarian tendencies, and a need to strengthen nation-states in a backlash against a multilateral-globalist order, was seen on the rise.
The pandemic offered an opportunity for either increasingly more multilateral cooperation amongst G20/G7 actors and the rest of the world, or for reverse, see a retraction in multilateral political cooperation from existing (or new) multilateral arrangements.
US ‘Abdicates’ Responsibility As Leader, China Pushes ‘Propaganda’
So far, as the crisis is still unfolding, many critical multilateral arrangements in place – like the G20/G7 – have played a limited role in presenting a unified front, or in reassuring and providing effective measures of relief to the most affected nations.
The G2 ‘Great Powers Club’ too, that is, US-China, have faced criticism for displaying weak global leadership, as the pandemic has infected one nation after another.
The US’s own domestic scenario (seeing the second largest number of reported deaths due to COVID-19) and the state of leadership – under President Trump – has showcased a weak international position for the United States to lead efforts in bringing nations together in fighting the virus, or even offer necessary aid/relief to many developing and less-developed countries.
Rather, under Trump, it has been engulfed in undertaking more protectionist measures to restrict exports and supply of essential medical equipment to neighbouring countries (and close allies) like Canada, and is now considering restricting its contribution(s) to the WHO.
The Chinese state, on the other hand, has utilised the opportunity to push its propaganda / narrative internationally, while emerging as a ‘costly’ supplier of medical equipment for nations (including the US). Despite its effort in providing for the increased short-term demand for medical supplies, it has continued to receive severe criticism for pursuing ‘virus-censorship’, keeping most countries in the dark (including the WHO) on the virus and its contagious spread, especially in the months of January-February (2020).
Post-COVID World: Authoritarian Leaders Gaining More Power?
Japan has now even offered financial support to its firms for withdrawing their operations from China.
And in a post-coronavirus economic scenario, many developed nations (in Europe and North America), especially those with a higher trade/economic exposure to China, may re-consider disentangling direct trade relations with China and/or pursue a decoupling of supply-chains (those heavily reliant on China).
We are also witnessing signs of authoritarian leaders exerting more control on their citizenry and (re)defining the sovereign command.
China is already commanding greater authoritarian control and surveillance on its citizens under President Xi. Boris Johnson, despite UK witnessing a surge in COVID-19 deaths, has in fact seen a rise in his approval ratings in the UK. And, Trump in the US, is using this crisis-opportunity to get more national attention in an election year, projecting himself as a ‘war-time president’ (his approval ratings have also gone up), while pursuing his xenophobic identity politics agenda, attacking China first, and now the WHO.
As Yuval Noah Harrari argued in a recent column, the choices people and governments make now shall (re)define the world they (or rather we) inhabit after the storm passes. And, in making choices, both governments and nation-states need to be wary of their long-term ramifications. One key pattern being observed in the case – as highlighted in most affected nation-states so far – is how the fight against coronavirus has fostered support for strong leaders across the world.
For example, the nationalist government in Hungary – a member of the democratic regional union of European Union – recently passed a law granting sweeping emergency powers to Prime Minister Viktor Orban in fighting the coronavirus pandemic.
The law grants almost absolute discretionary authority to Orban, by sidelining all parliamentary due process to have the power to rule by decree indefinitely.
‘Economic Crisis, Unemployment Fuel Support for Authoritarian Leadership’
Hyper-nationalistic sentiments that were earlier finding a majoritarian voice for concerns of national security, are doing so now in begetting urgent social security (healthcare, direct economic relief for those unemployed etc.).
These patterns in the (re)ordering of the global politico-economic world order are surely not new, if one draws historical evidence from the political and economic history of the 1930s – the decade of the aftermath of the Great Depression (especially in countries within Europe, Latin America, the US).
Social conditions of economic deprivation, rising unemployment rate, fuelled the rise of authoritarian leadership (including Hitler in Germany), amidst a strong public sentiment to assert strong political and economic nationalism.
Barry Eichengreen quite appositely explains in his recent book, The Populist Temptation:
(In the US of 1930s):
“There was economic nationalism all over in the form of trade wars.. There was Oswald Mosley’s antisemitism…There was the harassment and deportation of Mexican Americans, including even hospital patients, by the Los Angeles welfare department and US Department of Labor..”
These are the same realisations, as Eichengreen argues, that gave rise to the New Deal in the 1930s for a ‘progressive social order’ and the Beveridge Report in 1942, which created a very different social, economic and political order than existed before. In the financial world, more banking regulations happened (post the Great Depression), and the international monetary system of the gold standard collapsed, which led to the establishment of a new Bretton Woods order.
The World’s Relationship With China May Change
We are not in the 1930s anymore, and while parallel insinuations might be both appealing and tempting to make, the post-coronavirus political machinery might witness a more legitimate shift of general public acknowledgment towards the adoption and preference of authoritarian, command-control governance in different nation-states.
A plea for national security may go hand-in-hand with that for social security.
For some nations however, where authoritarianism was deeply entrenched in State-capacity, there might be a centrifugal effect induced by the pandemic taking the public sentiment away from a central-command model of governance (from unfreedoms to asking for more civic and socio-economic freedoms).
For example, in China, there has been already a growing consensus of the general failure of its party leadership under President Xi, in not only containing the pandemic, when early warnings were provided, but also in handling the crisis by not being transparent with the world, which led to many other countries becoming vulnerable to the virus.
It is more than likely that in a post-coronavirus scenario, there is going to be more pressure on China and on its moral and legal responsibility in case of the spread of the virus. At the same time, most nation-states might want to disentangle, or restrict their economic interdependence on China for their manufacturing and commodity needs. Sino-global relations may not be the same in the new world we inhabit.
Towards a ‘New Normal’
Whether a (renewed) revival of political-populism observed in a centralised (authoritarian) form of strong-man leadership actualises and leads to a transition in nation-states’ economic preferences in the post-pandemic world, is yet to be seen. What is clear though, drawing from Yuval’s analogy, is that the world after coronavirus will be far more different for all social, political and economic reasons. Even activities and patterns of production, consumption and distribution are likely to set into a new-normal for much of the next decade to come.
(The author is Associate Professor of Economics, OP Jindal Global University. He is currently Visiting Professor, Department of Economics, Carleton University. He tweets @prats1810. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)