The script of disruption and a new order

Source: By M.K. Narayanan: The Hindu

The COVID-19 pandemic is unprecedented, involving as it does far too many variables. The very complexity of the novel coronavirus leads to radical uncertainty. Hence, it it unlikely that the world will ever be the same again. Abnormal could well become the new normal.

Pandemics have often changed the world and reshaped human society. Empires have collapsed. Commentators are already talking of fundamental alterations in governance and business norms. What is left unsaid — and likely to pose an even bigger challenge — is the extent to which the pandemic will impact human values and conduct. There is already concern that a diminution in human values could occur, and with this, the concept of an international community might well cease to exist. Each nation is tending to look inwards, concentrating on its narrowly defined national interests.

Institutions under fire

It is singularly unfortunate that at a time like this, existing international institutions such as the United Nations, the United Nations Security Council and the World Health Organization (WHO) are seen to have failed to measure up to the grave challenge posed by the pandemic.

While the UN Security Council is under attack for being slow in dealing with a situation that appears, at least on the surface, far graver than any military threat in recent decades, WHO has been tarred with the charge of bias and of grossly underestimating the nature of the epidemic. That prestigious global institutions should have been singled out for attack at this time speaks volumes about the mood prevailing across the world.

Economic shock

There are many other aspects of the COVID-19 crisis that will drastically impact the globe. On the economic front, the World Bank has already predicted negative growth for most nations. India’s growth forecast for the current fiscal year has been put at 1.5% to 2.8%. Contraction of the economy and the loss of millions of jobs across all segments will further complicate this situation.

What is likely to change even more dramatically are certain other aspects relating to political management and security. Both terms are set to gain new meanings. The role of the state as an enforcer of public good will almost certainly become greatly enhanced. The dominant imperative would be to not put limits on the role of the state even where the situation may not be as grave as the present one. Many pieces of legislation of yesteryears that had been relegated to the archives — they were perceived to be anachronistic in a modern democratic set-up — may get a new lease of life. Some pieces of legislation such as the Disaster Management Act already reflect this reality today. Other pieces of legislation could follow in its wake. This trend is already becoming evident to some extent across the world. Europe has shown a willingness to sacrifice personal liberties in favour of greater state control.

There are no serious protests over the fact that many of the powers being vested in the instruments of state in democracies today, to meet the current challenge, are eerily similar to those already practised by authoritarian regimes such as China. Post COVID-19, the world may have to pay a heavy price in terms of loss of liberty. An omnipotent state could well become a reality.

China in the spotlight

Far-reaching changes can also be anticipated in the realm of geo-economics and geopolitics. The world needs to prepare for a sea change. One nation, viz. China, is presently seeking to take advantage of and benefit from the problems faced by the rest of the world in the wake of the epidemic. Already one of the most prominent nations of the world and an important player in international institutions, China remains totally unfazed by the stigma that the current world pandemic owes a great deal to its negligence — the first identified and detected COVID-19 victim in Wuhan was on December 1, 2019, but it was only in the second week of January 2020, that China sounded the alarm. More importantly, it is seeking to convert its ‘failure’ into a significant opportunity. This is Sino-centrism at its best, or possibly its worst.

Already indispensable as the world’s supplier of manufactured goods, China now seeks to benefit from the fact of its ‘early recovery’ to take advantage of the travails of the rest of the world, by using its manufacturing capability to its geo-economic advantage. Simultaneously, it seeks to shift from being a Black Swan (responsible for the pandemic), to masquerade as a White one, by offering medical aid and other palliatives to several Asian and African countries to meet their current pandemic threat. In turn, it seeks to gain a geopolitical advantage by this action.

China also seems to be preparing for the eventuality that the current pandemic could hollow out the financial viability of many companies, institutions and banks across the world. There are enough reports of China’s intentions to acquire financial assets and stakes in banks and companies across the world, taking advantage of the scaled-down value of their assets to support this. India seems to have woken up only recently to this threat, after the Peoples’ Bank of China acquired a 1% stake in India’s HDFC, taking advantage of the sharp decline in the price of HDFC stocks. Across the world, meanwhile, the clamour against China’s hostile takeover bids is becoming stronger. Several countries apart from India, such as Australia and Germany, have begun to restrict Chinese foreign direct investment in companies and financial institutions in their countries, recognising the inherent danger of a possible Chinese hostile takeover of their critical assets.

This may not, however, be adequate to checkmate China, which is poised to dominate the Regional Comprehensive Economic Partnership (RCEP), thus enabling it to exploit market access across the Association of Southeast Asian Nations, East Asian nations, Australia and New Zealand. Together with its Belt and Road Initiative, which seeks to combine regional connectivity alongside gaining a virtual economic and substantial stranglehold across Asia, China is ostensibly preparing the way for a China-centric multilateral globalisation framework.

A faltering West

The geopolitical fallout of this pandemic could be still more serious. One distinct possibility is that COVID-19 would effectively put paid to the existing global order that has existed since the late 1940s. The United States which is already being touted in some circles as a ‘failing’ state will be compelled to cede ground. Weakened economically and politically after COVID-19 has ravaged the nation, the U.S.’s capacity to play a critical role in world affairs is certain to diminish. The main beneficiary of this geopolitical turnaround is likely to be China, a country that does not quite believe in playing by the rules of international conduct. Europe, in the short and medium term, will prove incapable of defining and defending its common interests, let alone having any influence in world affairs. Germany, which may still retain some of its present strength, is already turning insular, while both France and a post-Brexit United Kingdom will be out of the reckoning as of now.

West Asia and India

Coming to West Asia, both Saudi Arabia and Iran are set to face difficult times. The oil price meltdown will aggravate an already difficult situation across the region. There may be no victors, but Israel may be one country that is in a position to exploit this situation to its advantage. In the meantime, the economic downturn greatly reduces India’s room for manoeuvre. In South Asia, it faces the prospect of being isolated, with the Chinese juggernaut winning Beijing new friends and contacts across a region deeply impacted by the economic consequences of the COVID-19 pandemic. Likewise, India’s leverage in West Asia — already greatly diminished — will suffer further, with oil prices going down and the Indian expatriate community (who are among the hardest hit by this downturn) out on a limb. Many of the latter may seek repatriation back to the host country, substantially reducing the inflow of foreign funds to India from the region.