Irfan ul Haq
Covid-19 can prove to be the proverbial straw that breaks the back of the global liberal economy. Since it exploded in the city of Wuhan in Hubei Province of China, the infection has swiftly spread and engulfed the whole planet. The reason of its very acceleration is human hyper-interconnectivity on a global scale. The Black Death in Europe resulted in the “waning of the Middle Ages”. Same can be said for Covid-19, which may result in the waning of globalisation’s heydays.
The World War II and disintegration of the Soviet Union had sped up globalisation, while the Covid-19 pandemic is reversing the process, perhaps permanently. The rise of the liberal international economic order (LIEO) particularly after 1990 has been a key factor in the movement of people beyond national borders, whether for purposes of employment, business, finance, or education. The order received a jolt with the financial crisis of 2008, unleashed by the fall of Lehman Brothers and the American Home Mortgage Investment Company announcing its incapability to meet its financial commitments with regard to funds assured by “sub-prime” mortgages. This crisis was a gift to nationalists and protectionists. The current crisis is further proof that the liberal global order is crumbling under the weight of its own contradictions. The “borderless world” as claimed by hyper globalists is under severe stress. Covid-19 has shown how relevant borders continue to be. The State with its Hobbesian might has come to the fore once again, restricting the movement of people, taking upon itself the task of saving people from the pandemic.
Climate change, populism and protectionism all have challenged economic globalisation and now Covid-19 is blocking trade, supply chains, travel, and movement of finance. It has come at a time when globalisation was already in retreat. American professor of internal relations Stephen Walt even said that “Globalization is in ICU”. Now the French finance minister Bruno Le Maire views the pandemic as a “game-changer” for globalisation. In the period between October 2018 and 2019, the WTO confirmed 102 new trade-restrictive measures, affecting USD 746.9 billion of trade flows. Covid-19 has pulled them down further. Global supply chains are hit and multilateral institutions of trade and exchange like the World Bank are paralysed. Corporations are still assessing the ramifications while tourism and international travel is at a complete halt.
Covid-19 has accelerated the de-globalisation process, not caused it. Trump’s policy of ‘America First ‘or ‘Make America Great Again’ and recently his imposition of punitive tariffs on imports from China, Modi’s ‘Make in India’ and China’s ‘Made in China 2025’ are some examples. Covid-19 has also forced countries states to rethink their immigration policies. Additionally, Trump recently stopped funding to the Wealth Health Organisation (WHO). There is growing opinion that this very pandemic is caused by globalisation which allowed it to spread beyond national frontiers. Realists for decades have argued that greater interconnectedness leads to greater fragilities. The world is heading towards more fragmentation and borders will likely become stronger in the very near future.
The European Union is a case in point. It was formed in 1993 as a political and economic union but it has suffered one debacle after another. The Eurozone crisis, the pressure of migrants, its adjoining regions increasingly caught in conflict. Brexit became a reality on February 1 this year, perhaps the final nail in the coffin of the European Union. The coronavirus has revealed how national instincts and lack of camaraderie are having the upper hand in all European countries. Unilateral decisions by Latvia, Lithuania, Poland, Denmark, Slovakia and Cyprus to close their borders and ban on export of medical equipment by France and Germany to fellow member states despite the barrier-free single market are just a few examples. The European silence on Italy’s appeal for medical assistance and protective masks through the EU Civil Protection Mechanism has exposed the limits of the Union. In her otherwise impressive television address on March 18, Angela Merkel did not even speak a single word on Europe.
The 1956 Suez crisis represented the ultimate crumbling of the United Kingdom as global power; Covid-19 could mark the ‘Suez moment’ for the US, the ringleader of globalisation and liberal internationalism. More generally, the pandemic is reinforcing the voices of those who are in favour of strong governments, those who emphasise societal needs over individual liberty and national action over global cooperation. The contagion is shaping up to be a litmus test for globalisation.
The writer is Junior Research Fellow at Kashmir University, Srinagar.