The world is struggling with a universal crisis three months after the first coronavirus case was reported in China, shaking all social, political, and economic bases of the globe.
Before the outbreak of the COVID-19 in the US, the American President Donald Trump optimistically said that his country could easily contain it in the few first days once it spreads but now he has announced that if the economy reopens in the next days, 2.2 million people could die of the virus. The remarks highlight the desperation of the world’s largest economy in the face of the virus and give a dim and unpredictable outlook of the global economy for years.
This issue raises questions about how the global order would be in the post-coronavirus world.
Coronavirus outbreak and global economy challenges
From the three scenarios the Organization for Economic Cooperation and Development has predicted for the global economy the worst is occurring.
The worst scenario is the spread of the virus in Africa, Latin America, and India and should this take place, the global economy will face the biggest recession in decades. Below 2 percent growth is assessed as a recession. If the virus fully spreads in India and Latin America, the global economic growth will drop to below 1.5 percent.
March 9 marked a black day for the stock markets and took the world close to repeat of the 1929 crash which initiated the biggest recession of the 20th century. On March 8, the value of the Exxon Mobi oil company dropped 7 percent, heavily pressuring the Dow Jones index. Marathon Oil Corporation saw a 40 percent fall in its shares. On March 13, Dow Jones’s shares dropped 9.9 percent, exceeding the 2008 drop. This was a record low since 1987. In London, the FTSE lost 7 percent, dragging many of the airlines to the brink to bankruptcy.
Although China as the bastion of the virus tried to minimize the economic and social consequences of the pandemic using restrictive measures, the Shanghai Stock Exchange dropped 12 percent. Now the country’s exports are 17 percent lower than before and in the first two months of the year about 5 million lost their jobs. In Australia and Japan, the stock markets dropped 10 and 5.2 percent consecutively.
In addition to the unpredictability of the global economy due to the uncertainty of a timeframe to control of the pandemic, the Saudi-Russia oil war is hitting hard the American shale oil that is uneconomical to produce if its price goes below $60 per barrel.
With the outbreak moving fast in Europe, the IFO Institute for Economic Studies has recently reported that business has dropped to 86 percent from 96 in Germany as the largest European economy, unprecedented since 2009. The Institute for Employment Research in its latest report said that three million Germans will lose their jobs as the COVID-19 crisis continues to hit the economy. The outbreak has interrupted the raw material provision chains, hence decreasing the production in various sectors.
The global tourism industry received the biggest blow from the pandemic. The shutdown of the tourism in the US, China, France, Turkey, Britain, Mexico, and Italy bears witness to this blow. The World Travel and Tourism Council in its latest report after the outbreak has predicted that 50 million jobs in the tourism sector are endangered and the travel will decrease 25 percent globally as the crisis unfolds.
The global orders are under the effects of economic orders. Deep changes in the global economy heavily influence the world’s security order. As the global economy shows vulnerability, businesses seek novel ways to adapt to new conditions. This brings about new global security approaches, putting on shaky ground the global unipolar order.
Although the key principle in international relations is the sovereignty of the states and the governments strengthen their economic, security, and military bases to deter the threats, coronavirus by smashing the world borders starting from China represented new and unknown threat to the national sovereignty of the states. While Washington sees the new threats coming from the space and the hypersonic missiles and forms the United States Space Forces (USSF) to address them, the emergence of coronavirus severely challenges its economy and security.
The US, since WWI identifying itself as the main arm of the United Nations Security Council and guarantor of world security, now is desperate to contain coronavirus spread within its borders. The country that in the past in many humanitarian crises like Indonesia and Japan tsunamis and also containment of AIDS in Africa played an important role now without other countries’ help cannot do anything to break the coronavirus outbreak chain at home.
If the US missile and nuclear power and also the military maneuvering determine the rules of the game in a unipolar world, now with US show of biological vulnerability, the rules of the game are changing. China, which is a supporter of multilateral global order, managed to adjust to the new conditions while the coronavirus spread was at its peak. Although there are speculations about the Chinese government cover-up of the real tolls of the pandemic, Beijing managed to successfully control the infectious disease using its tech potentials like artificial intelligence and drones. Like in war conditions, China began setting up field hospitals and increased some medical items like masks tenfolds.
The Chinese success in producing the necessary equipment to combat coronavirus offers a new definition of global governance, raised by the Chinese political and academic circles for nearly a decade. Jack Ma, Alibaba Group’s co-founder and former chief executive, promised that he will donate to the US COVID-19 tests and masks. He also said that he will send 20,000 COVID-19 tests and 100,000 masks to each of the 54 African countries. While economies of some powers are half-closed, China is producing in several folds necessary items to ship to the other countries suffering from the coronavirus-caused recession.
In addition to holding 90 percent of the US antibiotics market, China in developing the five-generation (5G) communication networks is the forerunner. China is rising as a global power in microelectronics. Trump, who in his national security doctrine called China the biggest threat, now has called for Chinese help in the anti-coronavirus combat. This means that the US-designed scheme to delay the Chinese regional hegemony is seriously challenged now, blurring the lines of unipolar order.
Delicacy of regional cooperation models
The European Union was one of the most successful models of advanced regional cooperation and many political experts hoped that such a model could be expanded across the world. While already hit by the crisis of rise of right-wing politics and also the exit of Britain from the united bloc, the EU now sees its unification success in its weakest level as the Continent unseats China as the heart of the pandemic outbreak that has so far killed over 40,000 people from the European countries. Italy and Spain, the biggest centers of the outbreak, are now desperate in their fight to control then infectious disease.
Some European countries believe that the Union is now suffering from confusion between nationalism and unity. Italian Prime Minister Giuseppe Conte recently criticized the current situation in the EU, saying that the European partners follow their nationalist logic while they have to take a unified stance on refugees, solidarity, and other issues. The French Minister for European Affairs Amelie de Montchalin in an interview warned about risks to the credibility of the EU and said that if some members do not want solidarity, their position in the EU should be questioned.
“The bloc’s credibility rests on its collective response to coronavirus pandemic,” she further said last week, adding that such countries as Spain, Italy, and Greece are teetering on the brink of bankruptcy and if the bloc cannot distribute the economic consequences of the coronavirus fairly, the existence philosophy of the EU will be seriously questioned.
Germany and the Netherlands came out strongly against a push by Italy, Spain, Portugal, and France to issue joint bonds to help finance an economic stimulus. There were also squabbles over the sharing of medical equipment and border controls, the Reuters reported.
All in all, it must be concluded that the post-coronavirus world will observe deep changes the first sign of which is the fast transition from unipolar order. The changes and influences will be larger along with the severity of the crisis.