Post-virus world will see new blocs emerge, old ones unravel
As the coronavirus disease (COVID-19) pandemic continues its surge across the globe, testing governments, health systems and economies, pundits are pouring over possible post-virus scenarios for those who survive. There is no doubt that our world will look different once the scourge is defeated. There will be many lessons to be learned, policies and priorities to be revised and new alliances and blocs to be formed, while old ones will unravel.
One popular prediction for a post-coronavirus world revolves around the collapse of the neoliberal conservative model that has been central to most economic powerhouses for decades. Under that model, the state takes a back seat as the forces of the free market and big multinationals determine the course for individuals and society at large. Also under that model, the welfare state is shunned and the private sector takes control of major public services and sectors, particularly health. It is all about making money and enriching the few.
That model has proved to be a failure in addressing the unprecedented challenges presented by the coronavirus. The US, which is struggling to provide basic protective gear to tens of thousands of doctors and nurses, as well as badly needed ventilators, is a case in point. President Donald Trump’s hesitation to lock the country down for a few weeks in order to contain the virus for fear that it would kill the economy — and his chances of re-election — underlines the harrowing fact that, under neoliberal dogma, people’s lives matter less than saving big business.
Another irony is the fact that the diehard capitalists ultimately had to resort to socialist tools to save big business, as seen with the $2 trillion so-called stimulus, which is actually a bailout. It was China’s centralized system and strong state tools that enabled it to quickly contain the outbreak. The Chinese experience will be studied for a long time to come.
The question that follows the prediction of the demise of the neoliberal model is what about globalization? That phenomenon is also being tested, with pundits predicting that a post-coronavirus world will witness a phase of de-globalization. Trump had already taken key steps in that direction even before the outbreak of the virus. He had pulled out of key multinational trade treaties, imposed tariffs on China and Europe, and was seeking to repatriate companies that have production lines in China and elsewhere.
Now, with a global recession kicking in, new regional blocs will form as globalization gives way to regionalization. The scenario most likely to occur sees China forming closer trade alliances with countries in Southeast Asia, Central Asia, Japan, Australia and New Zealand, as well as African and Gulf countries. The Belt and Road Initiative will gain traction in a post-coronavirus world.
The EU has been seriously hurt by the outbreak. Italy and Spain were left to fend for themselves as they became major centers of the pandemic. How this abandonment by their European partners will affect the future of the EU remains to be seen. The bloc had already suffered a setback when Britain pulled out. It suffered another blow when Trump banned EU citizens from entering the US, without informing European leaders first.
It was China, Russia and Cuba that came to Italy’s rescue during its darkest hour — gestures that will not be forgotten by the Italians. Three months into the outbreak, the EU is yet to address its deep-seated impact on its members.
With the price of oil dropping to historic lows, Russia will be forced to come closer to Europe — a new bloc that would serve the interests of both sides. The US, Canada and Mexico will turn their attention to South America and new alliances will be formed between countries in the two American continents. The emergence of these new blocs will define the future of the dollar as the world’s key currency against the euro and yuan.
Under the same prediction, geopolitical priorities will change, affecting the ability of countries to maintain troops and bases in foreign lands — such as Russia in Syria, the US in Europe, Southeast Asia and Japan, and Iran in Syria, Iraq and Yemen. There will be a dire need to spend money at home in order to maintain social stability and public order.
Geopolitical priorities will change, affecting the ability of countries to maintain troops and bases in foreign lands.
So where does the Arab world fit into this scenario? With the US becoming less dependent on the region’s oil, its political and economic links to countries in the region will be affected. Arab states will have to find a new formula to form their own bloc and increase intra-regional trade. The Arab world has been underutilized both in terms of the flow of investments and as a huge consumer market. We will see wealthy Arab states coming together, creating multibillion-dollar funds and pouring investments into promising emerging economies in countries like Sudan, Morocco, Tunisia, Syria, Jordan and Palestine.
This segmentation will become the new reality and Arab nations must address the inevitable changes that will affect international trade, finance and the economic management of wealth.
- Osama Al-Sharif is a journalist and political commentator based in Amman. Twitter: @plato010