The two key political risk lessons of the coronavirus

The two key political risk lessons of the coronavirus

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Donald Trump and Xi Jinping at the 2019 G20 Osaka summit. (AFP)

As Jawaharlal Nehru, the first premier of India, so aptly put it: “Crises and deadlocks when they occur have at least this advantage; that they force us to think.” So let’s take up Nehru’s challenge and truly think — beyond the hysteria and wishful thinking of so much of today’s analysis — about what the coronavirus means for the geostrategic future of the world.
The single, key and somewhat counter-intuitive point to make is that, through an intense study of history, the lesson that plainly emerges is that major crises tend not to change the world on their own; rather, they vastly accelerate trends that are already present. Supposed game changers are rarely that. Instead, they dramatically hasten trends that should already be apparent to the best political risk analysts. And that is surely what is happening in the midst of the coronavirus, which is undoubtedly the most important political risk event since the Cuban missile crisis.
First, the aftermath of the plague will herald a delinkage of globalization and a further denigration of the idea of international institutions as the gatekeepers of both global governance and the international community. This sacred, overrated belief was already under assault from the Trump administration, with its direct attacks on the (ironically) American-inspired post-1945 trade regime. Particularly in initiating a trade war with rising China, the Trump White House made it crystal clear it wanted to upend the present globalized economic order, which has so benefited Beijing and other rising powers over the past 20 years, to the detriment of the US.
The passing era of globalization, with its overemphasis on international institutions, was already under direct assault, as the direction of history was arrayed against it.
Nationalism, nations and the national interest, rather than being a tired relic of the past, instead characterize all the rising powers of the world: China, India, Brazil, Turkey, Indonesia and others. They are more sovereigntist, more nationalist, and more jealous of their prerogatives even than the US, long the bugbear of the European internationalist elite. In our new era, nationalism has already shown itself to be not the tired past, but very much the future of the world system.
The coronavirus crisis has made this stark reality plain, even as it has accelerated this process. Unlike in the 2008 recession, the G20 has so far been unable to reach a common policy position to combat the plague. The post-national flagship, the EU, has tied itself in knots as, initially, the Germans, far from being internationalist, hoarded face masks from their hard-pressed fellow Europeans, the Italians. European borders, supposedly nonexistent, closed in the desperate effort of states to cordon off the plague.
And, in the US, increasingly powerful voices in the ruling Republican coalition, including Peter Navarro, Trump’s senior trade representative, called into question globalization itself, pointing to the Chinese hoarding of masks and medical equipment, and strongly urging the on-shoring of medical supply chains as, following the pandemic, health issues will be seen not as an economic issue, but as a national security concern.
Look for a great deal more on-shoring, regional trade and commerce between political allies. The coronavirus means that the days of a single global supply chain, already numbered, are now over.
The second lesson of the crisis, first mooted by my firm in our January 2020 predictions, is that the world will be bipolar, with a Sino-American Cold War amounting to the basic geostrategic fact of our new era. Again, this was already there to be seen, given the rise of China, the Trump-induced trade war, and Xi Jinping’s aggressive moves with the Belt and Road Initiative and in the South China and East China Seas.
But the coronavirus crisis has taken tensions to an entirely new level. China’s documented cover-up of the origins of the virus (and incredibly slow admission of the outbreak in Wuhan, which cost the world weeks of time) has predictably led to outrage in an America already suspicious of Chinese motivations.
As China hawk Navarro put it: “Even as Chinese citizens were flying around, seeding the world with the virus... During the interval China was basically attempting to corner the market in personal protective equipment, including face masks, at a time the world was still sleeping on the dangers of the coronavirus.” For Washington, clearly, there will be a direct reckoning with the Chinese once the virus is contained; this will not be forgotten.

Nationalism has already shown itself to be not the tired past, but very much the future of the world system.

Dr. John C. Hulsman

Of course, given the historical reality of a rising power coming into contact with an established power — a fact of life since Athens challenged Sparta — some form of competition was probably structurally inevitable, however adroit the diplomacy on both sides. But there is no doubt that the coronavirus crisis has made the nascent Cold War for global dominance between the two superpowers the new central fact of our age.
Nehru was right; crises compel us to think. Thinking about the coronavirus makes it patently clear we have accelerated history and are now living in a world characterized by the resurgence of nationalism and the Sino-American great power rivalry. These two compass points, the lessons of the virus, must guide all our explorations of our new era hereafter.

  • Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via www.chartwellspeakers.com.
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