Coronavirus winners and losers

By Ramesh Thakur

Tuesday June 9, 2020

Adobe

Here is a preliminary assessment of losers and winners from the global pandemic. The list is subject to change without notice.

Losers

The United States may turn out to be the biggest loser of all. Washington’s confused and vacillating leadership has been so woeful that it may produce a pivot in geopolitical power. Unconscious of the irony, the US replicated the initial Chinese playbook of denials, cover-ups and blame-shifting. The pandemic may exhaust America’s economic capacity and moral authority for global leadership. President Donald Trump’s astonishing display of incompetence to the point of recklessness, ignorance and self-regard had already deepened questions about the capacity of the US — as a nation and as a political system — to respond swiftly and coherently to the increasingly complex challenges confronting it and the world. The nationwide protests by day — and riots by night—that have rocked numerous cities since the killing of George Floyd by an almost casually indifferent white policeman in Minnesota will have reconfirmed the growing conviction in many of the dystopian state of Trump’s America.

China won’t be far behind in the losers sweepstakes. Beijing’s behaviour in the early stages of the outbreak was inglorious and many countries and commentators won’t easily forget or lightly forgive. For six critical days, China’s leaders engaged in a systematic cover-up of the dangerous new virus in Wuhan, misinformed their own public, and actively dissembled and denied to the outside world and the World Health Organisation. The Chinese government lied and hundreds of thousands around the world died. Countries will work hard to decouple from China, causing a decline in foreign investment and tourism. The ability of President Xi Jinping’s ‘wolf-warrior diplomats’ to contain the diplomatic and economic fallout will be limited.

The European Union let a defining moment slip by. Instead of coming together against a common threat, most countries chose to fend for themselves. Some resisted efforts to share the costs of borrowing to help the worst-affected members, showing the limits to EU solidarity in a bloc already reeling from Brexit and resurrecting north-south divisions and prejudices. Italy was in love with the European project that was consummated in Rome, but the ‘small print and cold shoulder’ response to its moment of need may have snapped the romantic attachment. On 16 April the EU issued ‘a heartfelt apology’ to Italy for letting it down.

The Atlantic alliance was in deep trouble before the coronavirus crush already. Trump expressed repeated resentment of unfair burden-sharing. Europeans in turn had grown increasingly anxious about Washington’s reliability, goodwill, good sense and good faith. The pandemic has aggravated all the pre-existing fissures. The G7 couldn’t issue a communiqué because of the Trump administration’s insistence on calling out the ‘Wuhan virus’. Italy’s former prime minister Enrico Letta countered that the biggest danger for the EU is the ‘Trump virus’.

For several weeks the WHO put its own imprimatur as the world’s leading specialised health agency on Chinese obfuscations and misinformation. It has come under fierce criticism, not all unjustified, from Americans, Australians, Britons, Europeans, Indians, Japanese and Africans. Without a major overhaul, it could be crippled.

Epidemiological modelling has been another casualty. On 5 March, the WHO published a fatality rate of 3.4% for the coronavirus that badly misled epidemiologists in their modelling of the likely infectiousness and lethality of the virus and led many governments into lockdowns with deadly tolls on lives and livelihoods. Because modelling has real-world consequences of exceptional gravity, the profession could do with more prudence and caution.

Under the Australian model’s best-case scenario under lockdown (Appendix A, table 2), 2.9 million would be infected, 200,000 would require hospitalisation and nearly 5,000 people would need to be in intensive care at peak demand. With infections just over 7,200 and ICU peak occupancy at 96, the predicted numbers are off 400-fold and 50-fold, respectively. This challenges the model’s worst-case estimates that justified the lockdown measures.

Another loser is free market ideology and its accompanying tenet of globalisation. More broadly, not many democracies have demonstrated great competence in their governance, and the liberal component of their organising philosophy has been badly compromised with the vast expansion of state power without precedent even in wartime, reinforced by censorship by big tech (the Financial Times calls it censortech) of sceptical and dissenting opinions.

Considering that, an inquisitive, detached and critical press should have asked tough questions on justifications and evidence. Instead, most of the media became pandemic porn addicts. Just as with foreign military interventions, the threat was exaggerated, the evidence to justify the policy was lacking and thin, and the lack of an exit strategy led to mission creep from flattening the curve to eliminating the virus.

Winners

The biggest winner is the East Asian model of competence, good governance and social capital regardless of regime type. Japan, Taiwan, South Korea, Vietnam, Singapore drew on their intrinsic strengths of high-quality health governance, social cohesion, trust in public institutions and keenness to learn from and correct past mistakes.

China is the only nation in both lists. Ironically, the disease that originated there and spread like wildfire around the world because of the initial cover-up and disinformation by Chinese authorities, could potentially mark the moment of ascendancy in the ‘psychological balance of power’ as China moves to fill the global leadership vacuum vacated by Trump’s America.

China put on an impressive, if delayed, display of state capacity and power to suppress the outbreak and provide assistance to many other countries. Ian Bremmer tweeted: ‘It hurts to see China sending humanitarian aid to the US and Europe.’ If the economic damage to the US is the more substantial, the virus will accelerate the power shift, even as doubling down on the America First organising principle of foreign, trade and security policy adds to the US’s unreliability for traditional allies and friends.

As countries prepare to end their overdependence on China for critical medical supplies, the post-coronavirus world will offer India an unexpected, longer-horizon opportunity to play a larger role in revamped global supply chains, expand its manufacturing base and become the pharmacy to the world. On 19 April, PM Narendra Modi exhorted India to rise to the occasion and become ‘the global nerve centre of … multinational supply chains in the post-COVID-19 world’.

US, European and Japanese companies could be courted, but only if Modi is prepared to act decisively on reforms, end tax terrorism, ease labour market and land acquisition rigidity, and agree to arbitration by international tribunals that offer international investors more of a level playing field than national structures subject to government capture.

Ramesh Thakur is a former UN assistant secretary-general, is emeritus professor at the Australian National University and director of its Centre for Nuclear Non-Proliferation and Disarmament.

This article is curated from ASPI’s The Strategist.

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