Corona Spread : Ramifications For The World
Sub Title : Forecast of what is in store for nations and humans post Covid
Issues Details : Vol 14 Issue 2 May – Jun 2020
Author : Ajay Singh
Page No. : 59
Category : Geostrategy
: June 1, 2020
The Corona spread has impacted the world like no other event. By the time humanity is delivered from the scourge, our world would have changed forever. There will be far reaching changes in all realms- geo-political, social and economic. The article lucidly forecasts as to what is in store for nations and humans
There will not be a specific day when the battle against Covid 19 is won. This war will not end with declarations of victory. Rather it will be a hard slogging match that will go on and on till it is won block by block, city by city, state by state and country by country. Cities and nations which have locked down to defeat the virus will open up and then close again as fresh cases appear. Then the battle will start anew till the virus is contained and people step out tentatively and gingerly to the life we once took for granted. By the time humanity gets deliverance, which would happen when we develop ‘herd immunity’ or when are able to develop a vaccine and inoculate the majority, the virus would have changed our world forever.
Social and Cultural Change
No other event in recorded history has affected humans on the planet, as this one has. Huge change will seep into our lives. Large crowds will be frowned upon and religion, sports, movies, theatre, and music will all undergo dramatic transformations. On-line religious services – which were seen for the Easter celebrations – could become a norm, and wisely so. The cinema hall could be increasingly replaced by on-line movies on a pay-by-view basis – as would music, theatre, and concerts. Sports events too – including the postponed Olympics – may increasingly become a television spectacle, and not a live one. Travel and tourism will also be impacted. Looking at the positive, the virus could bring families together. The rigours of social isolation will end as aged parents and children are back under one roof for mutual support and companionship and family values gain relevance once again.
The inordinately high unemployment and lay-offs will cause a social upheaval which can affect over a quarter of the young population.Jobs would reduce in the future as more and more companies realize that they can manage with truncated staff. The concept of working from home and the realization that it is cheaper and actually more productive could make it a new norm and produce side benefits like reduced travel time, fewer cars on the roads, lesser requirement of office spaces, and increased use of electronic communications, teleconferencing and messaging.
The Economic Cost
Major changes will be wrought by the economic devastation that corona has brought in its wake. The world economy has contracted by 3 – 6% and the IMF has warned of an impending recession greater than the 1930s. Small businesses and the unorganized sector which hire over 30% of the work force and contribute over 17% to the Indian economy will be hardest hit with many resorting to lay-offs, folding up or being amalgamated with larger companies. Companies and businesses will be forced to change their model altogether. The disruption of supply chains and the atmosphere of global distrust could lead to an erosion of globalization; the WTO expects global trade to shrink by 32% in the short run. All this signals a return to the silo model with the global supply chain getting replaced by national or regional supply chains with most components being produced indigenously.
There would be an economic revival. By all estimates, it would be rapid after the virus has been contained, since unlike a war there would be no damage to existing infrastructure. The revival would take place sector wise, with consumer goods picking up first, manufacturing after that with the service industry to follow. Hospitality, travel, and tourism are unlikely to recover for at least two years, with travel being increasingly by road in personal vehicles, and confined to national borders. The aviation industry would be hardest hit, with safeguards at airports and within the aircraft, leading to exorbitant air fares which will dissuade people from air travel for some time to come.
The Pharma, IT and Telecom industries – all three are traditionally India’s strengths – are likely to witness a boom in the post-corona era. There will be a greater reliance on on-line processes and training, conferencing, marketing, sales, communications – everything. IT and telecom will provide the infrastructure for this, and 5 G networks (in which China, presently holds an edge) could well creep in faster than anticipated. It could also usher in the era of robotics and AI.
Perhaps the greatest damage has been the virtual melt down in the small and medium industries and the rampant unemployment that it has caused. By estimates over 26 million jobs across the world will be lost – which had taken a decade to create and will require at least 2-3 years to rejuvenate. The expat culture too may become a thing of the past, as battered economies, will give more jobs to locals. Work forces have returned to their homes in view of the extended lock down and there is a huge question mark about their return – both within India and abroad.
With the melting down of markets over 30% of investor wealth across the world has been wiped out, creating an uncertainty in the investment climate. The Indian Sensex crashed from an all-time high of 41000 to a low of 27000 Whether the curve will now be ‘V’ shaped, which will imply a rapid recovery or ‘U’ shaped which would mean a slow, but gradual return, or even a ‘L’ shape, which implies that the markets would not recover in the foreseeable future remains to be seen. However, most analysts predict a gradual return in two or three years – depending on how much havoc the virus leaves behind – before things finally stabilize
The Changing Geo-Political Stage
The virus has provided a geo-political turning point and we are already seeing a re-alignment of power equations with the balance shifting towards China. Because of its alleged role in creating and spreading the virus, China has lost a lot of moral ground (though that never really matters to them). However, it has actually gained at the expense of the USA and is well poised to take on strategic and economic supremacy. The US has ceded ground even before the virus struck and its knee-jerk handling of the crisis has eroded its image further. The European Union has been crippled by Brexit and been further devastated by the virus in Italy, Spain, Germany, and France. It will be considerably weakened economically and strategically, and with the US withdrawing into itself, the continent is open to Russia increasing its influence there. So, the two power centers of the world, USA, and EU, have been weakened and ceded ground to China and Russia.
China, in spite of being the source of the virus, has gained from it. In many ways, the virus has helped things fall in place for them (whether by design or default is still moot). Its Belt and Road Project may stall temporarily as cash strapped nations divert resources to health and default on debt repayment. This will enable China to gain control of their assets (like they did with Hambantota Port) as host nations fall deeper into the debt trap. China has also been pushing its claims in the South China Sea and posturing more aggressively with Taiwan since Covid 19 has swept the world. It is significant that both US carriers in the Pacific were forced to return to their bases, after an outbreak in the crew, leading to the situation where the only Aircraft carrier still patrolling in the region was China’s LIAONING. This period of flux when the world powers are too pre-occupied with combating the virus, could well be used by China to push its claims in disputed territories, a situation which could reach flashpoint. With the increasingly anti-China stance that the US administration has adopted for China’s role in spreading the virus, a Chinese action could well trigger a much larger conflagration.
One of the major determinants of the post Covid world will be in the enhancement or diminishing of soft power of the major nations. The stature of western nations such as USA, UK and most European nations has diminished considerably, by their handling of the situation. China, after the initial erosion of its stature, has used its clout (and prior expertise in the handling of the virus) and provided over 4 billion masks, protective equipment, and medical aid. (though often at a profit and not philanthropically as it is made out to be) India’s role in the provisioning of Hydroxychloroquine, the development of cheap and efficient ventilators and testing kits has been recognized and can be capitalized on. Eventually the nation which can successfully develop the vaccine first and manufacture it in large quantities would not only reap economic rewards, but also attain global standing that comes with it. The vaccine itself can then be used as a strategic tool, just as the virus is presumed to have been used as a strategic weapon.
While the major powers have struggled to cope, weaker nations, already on the economic precipice could well be overwhelmed and their very survival would be at stake. Afghanistan, Pakistan, Iraq, Syria, and the North African states could collapse into economic, social, and political chaos and set off a chain of further regional instability.
Much has been made of how the crisis has united the world against a common unseen enemy, but this seems temporary. It is significant that a global ceasefire was announced but it broke down within a month. In Afghanistan, the Taliban have used the period to launch another series of offensives, and the US -Taliban Deal is in tatters. Other traditional hot spots like the Middle East, Sudan, Yemen Somalia, and Syria, could see a resurgence of violence as radical groups use the period to strengthen their own positions, with the world powers too pre-occupied to intervene.
In fact, the virus has become a new weapon which can be used by non-state actors and rouge nations to weaken governments. And even though Biological Weapons are outlawed by the Biological Weapons Convention of 1922, it could well become the super weapon in the hands of terrorist. The suicide bombers of the future would not even have to wear an explosive vest. They would just have to sneeze.
How India emerges from this crisis will depend entirely on how successful we are in containing it. It would eventually be behind us only when we develop herd immunity to withstand the strain, but it will take 2-3 years to get back on track. It has dealt a death blow to a floundering economy and its long-term impact will takes years to recover from. If we can capitalize on the opportunity to wean businesses from China and bring in much needed reform, our recovery can be much faster. Perhaps we can also use it to bring about much needed social and lifestyle changes amongst our people. But, at the same time the threats from Pakistan and China and also the internal situation in Kashmir will not ebb. In fact, this situation may well be exploited by our adversaries and we must guard against it, both now and in the period that follows.
Covid 19 has been the greatest existentialist threat that we have faced in over a century, but this too will be defeated by modern medicine and the sheer resilience of man. It has its silver lining. It has allowed nature to heal itself, it has contributed to the war against climate change and it could herald in a new way of life for an entire generation. Geo-politically, socially, economically – in every way – the world will change. China will emerge as the pre-dominant global power and the US decline could just be hastened. Power centers like the European Union have been irrevocably weakened. India also stands at an inflexion point – we can use the globally changed environment as an opportunity, or we can be swept back by a decade. It all depends on how we handle the virus and its devastating impact. We should use this period to prepare for the post-corona world and establish our position in the new order which is bound to come.