The deglobalisation virus

Covid-19 comes at a time when the world’s governments have fewer tools for fighting against its effects than they once did.  

Pete Linforth

The coronavirus and the way of trying to control its effects, including the way of thinking about it, is bringing the world to a standstill (barring conflicts such as Syria and its refugees, Libya, and even Iraq) – a standstill that entails tremendous risks. It is not that the coronavirus has put in train a process of deglobalisation. This originated earlier, in the reactions to the 2008 crisis and what came in its wake. Covid-19, the contagion that has been so widespread largely because of human hyper-interconnection, is dramatically accelerating the process, with profound effects on the present and the future. Combating the virus involves keeping people apart, the opposite of what we have experienced in recent decades and previously. Borders – on land, at sea, and in the air – are staging a comeback, sometimes unilaterally, even in the European Union.

The Covid-19 crisis has become the third great shock of the century, after the 9/11 attacks and the process unleashed by the fall of Lehman Brothers in September 2008, which triggered economic and financial contagion. This is simultaneously a human shock, a supply-side shock (involving production), and a demand-side shock (involving consumption), with the added danger of unleashing a new financial crisis. It may be, as Holman Jenkins suggests, that recession is an inevitable part of the eminently sensible method used to combat the virus – in other words, the suppression of demand that comes with keeping people in their homes. But it comes when the world’s governments have fewer tools for fighting against its effects, and will exact an enormous toll.

Increasing numbers of supply chains, much more complex than they were in 2008, are seizing up or stalling. Many factories making machinery, cars, toys, and other products have had to cut or cease production for lack of vital components originating in, for example, China, where manufacturing has been halted. Air and other forms of travel are in abeyance; the same goes for the movement of shipping containers – that analogical invention so crucial to globalisation. Global tourism has taken a massive hit, from which it will take time to recover. The pandemic has laid bare our mutual dependence, the degree of interdependence on which we rely. And there is no shortage of people advocating retreat. Thus Bruno Le Maire, the French finance minister, says, “we should reduce our dependence on great powers such as China” – something not so very far removed from the proposals of US Secretary of Commerce Wilbur Ross taking advantage of the coronavirus. Many companies have realised the risks of this over-interdependence, and mean to curb it. A recent Bank of America report states that 80 percent of multinationals investigated plans to repatriate part of their production, known as re-shoring, a trend that Covid-19 could turn into a tidal wave.

All this comes amid the existing process of the technological decoupling of the United States and China being pushed by the Trump administration. Although walls do not halt its spread – unlike social distancing – the virus is going to lead to greater national emphasis, or regional emphasis at least, on production. This includes the field of medical supplies, where the crisis is revealing, for instance, Europe’s dependence on medicines manufactured in China and India (which has slashed its exports). The reaction of the Czech health minister, Adam Vojtech, when he pointed out that Europeans depend on such countries for one-third of their (mainly generic) medicines, and that their production should be brought to Europe to ensure supply, may prove to be paradigmatic. As though in response, China, with its own pandemic apparently under control, is airlifting massive deliveries of health supplies to Italy and Spain; whereas Trump has unilaterally suspended flights between Europe and the US – contrary to the advice of the World Health Organisation, precisely in order not to disrupt the supply of medical aid – thereby damaging transatlantic relationships even further.

That said, while Covid-19 and the way of addressing it is slowing physical globalisation down, it is also promoting an ever more digital, online form of globalisation. Remote working has won converts, as have online services. But even these are ultimately based on consummately physical realities, above all the delivery of orders. Courier companies, operating by van and bicycle, are working even more, and systems using drones and other autonomous systems have made headway in China during this crisis. The same applies to digital services for detecting illnesses using artificial intelligence, and robots for all manner of services.

The World Health Organisation, and the multilateralism that it represents, has had its centrality restored.

The World Health Organisation, and the multilateralism that it represents, has had its centrality restored. But the crisis has also involved the comeback of the state, albeit requiring multi-level management, something that might be referred to as inductive governance, in which not only international organisations and governments but also companies and members of the public participate. These are times demanding individual leadership, certainly, but above all collective leadership, something that is not yet taking place in Europe. They also require rehabilitating the idea of a global community in the face of what is undoubtedly a global menace.

Confronting the Ebola epidemic that emanated from Africa in 2014-2016, the US – with Barack Obama in the White House – put itself at the forefront of the fight. In the face of the coronavirus, Trump has sown confusion. Populism too has fallen prey to this pandemic, although it is revealing itself to aggravate the situation, particularly in a country like the US, with 28 million people lacking any health coverage and many millions more with inadequate cover. Trump, after being in denial, has reacted late. Boris Johnson and his advisers have appeared to propose that the more and earlier people get infected the better, because this is how immunity is generated. Many citizens and professionals are up in arms, and forcing him to change tack. The virus, as Thomas Wright and Kurt Campbell have argued, has revealed the limits of populism, a populism that is essentially deglobalising.

But what it is not putting a lid on is discrimination or national narratives, which have come back with renewed vigour when what is imperative is international cooperation, currently worse than inadequate. When the pandemic is overcome, globalisation will resume but in a guise that is less intense and different from the one we have known up to now. The global standstill will have lasting and not necessarily positive consequences.

This article was originally published in the blog of the Elcano Royal Institute

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.

Author