A fractured response to coronavirus | Opinion
World leaders fended off the 2008 slowdown together. But this time, it has been different
Coronavirus, or Covid-19, has already upended global financial markets. The havoc it’s wreaking on global politics is only just beginning — and politics doesn’t bounce back as easily or as quickly as markets do.
As the last few weeks have made clear, the world in 2020 is nowhere near ready to launch a coordinated, comprehensive response in the coronavirus battle. In an era of “my nation first” politics, it is also an era of “my nation first” responses to the greatest global health crisis the world has seen in recent memory. Coronavirus is, in other words, the first true crisis of our current G-Zero era of geopolitics.
Compare the world’s response to the coronavirus to the way it tackled the great financial crisis of 2008/2009. Faced with a catastrophic event, world leaders came together to chart a united way forward, and while there was no shortage of economic drama in the weeks and months that followed, a complete global financial meltdown was staved off, thanks to quick and coordinated action at the head of State level, which convened under the auspices of the G20 for the first time ever to deal with the pressing world threat.
That isn’t happening this time around. Set against multiple geopolitical battles currently raging — between China and the United States (US), between South Korea and Japan, between Turkey and the European Union, to name just a few — the world will not come together with the sense of urgency and unity this crisis deserves. And all this comes with a global economy already slowing, despite low interest rates, limiting the ammunition central banks worldwide have to combat the worst of the economic effects. A joint declaration by G7 finance ministers recently — not to mention an emergency rate cut by the US Fed — did nothing to slow the financial panic.
Instead of a global response to tackle the most global of problems, countries are forced to fend for themselves. And as usual, those countries with the most resources at their disposal — typically the world’s advanced industrial democracies — are the ones best placed to weather the storm. Some of that has to do with their general political stability, which gives their leaders the political space needed to take difficult and costly policy decisions. But beyond that, more wealth means better access to health care infrastructure and medicines, as well as more financial resources to deal with the economic disruption and fallout that follows — we’ve already seen South Korea and Japan pass supplemental budgets to take into account the costs and mayhem of coronavirus. The US has earmarked roughly $8 billion for the country’s fight against coronavirus. Of course, these are simply first steps; if coronavirus makes the jump from epidemic to full-blown pandemic, a far greater fiscal efforts is going to be required by the world’s leading economies. But again, these are the countries best-equipped to handle that.
The world’s emerging markets, meanwhile, were struggling even before coronavirus to attract foreign investment in a slowing global economic environment. And at a time when many of these governments will need more financial resources than ever to fight the spread of the disease, capital drying up will only compound their problems. It’s not out of the realm of possibility that the world will see one or more embattled governments fall as a result of their response (or lack thereof) to the coronavirus outbreak.
All of which is to say — brace yourself for much more political drama in the weeks and months ahead as well-founded calls for caution get mixed in with unfounded fake news and general panic.
But here’s the good news — never before in history has humanity had the scientific knowledge it does now, and the means to spread that scientific knowledge so widely and so quickly. That will be just as true when the vaccine is developed. The global response may not be as unified and efficient as we would otherwise like, but thousands and millions of people are already racing against time to deal with coronavirus. Markets and politics will both be a mess for a while, but for now, the best advice is to keep calm and carry on. Washing your hands helps, too.
