Changing Global Order post COVID-19

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The world was already in flux before the COVID-19 pandemic. The central notions of the pre-cold war and post-cold war period were being questioned with the emerging countries talking about multilateralism. But the COVID-19 has become an unexpected accelerating force to this churn and the world is been left debating what the post-pandemic world will look like. In this backdrop, it is important to analyze the possible outcomes of the pandemic and try to understand what India, a fierce proponent of multilateralism, should be looking at and preparing for.

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What is a world order?

  • World order is a term used in international relations to describe the distribution of power, political-economic-military hierarchies, and modes/patterns of interaction among countries.
  • We may have heard terms like balance of power, bipolar, unipolar, and multilateral. These terms describe the world order of its times.
  • The bipolar world order is a world divided into two camps- the USA and the Soviet Union. Unipolar world order is a world with one predominant power- the USA, and likewise.
  • The power hierarchy and power distribution of a particular time decide what kind of world order we are living in.
  • The current world order is described by experts as multipolar-multilateral world order.

What was the pre-pandemic setup of the world?

  • Before the pandemic too, the world was in a churn with the USA taking unprecedented inward turn after 2016. It retreated from various institutions, economic principles, and military outreach that helped it to become the superpower it is today.
  • China had shown signs of giving up the principle of building internal strength and started to open up to the geopolitics more aggressively. It launched the most aggressive initiative of the global times in the Belt and Road Initiative to expand its power both in the vicinity and beyond.
  • Russia, coming out of slumber after the disintegration of the Soviets, emerged as a key player, expanded its influence, and played a more active role in West Asia, deepened its relations with new actors like China.
  • Europe was dealing with the Brexit and the migrant crisis and was trying to make up for the USA’s retreat.
  • The emerging countries like India, Brazil were trying to uphold the principles of multilateralism and global order through calls of more egalitarian international institutions and a more equal place for them in those institutions.
  • It was not just the states or institutions but the fundamentals of international cooperation like a liberal economic regime, a more interconnected world were cracking up and cracks were created precisely by the agents of these fundamentals.
  • As the world was still coming out of the 2008 financial crisis, the world was hit by the growth of nationalism in many first world and emerging countries that led to these inward-looking policies.
  • The new frontier of super-advanced technology became the new frontier of competition as can be seen in the race for Artificial Intelligence and the 5G technology.

Why the world order is set to change post-COVID-19?

There are largely four accelerators of change that can be seen by the scholars.

  • The return of nationalism

The pandemic has brought the world to stand still and the national lockdowns have made self-reliance a buzz-word again. The lack of international trade, disbanding of means of transportation, search for testing kits, ICU equipment, ventilators has made nationalism come back with more vigor.

  • Death of multilateralism

International cooperation needs ceding a degree of sovereign rights for the setting of globally agreeable rules. The return of nationalism means disbanding of any such possibility. The failure of WHO and politics around it isn’t helping it either.

  • Retreat of globalization
  1. Global economic integration is possibly the best way to combat the ensuing global recession. But the opposition to globalization in the very birthplaces of its modern form i.e. the west has made globalism to retreat.
  2. The trade war was already happening between the USA and China. There are apprehensions in the western world about increasing Chinese presence around the world. The West is distrustful of the intents of China and its debt trap policy in its extended neighborhood and Africa.
  3. The economic conditions in western countries also accelerate the retreat of globalization.
  • China’s aggressive rise
  1. Pandemic has led to china abandoning its idea of peaceful rise and intends to stake its claim more aggressively.
  2. This stems from the rest of the world seemingly holding China responsible for the pandemic and targeting it. The aggressive posture is to protect and defend itself.
  3. Also, paradoxically, even if the virus originated in China, it is likely to emerge as the most powerful entity after the pandemic.

COVID-19 and Financial world order

  • Failure of the USA to sort of its own affairs at home let alone provide global leadership. It did not even try or show intent to muster a global response instead resorted to blame WHO and hold its contribution.
  • With an emerging vacuum in financial order due to the USA’s retreat, China vying to compete for greater control. Some of the factors that hold the key in the economic preponderance of China are discussed below.
  • China is the 2nd largest economy in the world
  • Huge Chinese Banks with deep pockets opening up to the world and supporting big Chinese multinationals.
  • China is giving a more active role to its currency on the global platform. In the commodities market, it is pursuing big MNCs to use Yuan (Rio Tinto, one of the largest Iron ore miners in the world issued its first contract in Yuan last year. Renminbi became a part of SDR maintained by the IMF and is the third-largest weightage higher than Japanese yen and British Pound.
  • The COVID-19 pandemic could increase Chinese financial influence. China is already sharing its experience of handling the pandemic and supplying essential for fighting the pandemic to hotspots like Italy and Spain
  • Its tough response in handling crises at home and growing size and depth of its financial markets have convinced investors that it is a safe bet when other markets were crushed under the lockdown. China’s bonds (its bond market is the 2nd largest in the world) remain stable as against emerging markets. This is a confidence booster for investors as the current pandemic posed one of the biggest threats to the bond market to date.
  • Chinese challenge of huge Digital wallet Apps that could potentially create a parallel mode of money transfer against the USA dominated SWIFT system.
  • China with its deep pockets has been investing heavily in Africa, South-East, and Central Asia. Recently Iran and China made public a secret cooperation pact draft which gives China near-exclusive passage to Iran.
  • Though China is far behind in this war but post-COVID world financial order may see a bipolar financial system where America-led financial system is at loggerheads with China-led parallel system. If that happens it will be harder to move money around the world and common people will be at loss in the end.
  • Apart from the Chinese rise, a new form of ‘gated globalization’ could emerge, one that is less free and less open than before. This will impact not only advanced economies, but emerging economies as well.
  • For instance, the pandemic has drawn attention to the risks faced by emerging economies due to massive capital outflow and a shortage of dollar liquidity in the region. This would require countries like India to overhaul fiscal policies and growth strategies to adapt to a less interconnected world.

What are the roles of middle and smaller powers in the post-COVID situation?

  • The middle countries have done a better job in handling the crisis than the West and China, according to some experts.
  • South Korea was one of the first countries where the pandemic spread rapidly and also there were a high number of deaths. But extensive testing, identifying the infected people and their contacts, and putting them in quarantine helped South Korea control the COVID-19 spread. The same is the case with Vietnam and Taiwan.
  • Though India is largely depending on social distancing and lockdown, looking at its population and limited resources, the rising numbers are still among the lowest considering its population.
  • It is in providing the assistance that middle powers have done well. India, Vietnam, and Taiwan have been assisting different countries to fight the pandemic. India’s place as the pharmacy of the world has strengthened in this pandemic.
  • Overall, while the middle countries get caught up in the rivalry between two powers, in this situation the middle countries have emerged as an important component in the international system even as the two major powers, the US and China, have struggled. The COVID-19 crisis has given an opportunity to these middle powers to highlight their role and in the future, they must leverage their capability.

Do the institutions of global governance face existential threat?

  • As the pandemic unravels, the UN system, especially the WHO faces a legitimacy crisis.
  • WHO was under fire for its alleged under/non-performance in the initial phase of the pandemic.
  • The UN itself has become a place for big-power rivalry The UNSC in particular is ever divided on major questions according to selfish interests.
  • In the wake of the economic breakdown of the world system, the World Bank or IMF is yet to come up with some concrete plan of action for national governments and global bodies.
  • As the USA and Europe are increasingly looking inward, these organizations face financial crunch, the dearth of political will which makes any substantial contribution on part of them near impossible.
  • It seems that at least the USA is convinced that its interests are not served with the current functioning of the UN.
  • As powers like France, Germany, India try to keep multilateralism and universal organizations relevant, it is to be seen if the efforts succeed.

What are the challenges for climate action after the pandemic?

  • The reports of reversing trends of ill effects of the pollution, industrialization, and trend of natural healing of the world could prove a short-term trend.
  • As the economies look to bounce back to pre-pandemic situations, they will resort to enhanced production, exploitation of natural resources, disband environmental concerns for some time to come.
  • These possibilities can harm the climate action led by UNFCC. Already the Paris deal is in shambles due to back out of the USA.
  • The contributions to the global climate actions will reduce as the climate concerns take a back seat in the face of economic breakdown. Every country is likely to neglect environmental concerns in its existing and new projects due to reduced capacities.
  • The protectionist regimes worldwide can threaten hard-earned global unanimity on climate action.
  • Especially the emerging economies who depend on future industrialization for its developmental targets are less likely to bother about climate action.

What are the challenges for India in the post-COVID world?

  • India is still struggling to contain the rising numbers of the COVID-19. The healthcare system has been exposed due to insufficient capacity, retreating private healthcare, and most of the burden falling on public hospitals.
  • While this is the case of handling pandemic, the economy is the main concern. Already slowing down the economy was hit hard by the pandemic.
  • As the world is giving up globalism and multilateralism, the room to maneuver for India reduces drastically.
  • Due to the decision of not joining RECP, though it was a desirable decision, makes India isolated in the south and south-East Asia. Plus, the Chinese checkbook diplomacy has already made dealing with the neighborhood hard for India.
  • As China reacts to global outrage against it, its first reaction has been stoking fire along its borders. It has aggressively claimed the whole of the South China Sea comes along with its baseless claims at the LAC in Ladakh. Such a revisionist China can be a potential territorial threat to India.
  • India, with limited economic capacity, growing but still limited global clout will have to walk a tight rope balancing its immediate geopolitical interests and long term developmental and strategic goals.
  • India as a firm believer of multilateralism and the role of the United Nations and its organs in global affairs finds little support (de-facto) to its world view. In this scenario, it is challenging for India to maintain that stance.

Are there any advantages for India in the post-pandemic times?

  • As the global outrage against Chinese cover-up increases, many multinationals have expressed their desire to look for other destinations for their businesses, manufacturing plants. In this scenario, India has an opportunity to attract investment towards itself.
  • India has all four factors for business: human capital, social capital, natural capital, and improving physical capital. It has already vowed to improve its manufacturing sector with campaigns like Make in India, improved openness to FDI. It can emerge as the preferred destination for investment.
  • As discussed above, India’s role as a pharmacy of the world has been highlighted in this pandemic. India has now an opportunity to build on this achievement and go for not just generic development but also original innovations in medicine. Its rich heritage of AYUSH can help in this endeavor.
  • The trade war between the USA and China will also help India to gain some important incentives in trade, technological cooperation and technology transfer, strategic engagement, etc.
  • As one of the last few supporters of multilateralism along with Germany, France, and Japan, it can steer the world in these tumultuous times.
  • India is a key member of G-20, USA’s interest in expanding G-7 to include India and some other countries, India’s active role in global affairs due to initiatives like International Solar Alliance, promoting CCIT for combating terrorism, engagements in QUAD, Asia-Africa Growth Corridor will only help India is playing a huge role in the post-pandemic world.

Way Forward

  • As the world is trying to open up, somewhat being ready to live with the virus until a vaccine is developed, the churn in the global order is starkly visible.
  • It must be realized that the current trend is not solely a product of the pandemic itself but has been going on for a while now.
  • So, what world needs today is not another period of distrust, competition, and uncertainty but a prolonged period of cooperation and convergence to tide over this crisis.
  • Though the USA-China tussle is imminent, other players must continue to discard any bipolarity as they have done after the end of cold-war.
  • The Alliance for Multilateralism launched by Germany and France as a network of countries supporting a rule-based multilateral order for international stability and peace is one such effort. Such efforts are relevant now more than ever when two biggest economic powers are likely to engage in a fierce competition.
  • This pandemic as discussed above is a harsh reminder for the proponents of neo-liberalism as even developed countries with a high standard of living and developed social sectors crumbled in no time at the face of the pandemic.
  • There is a serious need to relook our attitudes and efforts in sustainable development and environmental protection. Market forces and market mechanism has failed to live up to expectations and failed miserably in its claims of efficiency, effectiveness, and ability to deliver social goods.
  • We must take the stark inequalities in the world seriously and strive to achieve the sustainable development goals in time.
  • As leading voices like Bill Gates, Yuval Noah Harari maintain that this pandemic might not be the last of its kind, the global powers and international institutions like the UN, WHO must be strengthened to handle such crises effectively in the future. We need the UN now more than ever.
  • India’s recent posture of multi-alignment as against previous non-alignment is in line with this need as India strives to become a global mediator at the same time being a leading voice of south countries.
  • India must revive cooperation where it is a leading voice such as SAARC, BIMSTEC, etc.
  • India has already embarked upon the path of self-reliance and it has made it clear that it is not a program of isolation but of strengthening itself for the betterment of the world in line with “Vasudhaiv Kutumbakam.” A strong, democratic India which supports multilateralism is in the interest of the world.

Conclusion

The pandemic has not changed the world and ushered in a new era. What it has done is intensify and expedite underlying trends which were visible in international politics, and made the world confront a new reality in a period of a few months what would have taken several years. We must keep in mind that the answer to a skewed globalization is not anti-globalization but a more democratic, more egalitarian form of globalization. A world on the brink of climate change led disaster cannot afford to remain divided for long. Continuous efforts towards convergence and cooperation is the most effective answer.

Practice Question for Mains

Explicate the conditions and actors that could push the current world order to change? What stake India has in such a changed world? (250 words)

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