Unlike in 2008-2009, multilateral initiatives at the global level to overcome the crisis will most probably be ruined by the confrontation of the world’s largest centres for economic and technological leadership in a new, post-Covid world in the next decade, writes Igor Avlasenko, Associate Professor, at the Belarusian State University.
World economic crises occur, on average, once every ten years, and each has its own unique causes and special nature. Each necessitates a new means of rehabilitation, so that the global economy may return to a sustainable growth trajectory. When the world overcame the consequences of the 2008-2009 economic crisis, there was a greater degree of cooperation between the leading powers than at present. The recession a decade ago gave impetus for the creation of new and improved multilateral formats. In the fall of 2008, the first meeting of world leaders in the framework of the G20 took place, and from that moment, such meetings began to take place on a regular basis. Through multilateral consultations, the leading states were able to agree on the reform of the International Monetary Fund: the redistribution of quotas of the participating states, the share of their votes (in favour of developing countries), as well as the doubling the size of the authorised capital (and, accordingly, expanding the potential for providing stabilisation loans). At the regional level, multilateral cooperation manifested itself in the creation of a number of stabilisation mechanisms, including the EurAsEC Anti-Crisis Fund (2009) and the European Stability Mechanism (ESM) (2012).
However, the response to the current global epidemiological and economic crisis hasn’t seen the same degree of solidarity among the leading states that was observed a decade ago. On the contrary, a number of key multilateral institutions are in crisis: the work of the Appellate Body of the World Trade Organisation is blocked due to the US position; the efforts of the World Health Organisation to combat the pandemic have been seriously undermined by the decision of the Trump administration to abandon the WHO, and the meeting of the G7 leaders was torpedoed and has not yet taken place, even in an online format. Rather than intensifying multilateral efforts to combat the global threat, the current crisis gave impetus to increased rivalry in the international arena.
There are several reasons for such a development of events. First, the trend towards the revision or even the reversal of the globalisation process had already taken shape in previous years. Britain’s withdrawal from the European Union was a tell-tale manifestation, as well as the policies of the US President Donald Trump administration, aimed at withdrawing from existing multilateral agreements.
Second, the pandemic and the related economic crisis coincided with an exacerbation of the geopolitical struggle, most clearly manifested in the rivalry between the United States and the People’s Republic of China. Unlike during the crisis a decade ago, in 2020 it became clear which power would be able to most successfully cope with the consequences of the pandemic, and seize the leading position in setting trends and standards of world development for at least a decade to come. The success of the PRC in the fight against the pandemic clearly presupposes this kind of leadership. The response from the US administration has been largely emotional: President Donald Trump has accused both the Chinese leadership and the World Health Organisation of negligence and inaction.
Third, the collective response effort was influenced by the fundamentally new nature of the key global challenge of 2020 – it is an epidemiological one. Each state has been forced to seek out its own options and find an independent balance when considering quarantine measures as well as the effects of a possible recession in the economy, based on the dynamics of infections, as well as the states’ own financial capabilities. It is easy to find examples, given that the states participating in a very close integration association took completely different decisions when responding to challenges. In particular, in the spring, the government of the Russian Federation introduced strict quarantine restrictions, while the leadership of the Republic of Belarus (a partner in the Union State) ignored this approach. Sweden did the same, becoming the only EU state to avoid strict quarantine measures.
At the moment, for the leadership of any state, an early vaccination is the key to removing restrictions on the economy, an early recovery of economic growth and making up for lost time. Therefore, the fragile solidarity between the leading states of the world in the fight against the epidemic has smoothly spilled into the rivalry for primacy in vaccine production, for the distribution of this vaccine, and the right to sell it to third countries. Just as in 1943, the leading countries of the Grand Alliance began to defend their vision of the post-war world order in discussions, so now, even before the end of the pandemic, the leading powers are vying for leadership in the new, post-Covid world.
On August 11, President of the Russian Federation Vladimir Putin officially announced the successful trial completion of the world’s first vaccine against the coronavirus. Nevertheless, this fact has provoked a restrained and even sceptical reaction in the United States and the European Union. The leading US infectious disease expert Anthony Fauci expressed doubts about the safety and effectiveness of the Russian vaccine. A White House spokesman also confirmed that the United States will not use the Russian vaccine due to a lack of confidence in the test results, which, in his opinion, were carried out in a hurry. As the official spokesman of the European Commission, Eric Mamer, noted at a briefing at the end of October, foreign vaccines will be able to enter the European market, but “they will never be part of the EU vaccination strategy”.
Thus, the contours of the struggle among the leading powers and the pharmaceutical companies behind them for the coronavirus vaccine market are already emerging. The scale of this market is determined by the global nature of the threat. There are two main ways to combat the spread of competitor vaccines. The first is a media campaign aimed to discredit vaccines from foreign manufacturers. In the media, special attention is paid to the side effects and low effectiveness of the drug; all cases of death among the patients are closely studied. A loud precedent was the refusal of the Brazilian leadership to participate in the third phase of trials of a Chinese vaccine after the death of one of the programme participants. The second method is the standardisation process – closing markets at the national level (or at the level of the integration association as a whole) by tightening the requirements for the certification of vaccines from foreign manufacturers. The statement by the official representative of the European Commission is evidence of such an approach.
The markets of third countries that do not have sufficient industrial capabilities to develop their own pharmaceutical products can also become a battlefield for various vaccine manufacturers. It seems likely that in the future, some leading powers (in particular the United States) will use economic and political pressure on such countries in order to allow their own vaccine and at the same time close the market to competitors.
Over the past two decades, the world has experienced several regional epidemics, such as bird flu, swine flu, Zika virus, Ebola, Middle East respiratory syndrome (MERS). In the context of accelerating technological development, the expansion of the anthropogenic zone and its ever closer contact with the habitat of wild animals, the likelihood of the emergence of new virus mutations being transmitted to human beings also increases. In the next decade, the emergence of new biological threats at the regional and global level is quite likely. This means that the rivalry between the world’s largest pharmaceutical companies will only intensify, and the main instruments in this struggle will be government bodies, which approve the rules and standards for the certification of medicines, thus, protecting national markets, as well as using the media.
Despite the fact that the coronavirus turned out to be a fundamentally new global challenge, dealing the economy its most serious blow since the Great Depression and World War II, it has not increased cooperation; on the contrary, it has intensified rivalry. Medicine and pharmaceuticals have become another “new political space” (along with outer space, information technology, and sports), in which competition between the leading actors of the world economy and world politics is only intensifying. With an increase of the service sector of the world economy, with an increase of people’s attention to health problems, physical and psychological well-being, the scale of this “space” (and the corresponding production market) will inevitably expand. In such conditions, altruism between the great powers, as well as between the leading manufacturing corporations, is quite impossible.
Thus, unlike in 2008-2009, multilateral initiatives at the global level to overcome the crisis will most probably be ruined by the confrontation of the world’s largest centres for economic and technological leadership in a new, post-Covid world in the next decade. The rivalry between vaccine manufacturers will be another manifestation of the desire to seize technological leadership, with the transition to the fourth phase of the global industrial revolution. In this regard, it is very likely that the main political and economic outcome of the Covid-19 pandemic will be the increased fragmentation and regionalisation of the world system.