Morality and Law
The New Wave of Covid: A Negative Crisis?

Can the negatives of the crisis be turned into the positives by taking advantage of the opportunity afforded by the global shock to the system? In international affairs all the signals are turned to red, with the liberal international order crumbling and the 1945 international system challenged as never before. However, at the societal level the green signals are strongest, Valdai Club expert Richard Sakwa writes.

The approach of winter in the northern hemisphere is accompanied by the gathering pace of a second wave of the coronavirus pandemic. In the wake of the Great War in 1918-19 the second wave of the great ‘Spanish’ flu pandemic had been worse than the first, raising fears this year that the coming winter months may repeat that devastating experience. Businesses that survived the first wave, notably airlines, may finally go under in the second as travel restrictions are once again imposed. The International Monetary Fund estimates the pandemic’s economic loss to the global economy at some $12 trillion, and that is only counting the first wave. It is hard to under-estimate the potentially damaging consequences of a second wave.

In certain respects, of course, the second wave is just the continuation of the first. Unless some sort of widely-available vaccine can be introduced soon, then we can anticipate a series of waves stretching into the future. Each stage will test popular reactions. Populations on the whole in the first wave were willing to accept sacrificing their freedom for the common good, but as the epidemic ebbs and flows it will be harder to convince people that new restrictions and hardships are the appropriate response. The Swedish model of voluntary controls, which allows the economy and society to work largely as normal, becomes increasingly attractive. The balance to be drawn between virus control and economic damage is increasingly contested. The restrictions are increasingly perceived to be as economically damaging as the disease itself.

The virus affects various age groups and ethnic communities differently, rendering effective epidemiological management difficult. For example, younger people are more resilient, but nevertheless asymptomatic carriers can infect older people, as happened in the US sunbelt over the summer. For various reasons, reflecting employment, housing and sociability patterns, black and ethnic minority communities in the UK suffer disproportionately. 

No More Shelter
Andrey Bystritskiy
Perhaps the strongest impression of the coronavirus pandemic is that there is nowhere to hide from it. If the coronavirus is war, then there is no place to retreat in this war.
Message from the Chairman

Life is disrupted at all levels. Whole societies and the global economy work in fits and starts. Businesses that survived the first wave, battered and bruised but still alive, may now go under. Shoppers still fear the high street, leaving stores semi-deserted, while the shift to online sales augurs the end of the old consumer model in its entirety. Students, who in many cases have committed significant sums of money for their education, are taught on-line while being forced to quarantine in dormitories on semi-deserted campuses. The leisure industry including bars and restaurants managed to survive the first wave, usually through various forms of state support such as furlough payments. Employers were able to retain staff, but are now faced with diminishing state support. As winter deepens there will be a growing wave of redundancies, business closures and rising unemployment. 

Hanging over it all is the sense of futility. Rahm Emanuel, who served as mayor of Chicago after having previously been President Barack Obama’s chief of staff, is reputed to have stated ‘You never want a serious crisis to go to waste’. He was speaking in the wake of the 2008 global financial crisis, and the idea was that the shock of the crisis would force reforms to financial markets, above all to limit the power of the banks. The growing gulf between various forms of financialisation and the ‘real economy’ would be reversed, attention paid to the real needs of industry and consumers, and some of the egregious excesses in bonuses and risk culture reduced. In the event little was achieved, and the vast sums devoted to quantitative easing in fact were channelled through the very banks that had provoked the crisis in the first place. The crisis did provoke new forms of popular mobilization, including the various ‘Occupy’ movements, but they soon fizzled out. Nevertheless, the agenda of improved financial control remains on the table.

Will the coronacrisis prompt a return to the agenda of 2008? At present this is hard to envisage. The pandemic has so far, in the main, only accelerated and intensified negative tendencies. Early indications of solidarity and internationally-coordinated responses, including calls for a global ceasefire, soon gave way to the reassertion of national egotism as countries struggled to get scarce stocks of personal protective and other equipment. Wars continued, and existing rifts were deepened. The trade war between the United and China has now become a type of new cold war, with mutual antagonism assuming deeper ideological forms. Coronavirus nationalism has added a new layer to the already intensifying great power conflicts. 

This is where the concept of a negative crisis comes in. A negative crisis is one in which there are few, if any, positive outcomes. The earlier financial crisis at least demonstrated elements of coherent international cooperation, as the G20 coordinated government policies and countries pulled together. This crisis has only illustrated the further ‘crumbling’ of international order, as earlier Valdai reports have put it. Multilateral institutions have either been marginalized, or even come under attack. The UN’s World Health Organisation was accused by Washington of having been too complaisant with the Chinese authorities in the early stages of the pandemic, and the US declared its departure. The unseemly race to be the first with an effective vaccine, accompanied by accusations of hacking, undermined the elements of genuine cooperation in the search for a way of beating the virus.

Although some of the planned major military exercises in Europe were scaled back, they were not cancelled. The new ‘iron curtain’ across the continent has only been reinforced. This is accompanied by provocative ‘freedom of navigation’ operations in the Barents Sea, and innumerable dangerous manoeuvres in the Black and Baltic seas. The impasse in international affairs has only deepened. More broadly, the deepening Sino-American confrontation is recreating elements of a bipolar structure to international politics, in which other countries, including major world powers, are forced to chose, whether they like it or not. None can resist the gravitational pull of one or the other ‘superpower’. 

In short, a negative crisis is one in which the opportunities for renewal and rethinking provoked by a crisis are not used or cannot be used because they do not exist as substantive and realistic policy platforms. The disconnect between the real economy and financial markets has not been bridged. The vulnerability of those who were already weak and marginalized in society is exacerbated, with precarious incomes further reduced or entirely lost. The major tech giants, on the other hand, only consolidated their position. Thirty million American jobs were lost over the summer, but Amazon employed thousands more in its warehouses and distribution systems. Borders have been reinforced, and even the Schengen free travel zone in Europe is under threat.

At the global level, this is a double crisis. The foundations of the so-called liberal international order (in large part a synonym assumed after 1989 for the Atlantic power system) have long been eroding as hubristic and counter-productive strategies have been deployed. The ‘end of history’ has long ended, and the type of globalism with which it was associated is decaying. This is not so much because of the emergence of illiberal, populist or authoritarian alternatives, but because of its own internal contradictions. However, the far more consequential crisis is that afflicting the international system created in 1945. The whole system of international law centred on the UN, its Charter and institutions, is under sustained attack. The 1945 system was based on the idea of sovereign internationalism, and thus is not simply Westphalian. Sovereignty is defended, but it is moderated by a commitment to internationalism. The forms, practices and institutions of that internationalism, above all embodied by traditional methods of diplomacy, are eroding.

Global Corporations and Politics
While Companies Are Rising, Countries Are Weakening
Wang Wen
Through the pandemic situation, we can find that the speed of adjustment and reform of the company is obviously faster than that of the state in the crisis. In our era, the company should be more enterprising than the country. Comparing companies with countries is certainly a new topic and a controversial one. But there should be no controversy at all, when the COVID-19 outbreak inspires us to think about the mode of human governance, writes Valdai Club expert Wang Wen.

Expert Opinions

The present crisis is undoubtedly a moment of danger, but can it also be an opportunity? First, the pandemic accelerated the shift towards decarbonising economies, with various ‘green’ plans for renewal. The demand for oil is unlikely to return to 2019 levels for at least a couple of years, if ever. In that sense, ‘peak oil’ (defined in terms of demand rather than supply) has already been reached. At the same time, there has been increasing attention to issues of ‘climate justice’ – the distribution of environmental costs is very uneven, falling in particular on lesser developed countries and those most at risk in developed societies. 

Second, at various points more than $20 trillion has been announced for Covid-19 recovery plans. The UN insists that this money should be farmed in terms of green recovery programmes. This also encompasses shifts in transport patterns, with a move away from the internal combustion engine toward electric cars, as well as more emphasis on urban design that would encourage cycling and walking – the idea of the ’15-minute city’ pioneered in Paris. It also encompasses plans to ensure equitable access to vaccines, rather than some rich nations hoarding the lot. The epidemic magnified the inequalities in access to healthcare, both within countries and between them. This is reflected in the number of tests, running now at about 290 per 100,000 population in developed countries, but only 14 in low income countries.

This brings us to the third point, namely the paradox that the Covid-19 pandemic radically reasserted the power, and indeed authority, of the central state, while at the same highlighting the importance of regional and local government. Despite its rhetoric in favour of individual freedom, the neo-liberal state has been characterized by creeping centralization in the economy, healthcare and education as increasingly complex – and burdensome – forms of regulation were imposed. The pandemic reasserted the importance of local responses, tailored to specific communities and infection levels. In the UK this has been apparent in the diverging strategies of the four nations, as well as in the various regions of England. The localization of business and banks, as already practiced in some federal states, would restore community pride and help overcome the sharp regional imbalances, which are particularly acute in the UK. This here feeds calls for an economic overhaul as radical as the one that was achieved by the 1945 Labour government.

So, can the negatives of the crisis be turned into the positives by taking advantage of the opportunity afforded by the global shock to the system? In international affairs all the signals are turned to red, with the liberal international order crumbling and the 1945 international system challenged as never before. However, at the societal level the green signals are strongest. The continuing environmental catastrophe is now reinforced by an epidemiological disaster on an almost unimaginable scale, building on economic dysfunctionalities already exposed by the 2008 crisis. The absence of a positive narrative in which to respond to the multilayered character of the negative crisis has opened up space for illiberal populists, neo-nationalists and militarists. There is no natural positive revolution in prospect, since almost all the sources of renewal are exhausted in one way or another. The best that can be achieved in present circumstances is to defend the international legal order established in 1945, and to remember how out of the embers of war societies were rebuilt.

The World Composes Itself: What Was Impossible Yesterday May Become Reality Tomorrow
Whether the world is angry or composing itself is unknown, but this is undoubtedly a new world. These days in Moscow, the participants of the 17th Annual Meeting of the Valdai  Discussion Club are discussing the global changes that humanity is facing in 2020. Three sessions were held on the first day of the meeting. What the experts spoke about and what conclusions they came to, read in the analytical note of Timofei Bordachev, programme director of the Valdai Discussion Club.
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Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.