A health crisis at the outset, COVID-19 soon turned into an unprecedented economic and social crisis. No economist could ever have imagined this: several billion people confined to their own homes. The consequences will, therefore, go far beyond what we experienced in 2008. But we must now assess the consequences of this event, avoiding two pitfalls. Firstly, given the uncertainty surrounding this crisis, we must not draw hasty conclusions. Secondly, we must not let ourselves be overcome by shock, concluding too quickly that everything will change. In the history of human societies, major crises are always heralded by warning signs or events. And major crises usually have an accelerating effect on trends. This is why it would make more sense to look at the consequences of COVID-19 from the point of view of how this crisis could magnify dynamics that are already at work. What are these dynamics? I can see three: firstly, the future of globalisation and neoliberalism; secondly, the evolution of global governance; thirdly, the resilience of the European Union and democratic European political systems when coping with serious and unforeseen risks. These three dynamics will shape the post-coronavirus world – a world which, to a certain extent, is already here.
This pandemic will not mark the end of globalisation. However, it will call into question a number of its modalities and ideological assumptions, including, in particular, the famous neoliberal mantra: open markets, the downsizing of the state, and privatisation. These modalities were already being challenged before the start of the crisis. They will be challenged even more afterwards. In the past decade, globalisation has increased owing to the development of supply chains that are constantly growing in number and scale. The digitalisation of the economy has accentuated this trend, benefiting many emerging countries – in particular China, which has attracted a large share of textile and consumer-electronics production, but also India, in industries such as pharmaceuticals. More than 300 of the world’s 500 leading companies have a presence in Wuhan, where the pandemic started. Supply chains will not, of course, disappear after the crisis – because they are of considerable economic interest. However, there are three ways in which this dynamic will change, to some extent.
The first way will involve diversifying sources of supply in the health sector. We are extremely dependent on China in terms of imports of a number of products, particularly masks and protective clothing (50%). In addition, 40% of the antibiotics imported by Germany, France, and Italy come from China, which produces 90% of the penicillin consumed in the world. Not one gram of paracetamol is produced in Europe at the moment. The establishment of an inventory or strategic reserve of essential products would, therefore, enable Europe to prevent shortages and ensure that these products were available across the continent. A first step is the introduction of the European RescEU programme to respond to this risk, in particular through the pooling of resources. The aim is to limit dependence on exporting countries for each essential product, so that no country is the source of too big a proportion of imports of such products. We must protect ourselves, but protecting ourselves does not mean giving way to protectionism.
The second way will involve relocating a number of activities, bringing them as close as possible to the place of consumption. We are likely to move towards shorter supply chains, which could coincide perfectly with the demands of combating climate change. This will probably raise the cost of products. However, we must accept a compromise between security needs and ensuring the lowest possible cost for consumers. In the wake of this crisis, we need to acknowledge that the interests of citizens must take precedence over the interests of consumers. More fundamentally, we need to prioritise. Would it not be sensible to have more activities in North Africa or elsewhere in Africa rather than Asia from now on? Not that one should rule out the other. But, now, it is clear that it is a priority for Europe, and in its interests, to ensure that countries in its immediate vicinity develop swiftly and well. Given that we are already talking about developing strategic partnerships with Africa, it would be a good idea to identify areas, such as medical products, in which these could take shape and be implemented.
Finally, the third way in which the supply chain approach could change is likely to involve alternative technological processes, such as the general use of 3D printing or robots to curb the risk of offshoring. In Italy, using a 3D printer, some people managed to manufacture valves for intensive respiratory care devices very quickly and at an extremely low cost. Having said that, while it is absolutely essential for countries to seek greater health security for themselves, it is also vital to find a new balance to prevent a widespread protectionist drive that would result in a global depression. This is very important for Europe, which of all the world’s regions is the most dependent on world trade, and which is, to date, the region most affected by the economic downturn. In short, we will need to devise arrangements for a new kind of globalisation capable of striking a balance between the undeniable advantages of open markets and interdependence, and between the sovereignty and security of countries.
Given this, it is clear that we cannot repeat the mistakes of 2009 – when, after recording a drop in greenhouse-gas emissions, these same emissions rose again as if nothing had happened. Moreover, this crisis is an indisputable sign that our ecosystems are overloaded. It is, therefore, more vital than ever that the struggle to preserve biodiversity should become a major component in the fight against climate change. The face of globalisation will, therefore, change. That of the state will too, as its shrinkage has been at the heart of neoliberal ideology. It is clear from this crisis that a spontaneous demand for state action is growing, but rather than a nanny state, what is needed is to restore the state’s strategic capacity to anticipate and prepare society for challenges of this kind. The countries that have managed the health crisis best in the past three months are those where public authority is best organised. What counts is the quality of a state, and not just its size. Restoring the strategic role of the state will be a post-crisis priority. But this will not be easy to achieve in Europe, where nation states and a single market coexist.
The imperatives behind the creation of the single market meant that all protection mechanisms were viewed as obstacles hindering the construction of that market and, as a result, Europe forgot to build collective protection. Hence our rather belated focus on strategic issues linked to reciprocity, particularly in terms of market access. Thankfully, in Europe, there is now growing talk of tighter controls on foreign investment and distortions of competition caused by non-European countries and we are also in the process of reassessing state aid. China’s recent award of 5G licences illustrates how European operators are sidelined. By way of example, Nokia and Ericsson recently secured a share of just 11.5% of the Chinese deal, compared to a 25% share for 4G. Meanwhile, Huawei already has a 30 percent share of Europe’s 5G market. We also need to guard against foreign groups looking to benefit from the decline in asset value to take control of European companies. Again, we will need to learn from this crisis, which has revealed the asymmetric nature of our relations with China, and mobilise policy instruments to end this situation.
The covid-19 crisis will shine a light on how globalisation increases the vulnerability of nations that do not take enough measures to ensure their security in the broadest sense of the word. All of which must lead Europe to deliver on the idea of strategic autonomy – which, as we can clearly see, cannot be restricted to the military sphere alone. This strategic autonomy must be built around six main pillars, which I would like to set out here:
- reducing our dependency, not only in the healthcare sector but also in the field of future technologies, such as batteries and artificial intelligence;
- preventing market players from outside Europe from taking control of our strategic activities, which requires these activities to be clearly identified upstream;
- protecting our critical infrastructure against cyberattacks;
- ensuring that our decision-making autonomy will never be undermined by the offshoring of certain economic activities and the dependence that creates;
- extending Europe’s regulatory powers to cover future technologies to prevent others from regulating in a way that is detrimental to us;
- showing leadership in all areas where a lack of global governance is destroying the multilateral system.
This leads me to the question of global governance. For the first time since the UN was created, it has proven impossible to reach a consensus during a pandemic; this does not augur well. This situation is the result of disagreements between countries and the lack of interest among a number of them in any form of international leadership. All of which is extremely worrying, as we know that strong international coordination can be a game-changer. Coordination makes it possible to share best practices; propose international standards; pool resources for testing and vaccine research; and create partnerships to produce all the vital products and equipment needed to fight the pandemic. This need for coordination will also be extremely important when lockdown measures are lifted. We will face serious problems if each country takes it upon itself to lift the lockdown. Later, we will, of course, need to assess what has been done well, and less well, since the pandemic began. But now is the time to rally together, not to cause controversy.
The US, China, and the EU will have to work together closely to emerge from the crisis. But if, instead of just straining relations between the US and China, this crisis were to bring matters to a head between them, Europe’s role would be even more crucial. Europe will need to ensure that the effects of this rivalry do not have negative repercussions in certain regions of the world – particularly Africa, which will need real financial support to address the pandemic. Given this situation, if we want to set an example and, above all, be credible, we have to first show our own people that we practise at home what we preach internationally – by which I mean an approach based on European solidarity. But we are then reliving the same intergovernmental debates on how to organise European solidarity that delayed the response to the euro crisis – a crisis that cost us dearly, both economically and socially. We are reliving the same confrontation between north and south. And we are again seeing the limits of European solidarity owing to the fact that we are not yet a political union or even a real economic and monetary union, despite the progress that has undeniably been made.
This crisis will also be a political test for Europe’s democratic systems. Crises always show societies where their strengths and weaknesses lie. Political narratives are already being written to prepare for what comes next. There are three competing narratives: the populist narrative, the authoritarian narrative (in many ways similar to the first), and the democratic narrative. In theory, the populist narrative ought to be severely affected by this crisis, as it brings the importance of a rational approach, expertise, and knowledge into sharp focus – principles that the populists mock or reject as they associate all of those qualities with the elite. Populism is a shape?shifter. It adapts to any situation and can easily change direction since it does not feel the need to distinguish between truth and fiction. Furthermore, populists will always be at ease during times when fear prevails. The authoritarian narrative is similar to the populist narrative in that it seeks to simplify problems and provide one central explanation for them all. It takes the line that only authoritarian and centralised regimes can defeat the pandemic by mobilising all of a country’s resources. But we know this to be false. We already know that well-organised democratic countries have, so far, had the greatest success in terms of containing the crisis.
That leaves the democratic narrative. This one is the hardest to put together, since doubting, questioning, deliberation, and debate are the foundations of democratic societies. All of which hinder swift and effective action based on a clear and indisputable narrative. But, fundamentally, once the crisis is over, the people of Europe will deliver their own verdict on the approach taken by each member state and by Europe as a whole. This makes it vital for the EU to be seen as a player that is able to make a difference. This does not mean that it should take the place of the member states, but rather that it should build on their action to give meaning and substance to the fundamental issue at stake: the protection of the European model. But this model will only mean something in the eyes of the world if we can successfully promote solidarity among the member states. And, on that issue, we still have much to do.
Once again, we find ourselves living through an existential moment in time for the EU – because how we respond will affect the cohesion of our societies, the stability of our national political systems, and the future of European integration. Now is the time to heal the wounds from previous crises, not reopen them. To achieve this, the EU’s institutions and policies need to win over the hearts and minds of Europe’s citizens. And, in this regard, there is still much to be done.
Josep Borrell is the High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission for a Stronger Europe in the World.
‘The Post-Coronavirus World is Already Here’ – Policy Brief by Josep Borrell – European Council on Foreign Relations / ECFR.