The post-mortem results are unanimous: in 2020 globalization died of COVID-19-related complications. The pandemic accelerated existing trends of economic de-globalization, strategic decoupling, and diplomatic distancing. The world moved apart, and cooled off. What remains of the international community is now sitting at home in self-imposed quarantine.
And yet the symptoms don’t quite fit the diagnosis: international relations are feverish. The EU is beset by influence operations from China, social instability in Belarus, and territorial disputes in the Eastern Mediterranean. Moreover Europeans, far from decoupling, have just taken a leap together, mandating the EU to raise money on global markets to save businesses here.
At this point a second opinion would usually be prescribed—an effort to bring nuance to the hyperbole. But in this case, the reality check highlights only how drastic things are. COVID-19, far from killing off globalization, has strengthened its core stakeholders—big powers, big business, and aloof political leaders. The malcontents are now raising the stakes.
Nail in the Coffin?
Back in March, when COVID-19 was declared a pandemic, globalization was already in crisis. US President Donald Trump had just paralyzed the World Trade Organization, and wrested control from China and Huawei of the World Intellectual Property Organization. As for those global bodies that were actually supposed to protect national markets, Trump had come out swinging at the World Health Organization for its criticism of his cuts to Obamacare and the international health budget.
Then COVID-19 hit, and the trend toward renationalization has accelerated. The WTO lost its head, when director general Roberto Azevedo gave up his mandate amidst predictions of a 30 percent annual dip in trade. The WIPO was subverted, as wealthy economies used intellectual property protections to prevent poorer ones gaining early access to vaccines. And as for the WHO, the US informed this global antibody of its intention to withdraw, taking 22 percent of the annual budget with it.
More recently President Trump has declared the end of his bromance with Chinese President Xi Jinping, opting for a conscious uncoupling which would shut China out of US infrastructure, boost the autonomy of strategic industries, and re-shore production. Trump’s dissatisfaction with Europe has also been rekindled, and there has been talk of a trade war amidst tech taxes and troop withdrawals. It seems like a classic case of economic de-globalization, strategic decoupling, and diplomatic distancing.
Alive and Definitely Kicking
But look again, and the signs are that the COVID-19 crisis may actually bolster globalization, or at least push it into new and deeper avenues. If there is a medical metaphor here, it is that the US, the EU, and China are conjoined bodies—Siamese triplets. They may talk tough about their independence from one another, but they just learned in a compressed period what separation actually entails. Severing their intertwined supply chains would be a damaging, if not impossible, piece ofsurgery.
The big three global markets may not like the state of globalization, but they are nevertheless status quo powers. Each believes the global system has been forged in its image (even the upstart Chinese) and they will fight to protect their advantages. They will prevent one another decoupling: each retreat inflicts damage on the others, as shown by the case of the Russian aluminum giant Rusal. Their businesses may well move production from one country to another, but few will re-shore.
That might explain why the big powers have proved so risk-averse in their approach to the world, even firebrand Donald Trump. The pandemic, and the scramble for a vaccine, has highlighted their unfortunate dependence on each other—China for advanced medical technologies, the US and EU for mass-produced face masks. But re-shoring would only increase the vulnerability: the more geographically diverse the production base, the more it could remain open as the virus spread.
The big three are in fact pushing the world into a new and far more intrusive form of globalization. If they cannot repatriate production the only way to stay open for business is to influence manufacturing standards abroad—be it in export markets like China, where poor standards unleashed the virus, or transit states at risk of tipping back into lockdown. The EU is stepping up its efforts to influence how other countries work and consume, joining a bruising battle for influence.
As for the idea that relations between leaders are cooling, don’t believe that. Leaders have never had so much time for each other. French President Emmanuel Macron speaks to Germany’s Angela Merkel who speaks to Turkish leader, Recep Tayyip Erdoğan who speaks to Russia’s President Vladimir Putin, or at least until very recently. The coronavirus pandemic has made this even easier—leaders have cut down on travel and have learnt to videoconference instead. If there is brinksmanship in the Aegean or in Belarus, then it’s probably because of the excess of contact rather than the lack of it—leaders reassure themselves before misbehaving.
Poor Prospects
In many ways, we are seeing a return to the period of high globalization before the advent of Trump and Co. But they have unleashed dynamic counter-trends, and that is where the world is moving apart. Economic re-globalization has spurred social deglobalization, the strategic recoupling has unleashed a tactical decoupling; and the increasingly collusive diplomatic relations between leaders has created a democratic distancing.
The big markets may be cementing their advantages under the status quo, but malcontents like Russia and Turkey have few stakes, and their asymmetrical appetite for risk plays out in their favor. Having failed to adapt to modern life, they can fall back on an earlier mode of behavior—an imperial mental map and playbook, as well as a motivating sense of past humiliation. These countries are opportunistically seeking to carve out autonomous energy supplies and supply routes.
Leaders of the big powers are having to focus their time on building relations to one another and the autocrats. They are not out and about on the streets, meeting people who likewise are organizing online forming unexpected new alliances and opinions. The leaders of the big powers are becoming estranged from their societies. At the domestic level, this is already leading to last-minute political miscalculations.
And societies are growing wary of globalization. The EU, the US, and China each want to influence the way the other lives, abolishing wet markets in Wuhan or changing the way personal data is stored in Europe. The pandemic highlighted to societies how trade and commerce expose people to risk. Now they are transferring the fear of “contagion” to market forces in general—fearful of “infection” by influence operations, hidden investments, and free products.
And Europe is particularly vulnerable to this, because of its historical medical condition.
Roderick Parkes heads the Alfred von Oppenheim Center for European Policy Studies at the German Council on Foreign Relations (DGAP).
