Covid-19 – and After

People such as Westmacott compare China's performance in dealing with the coronavirus crisis with that of the United States to the former's advantage. Beijing made mistakes at the beginning of the crisis by not revealing the extent and nature of the virus attack nor how the crisis originated. Since then, however, it has made amends. On March 18 it offered the European Union as a whole two million surgical masks, 200,000 advanced N95 masks and 50,000 testing kits. China had won its way back to European hearts whereas America had pulled back from the countries with which it was traditionally aligned.

Covid-19 has brought other changes to the international scene reversing some of the developments that had been made. The structure of the European Union had come under stress. It was struggling to keep open its internal borders to free trade and travel and preserve the single market principles that are the defining feature of the Union. Tim King, the former editor of European Voice writing in Politico, suggested that the handling of the coronavirus crisis marked a "hasty dismantling of what took decades of painstaking negotiations to construct."

According to one view, such is the severity of this crisis that America's absence could permanently affect its standing, ceding ground to an ascendant China in the great game of global influence. Very few countries today see the U.S. as part of the solution, whereas in the past it was the natural point of comparison or a country to imitate.

There were consequences for the United States in the way the country was handling its relations with the world outside. Experts came up with a term to describe the way countries were working with one another -- they called it "disaster diplomacy." "It's clear that coronavirus is going to affect almost every aspect of American foreign policy for quite a while," said Richard Fontaine, a National Security official during the administration of President George W. Bush, who is now the chief executive of the Center for New American Security. Already the virus has sharpened competition between the United States and China and could hasten the withdrawal of American troops from Iraq, Afghanistan and other places.

In an implicit challenge to American policy against some of its adversaries, two top United Nations officials, Secretary General Antonio Guterres and Michelle Bachelet, the high commissioner for human rights, called for the easing of financial sanctions against economically strapped countries so that they could confront the spreading disease. Ms. Bachelet said the economic penalties could impede medical treatment in Iran, Venezuela, Cuba, North Korea and Zimbabwe -- all of which are sanctioned by Washington. In an open letter to the American people, Iran's president Hassan Rouhani said the United States was "aiding the spread of the virus with its sanctions," which he said "have drastically undermined the ability of the Iranian people to fight the coronavirus and some among them are losing lives as a result."

The Covid-19 pandemic, if it is overcome by a combination of the development of vaccines and drugs and sound social engineering, would leave behind a world very different from the one that existed before the arrival of the coronavirus. Rich countries in Europe and North America have more to lose than those that fall in the category of "developing states." They are heading towards a deep economic slowdown that may be more severe than the Great Depression of the 1930s. To recover from that expected economic situation they will have to bring about significant demographic changes. The deaths the pandemic is likely to cause would accelerate the decline in the rate of population growth in this part of the world. It is already below zero in some of these countries. They may be able to arrest this decline if they allow higher levels of migration from the much more crowded and much younger developing world.

The developing world will also be seriously affected by Covid-19. It will also lose a million or two million people and suffer a sharp economic downturn. But it could recover if those that have decision-making roles to play come up with the right set of policies. A national lockdown such as the one carried out by India is not the right way to handle the situation. It may slow down the spread of the virus but will also, at the same time, inflict a lot of pain on the poorer segments of the population. Partial lockdowns, as implemented by the Pakistan government headed by Prime Minister Imran Khan, appears to be the right approach. The government has also launched a program of cash transfers targeted at poor households. Close to a billion dollars will be provided to 12 million poor households. There are in all 54 million households in the country and a fourth of these are very poor. They will be most affected by the Covid-19 disease. The government's cash-relief program will reach most of the households who are likely to become the targets of coronavirus.

If one consequence of the pandemic is to produce a less globalized world in which internationalism is replaced by nationalism, the developing world, led perhaps by China, could go on its own. President Xi Jinping's Belt and Road Initiative, the BRI, is a move in that direction. The China-Pakistan Economic Corridor is a part of this initiative. The large investments China is making in improving physical infrastructure will knit together China, Asia and Africa and produce economic connections that don't exist at this time. Thus connected, today's developing world could take advantage of its demographic situation. It is not an exaggeration to suggest that China is on the way to becoming the center of this new world. It's share in global GDP has already increased from only 2.3 percent in 1980 when it began the process of opening up to the world to 17.8 percent in 2016. On the other hand, that of Europe has declined in the same period from 30 percent to 16.7 percent.

Developing countries have very young populations who, because of their age, could escape the worst of Covid-19. They could be educated and trained to develop the various components of the service sector, the fastest growing part of the global economy. The median age of the Pakistani population is 23.8 years which means that half of its current population of 212 million is below that age. This age profile compares very favourably with that of, say, Germany which has a median age of 47.1 years. This is the world's highest. Pakistan is a part of the world where the youth dominate; the median age of Afghanistan is only 18.9 years. The world's average is 30.4 years. A young population brings economic vitality; well-educated and well-trained, the youth also improve the technological base of the countries in which they live.

This focus on the poor countries' demographic situation is to suggest that while the Covid-19 pandemic will set back economic growth in the developing world, the recovery from the setback will be faster than in rich countries. With the youth properly deployed, developing countries could fairly quickly modernize services such as healthcare, education, sports and tourism, some of which could produce items for export or invite foreign visitors wanting to use these services.