Business in Times of Corona: Time to Make America Great Again

Business-in-Times-of-Corona---Time-to-Make-America-Great-AgainThe corona pandemic rapidly engulfing the world has led to a sudden reversal in the plight of the nation state as a concept. Rescued from well-deserved oblivion, even smaller countries that have traditionally embraced multilateralism as the only viable way to further their interests, the nation state resurfaced with an apparent vengeance. The recommendations of the World Health Organisation are largely ignored whilst nations across the globe implement their own response to the pandemic, ranging from complete lockdowns to quasi-denials.

Even in Europe, coordination and cooperation between EU member states vanished almost overnight. Borders were hastily closed to travellers, but not to recriminations which followed the familiar patterns of supposed national traits. The composed and weighted response of the Dutch to the crisis caused consternation, if not indignation, in neighbouring countries fearful that a policy which allows for the ‘controlled spread’ of the virus could spill over. Belgium closed a border that had vanished in all but name, barricading countless backroads with containers and blocs of concrete to stop the flow of traffic whilst gendarmes intercepted and turned back southbound vehicles on major thoroughfares. Elsewhere on the continent, queues of traffic stretched for miles as border agents emerged out of the proverbial woodwork to seal off entire countries.

In a matter of days, the European Union’s celebrated Schengen common travel area was sliced into its 26 component jurisdictions. Land-locked Serbia, outside both the EU and the Schengen Area, saw its links to the outside world severed without so much as a prior warning, leading its president Aleksandar Vucic to conclude that European solidarity is just a ‘fairy tale’. China proved more understanding and promptly dispatched advisers, doctors, and medical equipment to Belgrade to help the government deal with the crisis. The apparently deeply grateful Serbian president said that he will listen to whatever Chinese experts have to say and follow their advice to the letter.

The big multilateral structures and entities that underpin the post-war world order have so far proved all but toothless in dealing with the pandemic. Though admittedly public healthcare remains the remit of nation states, even in the European Union, the lack of a coordinated response to a threat that recognises no borders is worrisome and lays bare the fragility of international cooperation. When Belgium and The Netherlands, arguably the world’s two most tightly integrated nations and closest friends, retreat behind their borders, the nation state is back.

Even the EU’s much-touted single market showed cracks as governments impose export restrictions on critical medical equipment such as respirators. Appeals from Brussels to respect free trade rules were simply ignored by member states, even those that usually abide by all rules such as Germany. When Italy called on fellow EU member states for emergency support, not a single one answered the call.

Former IMF Chief Economist Olivier Blanchard is unhappy with the reflexes displayed by most countries affected by the corona virus and wrote in The New York Times that the world should act in unison and with determination in the face of a common foe. Mr Blanchard reminded his readers that markets and conventions have but a limited role to play in the struggle for survival as evidenced by the vast outlays of cash required to fight World War II which at its height drove the US fiscal deficit to 26% of GDP.

Geopolitics, until recently a taboo topic in civilised discourse, is back as well. The fragmented response of western nations and the absence of American leadership create a vacuum that cannot exist for long. Writing in Foreign Affairs, former US Assistant-Secretary of State Kurt Campbell and Rush Doshi of the Brookings Institution, argue that the pandemic has brought about a new ‘Suez Moment’. In 1956, the Suez Crisis heralded the end of Great Britain as a global power. Messrs Campbell and Doshi believe the 2020 Corona Pandemic may be the event that deprives the United States of its status as the world’s pre-eminent superpower.

With considerable brawn, and ignoring its own initial missteps, the government of China is moving quickly to fill the void and convince the world of its superior approach to both the medical emergency and global crisis management. Beijing is, of course, helped by the much less effective display of brawn at the White House. Conservative wishful thinking did not help either: Likening the corona virus to Chernobyl, and expecting a similar fallout, severely underestimates the strength, resolve, and resourcefulness of Chinese authorities.

Taking a page out of the history book, China is fast becoming the arsenal of the world as an increasing number of countries grapple with the unseen viral sniper that preys on the vulnerable. Whilst European countries dithered, China has sent vast quantities of medical supplies to hard-hit Italy and even to the United States. Should the US be unable to put its domestic industry on a war footing, the country could still lead by mobilising its outsized life sciences establishment to come up with a vaccine. Instead, the Trump Administration tried to buy a German research lab by reportedly offering a billion dollars to move the company’s scientists and operations stateside – a move that irked Chancellor Merkel and prompted her to forcefully intervene.

Though the ascendancy of the nation state as an instinctive reflex to the global crisis will not likely result in calls for a return to autarky, globalisation is not expected to escape a hit. Heavily invested in global trade, China – again – is well poised to take the lead. It is the only country that pursues a clear and long-term vision on global trade with its Belt and Road Initiative – a vast network of logistics and finance – that may be adapted to best suit the needs of the post-corona world and re-establish broken supply chains, a feat that would certainly not remain without geopolitical rewards.

Against President Xi Jinping – the proverbial ‘man with a plan’ – the Western World puts up a man who wants to make his country ‘great’ at the expense of others, and a lot of small men and women cowering behind national borders waiting for deliverance. However, it is not too late for the US to escape the dreaded ‘Suez Moment’: Its resourceful entrepreneurs, capable administrators, peerless scientists, and bottomless capital markets – in other words: its unequalled heft – can still be rallied to call a panicked world to order, provide succour, and show who’s in charge of global affairs. This is the time to make America great again.

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