Mohammad Shahid Saleem
It’s for the first time in the history of postindustrial human civilization that humanity is navigating leaderless. After the end of the cold war, a unipolar world with the United States of America taking the role of global master, emerged with new economic and political order. The world politics started shaping that way and all developed, developing and least-developed economies started entering into a bond of amensalism with the superpower while for the USA it was more of a commensalism. The emergence of China in 2008 and its continuation as a world rising economic epicenter since then started reshaping the global geo-economic scenario. However, the challenge posed by the COVID 19 has utterly dazed the confidence of all the mighty political tycoons, on both sides of Atlantics, who till the spread of this deadly RNA virus strand were in deep slumber.
Still we are in trailer stages of the epidemic and the pig picture is yet to play on screen and therefore, we need to stay tuned to see the worst crisis and painful devastation. The world will be witness to a series of cascading problems be it economic, health, educational or socio-political. And to deal with this crisis is quite impossible without any world leader or the major economies of the world joining hands together to take humanity out of these ferocious waves of this horrific biological storm.
The first shock which the humanity is presently witnessing is the health shock. With the number of infections spreading coupled with daily deaths and the absence of a vaccine, the situation is worsening day by day. First, the problem was Wuhan centric, then it shifted to Italy, then to Iran, Spain, Germany, France, Netherlands, UK and the latest is the mighty and superpower USA. All medics are struggling day and night without any knowledge of valid prophylaxis of the virus. Kudos to all the brave hearts world over working selflessly for a cause to save humanity without any political, social, economic or religious consideration. A ray of hope indeed.
The second shock which the globe and homo-economicus has to face is the free fall of economies worldwide. The first hit is the private sector. With the USA losing 10 million jobs in just the first two weeks of the pandemic is an eye-opener if we compare the same with 8.8 million jobs dwindling in 106 weeks of 2008-2010 economic recession. And yes, by next week the jobs lost will be much more than 15 million while the GDP of the USA has already a hit of 75% downfall. The economy is indeed under ‘medically induced coma’ as mentioned by Paul Krugman and the nations are acting without any strategy to overcome this unprecedented challenge. The picture at the global level will be much worse and pathetic with the grim situation in developing economies where 70% of the workforce is in the unorganized sector. For us in India 80 out of 100 are engaged in the informal sector with around 140 million or one-fourth of the total workforce are migrants elsewhere in the country. With 42 million daily wagers and 250 million living below the poverty line, the situation is hard to be tackled and solved. The global south, therefore, has to face a severe and harsh brunt even if luckily, they escape the pandemic, which in any case is the least probability.
The third shock which the economy will face is the bankruptcy of countries as they will fail to repay the debts. Italy, the third-highest debt holder in the world, has already crippled down and its debt level is further skyrocketing as large funds are being arranged and pumped to fight the deadly pandemic. But with the economy under strict lockdown this scenario is not going to continue endlessly. The same is the situation with the fat economies of China and the USA with both having 310% and 210% of the public and private debt to GDP ratio and the global business in deep halt. We can visualize the situation that would emerge from the developing economies and least developed ones that always scream in the debt trap and balance of payment crisis. The top economy of the Eurozone-Germany, which had not seen any downward trend for the last almost ten years, has economy contracted by 5%. The Netherlands after having pumped a stimulus package of 1o billion Euros into the system has warned about the companies going bankrupt and the loss of a huge number of jobs. Similar situations are awaiting to arise everywhere. The state of affairs is going to be more deadly in the coming days, wait and watch.
The developing world is another looming threat in the arena. These reports coming forth are quite satisfying to date as if the conditions of social distancing and lockdowns have worked. If experts are to be believed, in India, the RNA virus is not the same as was in Italy coupled with the immunity effect of the population due to BCG vaccination. In addition, if the soaring heat of the coming months neutralizes the RNA, the situation will be win-win for both poles-North and South. But if things are not as the experts are saying or the good graph is due to less testing or RNA virus turn heat resistant, the countries like India, Brazil, Nigeria, Indonesia, Malaysia along with other countries of Asia and Africa are going to shake the already trembling peace of the globe. All these economies will crumble due to a fall in tax revenue, giving away new subsidies to subside the impact of the pandemic, unemployment, death of unorganized sector, the death blow to the organized sector, the balance of payment problem, inflation coupled with a liquidity crisis. The net result will be an unprecedented depression of its own features routing the economies to havoc and chaos. However, a key study of coronaviruses- HCoV-NL63, HCoV-OC43 and HCoV-229E, have shown a high rate of infection during February and low in summers with some other studies suggesting seasonal behavior of Coronaviruses in temperate climate. A ray of hope.
Another problem in developing countries is the actual implementation of social distancing and lockdown. Be it Alexandra of Johannesburg, Mokoko of Lagos, Dharavi of Mumbai, Abuja of Nigeria or Acra of Ghana, the practicality of this therapy in the absence of vaccine is measly impossible. Around 750 thousand slum population living in around 20,000 shacks in Alexandra, 300 thousand in Mokoko living in shacks on stilts over a field lagoon, around million in Dharavi in an area of around one square mile adjacent to fabulous rich locality and a similar situation in Abuja and Acra-social distancing seems an impracticable solution as thousands use community latrine and water points. Similarly, with 92 million population living in one room throughout the country and the country under lockdown, the side effects of lockdown on social distancing itself are obvious. The examples are just to have an idea of the real-time ground situation beyond enjoying the social media success stories.
The bad days for oil-rich economies are not too far. They also will find themselves sailing in the same boat as will be the developing economies. The oil prices are expected to hit the lowest ebb of $10 per barrel, which happened once during the collapse of the USSR. The oil economies gaining only at the rate of $ 60 per barrel are going to have a big hit. A worst-hit indeed. The situation of Saudi Arabia, Libya, Iran, Iraq, Nigeria and Venezuela would move to the worst scenario as the whole of the economy of these nations is dependent on oil. This might give rise to multiple and rippling effects of revolutions, coups, public unrest, civil wars, refugee crisis, terrorism and political turmoils.
The World leaders instead of discussing the solutions for the globe and its economy are back in their glittering cocoons in total selfish mode. At this crucial juncture the slogan of ensuring freedom for all is missing. The global outreach of these humane and philanthropic political magnates is eclipsed by self-protection and egocentricity. The time when globe actually requires these leaders to join their hands to steer the world economy and to give a global response to the pandemic and not a narrow national response, we saw the G7 countries even failing in issuing a joint statement as big boss was insisting on naming the RNA virus as ‘Wuhan Virus’. Subsequent to the, despite efforts made by oil giant Saudi Arabia, the G20 also was ineffective.
The facts of selfishness and meanness are quite clear and open. USA has paid billions of dollars to a German company to create a vaccine to be used for curing American only. Germany blocked medical supplies to the atrophied Italy and Great Britain is refusing access to free healthcare to asylum seekers during the pandemic. This naïve approach and decision making is not only inhumane but also brutal in the history of modern global social order. If these leaders recall, during the 2008-10 economic crisis, all the economies and central banks worked together and due to that emerged with a strong push. To have that strong push again these leaders are again required to join hands, chalk out strategy, pool resources and put all men and machinery into use for having a vaccine and steering the economy through these thundery waves of the pandemic so that the population will be having something to feed their bellies. And, God forbade, if such a cooperation doesn’t emerge as soon as possible, the doomsday is not too far. After all, on the great day of judgment, all the innocent kids including those killed in politically driven wars will be asked by the almighty “For what sin you were killed” and the reply is to be given by the leaders not them.
(The author is a Kashmir Administrative Service officer presently doing Masters in Development Studies (Public Policy) at the International Institute of Social Studies, Erasmus University, The Hague, The Netherlands.)