Pandemipolitics and the (Potential) Unmaking of the Liberal World Order

By Gregorio Bettiza , The University of Exeter

The global politics of the current Covid-19 pandemic (i.e. ‘pandemipolitics’) intersects in complex ways with the making, ongoing crisis, and potential unmaking of the liberal world order. What the characteristics of this order are is a hotly debated issue in international relations. Rather than using a clear-cut definition, I tend to think about the liberal order as coming together around four interlocking features which constitute our contemporary, post-Cold War, globalized international system.

First, this order is characterized by a progressive growth of international institutions and rules designed to collectively govern multiple aspects of world affairs. Second, the liberal order is marked by the spread of capitalist modes of production and the forces of economic globalization, largely organized around neo-liberal logics which require the scaling back of the state and thrive on the (relatively) free movement of goods, finance, and people worldwide. Third, this order facilitates and legitimizes the global diffusion of liberal values and institutions, including democratic regimes and universal human rights norms, while simultaneously delegitimizing and stigmatizing non-liberal worldviews and identities. Fourth, and finally, driving many of these processes and structures, are ideas, practices, and interests largely stemming from powerful Western actors.

Flags of United Nations member states

The paradox of the coronavirus pandemic, as John Heathershaw already observes in his post, is that it very much flourishes on the forces which structure this order. International mobility and economic interdependence have contributed to the rapid spread of the virus outside Chinese borders. It is not an accident that some of the most open, rich, and globally connected regions and cities — whether it is Lombardy in Italy, London in the UK or New York in the US, — have been hit the hardest. The rolling back of social securities and healthcare systems in a neo-liberal age of austerity, privatization, and casualization have undermined the capacity of societies and states to respond adequately. Continued poverty and disparities in much of the Global South, are leaving the developing world particularly vulnerable as the pandemic moves in their direction.

Yet Covid-19’s diffusion and international responses — which unsurprisingly include important curbs on globalization and a reassertion of the state, — simultaneously intensify the current crisis of the liberal world order. This is especially the case as pandemipolitics interacts and accentuates existing forces which have been destabilizing this order in past decades: financial and economic crisis; ongoing power shifts, most notably from the West to the East; and the rise of populist, nationalist, and authoritarian politics across regions.

Global cooperation has been sorely lacking. Nationalism and xenophobia are on the rise, while countries compete for medical supplies, machineries and patents to protect their citizens at the expense of others. Borders have quickly hardened, even in the supposedly borderless Schengen Area. Collective European institutions have appeared slow, divided, and out of step with the challenges the situation is posing them. The festering cleavage between Northern and Southern European countries has rapidly reopened and widened, most notably in the context of the ongoing Eurobond debate. American and Chinese global rivalry has intensified even further.

Curbing the virus is requiring that substantial parts of the global economy come to a standstill. A recession, if not even depression, is in the making as businesses are going bankrupt, supply chains are being disrupted, unemployment is soaring, stock markets are tanking, and public deficits are ballooning. Meanwhile, the internetization of our lives and economies is accelerating. Under conditions of lockdown, online giants like Google, Facebook and especially Amazon are becoming even more powerful. Lesser known platforms like Zoom and Houseparty are finding their way into our lives (and data).

Liberal values and institutions are coming under considerable stress. Democracies, principally Western ones, have appeared incompetent and in disarray as they have struggled to keep Covid-19 at bay. According to the available statistics (as of early April), the US and many European states have all surpassed China in the number of cases and deaths. As economic crisis breads populism, the world may likely see further democratic backsliding. Hungary, where Prime Minister Victor Orbán now rules by decree circumventing democratic institutions and practices, may be a warning sign of things to come. Simultaneously, autocracies are appearing to many as more efficient systems and are seizing the (propaganda) moment. Despite bearing important responsibilities, China is effectively presenting itself as part of the solution rather than the problem to the global pandemic. Civil liberties are being threatened as states significantly expand their surveillance capabilities. Covid-19 is proving to be a further boon for surveillance capitalism too.

It may not be all doom and gloom. Another future is possible. As the coronavirus exposes the contradictions and accelerates the crisis of the liberal world order, opportunities for radically changing course may open up. These may include a newfound appreciation, rather than persistent delegitimation, of the state as the provider of public goods and social safety nets. We may see greater investments in healthcare and research, accompanied by a revived trust in science and expertise. Citizens may become increasingly conscious of and resistant to the ever more intrusive forms of surveillance modern technologies facilitate. Decreasing emissions and pollution in a world in lockdown, are likely to provide powerful new data and narratives supporting the fight against climate change. A renewed sense of interdependence and solidarity, that we are all part of a common humanity, could enable greater and fairer forms of global cooperation. A less Western-centric international system may emerge with other regions of the world contributing more actively to global knowledge and norms.

2020 is destined to become an important benchmark in the unfolding crisis of the liberal world order. What lies beyond it is yet unknown. Two different horizons of possibility were explored. A more pessimistic one of rising divisions, authoritarianism, and surveillance, born from an analysis of how current pandemipolitics potentially reinforce a series of ongoing, worrying, global developments. This assessment, however, should be interpreted more as a warning than a prediction of an ineluctable fate. Societies and polities have recurrently had the capacity in the aftermath of critical junctures to create a better world. Which scenario will materialize in the coming decade remains uncertain. What is likely is that today’s global pandemic will bring to an end — for better or worse — the liberal world order as we knew it.

China’s Overseas Investments and the Coronavirus Crisis: Towards Benevolence or Profit?

By Catherine Owen, the University of Exeter

A ‘new settlement‘ in Kyrgyzstan — one of many countries with a high level of Chinese investment under the Belt & Road Initiative (Credit: Owen)

The last week of March was a big day for economic news. While the IMF declared that the world economy was in a COVID-19 induced recession and Fitch credit rating agency downgraded the UK’s credit rating from AA to AA−, observers noted signs that the Chinese economy was beginning to recover from the sudden impact of COVID-19. Although profits were still low, property sales and steel production had more or less returned to normal.

But China’s economy is not out of the woods yet: while the government has implemented a raft of policies to help businesses as they resume operations, there is little it can do to boost the external demand required to sustain its export-based economy. As the global financial devastation wrought by the whirlwind of COVID-19 becomes apparent, will China take advantage of commodities prices’ historic lows and ramp up overseas investments or will it begin to demand timely repayments on its global loan book as domestic purse strings tighten?

In the last two decades, Chinese state-owned banks and enterprises have lent hundreds of billions of dollars to developing countries, leading China to surpass the World Bank and IMF as the world’s largest creditor.  When confronted with COVID-19, developing countries are likely to take the biggest hit in terms of both economics and mortality, as their fragile markets and health systems are pushed to point of collapse. Meanwhile, China’s loans are often secured against commodities, meaning that when borrowers default, countries must cede natural resources or infrastructural apparatus to China.

China’s highly publicised aid-related activities differ sharply from the much more oblique management of its burgeoning overseas financial portfolio, the former constituting more of a global public relations campaign while the latter remains shrouded in secrecy. Indeed, recent research indicates that up to 50% of its loans go unreported.  While the World Bank and the IMF have called on creditors to suspend loan repayments for the world’s poorest countries, Chinese creditors have thus far remained silent. Last month, China Development Bank stated that it would provide low-cost financing and loans for companies involved in the Belt and Road Initiative (BRI) — but it is not clear whether this referred solely to Chinese companies.

While it will take months for China’s overseas debt management strategy to become clear, there are places we can look for the first signs of emerging trends. Colleagues and I have argued elsewhere that activities at the state’s peripheries are just as significant as central government pronouncements when trying to understand national strategies. Hence, in order to gather an indication of what is to come, we can examine the activities of sub-national Chinese actors in the margins.

The first indication of how things could continue comes from a pronouncement from an economist at the People’s Bank of China, who recently stated that local governments were likely to respond by investing in high-cost infrastructure projects, supported by trillions of yuan of local government bonds released as fiscal stimulus. This could see local governments at China’s peripheries expanding the already extensive cross-border collaboration with low-income neighbouring countries desperate for infrastructure and investment. While BRI construction has temporarily ground to a halt across Central, South and South East Asia, this provides reason to suggest that, once travel restrictions are lifted, BRI-related activities will increase with renewed zeal.

However, the debt-stricken countries on China’s periphery are not able to wait that long. For example, on 26 March, Kyrgyzstan became the first country to receive a soft loan to tackle the economic impact of COVID-19 totalling $120.9 million — not from China but from the International Monetary Fund. Its largely remittance-based economy is taking a further hit as swathes of workers return home from Russia as enforced lockdown is extinguishing work opportunities in Moscow. Heart-breaking stories of people unable to afford to feed their families as food prices have shot up and shops have closed have appeared in the local media. The country has received financial support and donations of masks and personal protective equipment from USAID, the World Health Organization, and the Soros Foundation Kyrgyzstan. While China and Russia have donated much-needed medical equipment, Kyrgyzstan’s debts to China total at least 30% of its GDP with almost half belonging to a single creditor — China’s Export-Import Bank. It is not clear how this debt will be managed in the near term.

Elsewhere, the consequences of unprofitable Chinese overseas investments have become devastatingly apparent. In Australia, when Chinese businessman Liu Dianbo recently closed 34 private hospitals he owned in Australia due to a cited lack of profit. As this case demonstrates, with profits stalling, there is little to prevent Chinese investors from simply shutting down essential infrastructural operations overseas. While strong states like Australia can mobilise other resources to fill this gap, this is far from the case in countries like Kyrgyzstan, where the government is already struggling to respond to the epidemic.

Many other countries in Africa and Southeast Asia are facing comparable situations to that of Kyrgyzstan: corrupt governments, fragile health systems, and large debts to China. How China’s big banks and billionaires respond to the economic crisis ripping through the world will have profound consequences for the living standards of many of the world’s poorest. Some have suggested that the international symbolic capital acquired by China through its comparatively effective management of the pandemic will outweigh the accusations by Western countries that its initial handling of the crisis was poor, and shift normative power further away from Western countries. But how China acts as the world’s largest debt collector during this crisis should also form a large part of this picture.