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Post-coronavirus world will see new blocs emerging, old ones unraveling

Mar 31,2020 - Last updated at Mar 31,2020

As the coronavirus (COVID-19) pandemic continues its surge across the globe, testing governments, the health systems and economies, pundits are pouring over possible post-coronavirus scenarios for those who will survive. There is no doubt that our world will look different once the scourge is defeated. There will be many lessons to be learned, policies and priorities to be revised and new alliances and blocs to be formed while old ones unravel.

One popular prediction for a post-coronavirus world revolves around the collapse of neoliberal conservative model that has been central to most economic powerhouses for decades. Under that model, the state takes a back seat as the forces of the free market and big multinationals determine the course for individuals and society at large. Also under that model, the welfare state is shunned while the private sector takes control of major public services and sectors particularly health. It is all about making money and enriching the few.

That model has proved to be a failure in addressing the unprecedented challenge presented by the coronavirus: The US, which is struggling to provide basic protective gear to tens of thousands of doctors and nurses as well as badly needed ventilators, is a case in point. And President Donald Trump’s hesitation to close the country for a few weeks in order to contain the virus for fear that it would kill the economy, and his chances for re-election, underlines the harrowing fact that under neoliberal dogma, peoples’ lives matter less than saving big business.

Another irony is the fact that by the end of the day, the neoliberal diehard capitalists had to resort to socialist tools to save big business as seen in the $2 trillion so-called stimulus; actually it is a bailout, plan.

It was China’s centralised system and strong state tools that managed to contain the outbreak in record time. The Chinese experience will be studied by countries for a long time to come.

The question that follows the prediction of the demise of neoliberal model is what about globalisation? That phenomenon is also being tested with pundits predicting that a post-coronavirus world will witness a phase of de-globalisation. Trump had already taken key steps in that direction even before the outbreak of the virus. He had pulled out of key multinational trade treaties, imposed tariffs on China and Europe and is seeking to repatriate companies that have production lines in China and elsewhere.

Now with a global recession kicking in for some time, new regional blocs will form as globalization gives way to regionalisation. The scenario most likely to occur sees China forming closer trade alliances with countries in Southeast Asia, Central Asia, Japan, Australia and New Zealand, as well as Africa and Gulf countries. The Belt and Road Initiative will gain traction in a post-coronavirus world.

The EU has been seriously hurt by the outbreak. Italy and Spain were left to fend for themselves as they became the epicentre of the pandemic. How this abandonment by their European partners will affect the future of the EU remains to be seen. The EU had already suffered a blow when Britain pulled out. It suffered another blow when Trump banned EU citizens from entering the United States without informing European leaders first.

It was China, Russia and Cuba that came to Italy’s rescue during its darkest hour; a gesture that will not be forgotten by the Italians. Three months after the outbreak, the EU is yet to address the deep-seated impact on its members.

With the price of oil dropping to historic lows, Russia will be forced to come closer to Europe; a new bloc that serves the interests of both sides. The United States, Canada and Mexico will turn their attention to South America and new alliances will be formed between countries in the two American continents.

The emergence of these new blocs will define the future of the dollar as key currency against the Euro and Yuan.

Under the same prediction geopolitical priorities will change affecting the ability of countries to maintain troops and bases in foreign lands; Russia in Syria, the US in Europe and Southeast Asia and Japan, and Iran in Syria, Iraq and Yemen. There will be a dire need to spend money at home in order to maintain social stability and public order.

So where does the Arab world fit in this scenario? With the US becoming less dependent on the region’s oil, its political and economic links to countries in the region will be affected. Arab states will have to find a new formula to form their own bloc and increase intra-regional trade. The Arab world has been under utilised both in terms of the flow of investments and as a huge consumer market. We will see wealthy Arab states coming together, creating multibillion dollar funds and pouring investments into promising emerging economies in countries like Sudan, Morocco, Tunis, Syria, Jordan and Palestine.

This segmentation will become the new reality and Arab nations must address the inevitable change that will affect international trade, finance and economic management of wealth.

 

Osama Al Sharif is a journalist and political commentator based in Amman

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