Globalisation in peril post-COVID-19

THE world changed politically after every great war. It became closer and some form of international political and economic co-operation was developed.

However, the COVID-19 pandemic is hastening the change that began in 2016 with Brexit and Donald Trump becoming the 44th United States President.

After World War I (1914-18), Western European countries and the US agreed on setting up the League of Nations that was proposed by Woodrow Wilson.

This was a platform that sought international political co-operation, but more specifically, the outbreak of another great war.

However, this effort was not sufficient as the US deliberately opted out of the resultant League of Nations.

Post-World War II, the victors, instead of sharing the spoils of war, they relooked at the League of Nations concept and tweaked it a bit and even got the support and membership of the US in setting up the United Nations, which is headquartered in New York (financial capital of the world).

Beyond the political co-operation under the UN, the countries also set up the Bretton Woods financial institutions — the World Bank and the International Monetary Fund (IMF).

These financial institutions have helped many countries access large funds for infrastructural development, however, under the model developed by Milton Friedman’s Chicago School of Economics — deregulation, privatisation and less control by States.

During the 2008/9 global recession, the Bretton Woods gave each member State some US$500 million special drawing rights.

The amounts were meant to kickstart economic recovery through stimulating production and aggregate spending by citizens.

The support had varying degrees of effectiveness, but more importantly is the fact that the world tried to have a concerted policy.

In December 2019, China announced the emergence of a novel flu virus — COVID-19 which was highly infectious.
By March, the World Health Organisation declared it a pandemic and by yesterday, it had infected nearly two million people globally and killed 121 000 others.

Most of the deaths were recorded in Italy, Spain, the United Kingdom and the US.

The pandemic has had a devastating effect on the economy — potentially worse than the 2008/9 global recession, but to date the Bretton Woods institutions are yet to come up with a global rescue package.

Many economies are under lockdown, with all industries closed except essential services.

The worst-affected industries are aviation, tourism and entertainment.

Billions of dollars worth of revenue has been lost and likely to continue being lost until infections flatten out or a cure is found.

Individual countries and regional economic blocs have taken it upon themselves to save their industries.

The US has signed a US$2 trillion bailout package for its industries and vulnerable citizens, the United Kingdom also set up a nearly 500 billion pound bailout for its companies and European Union Central Bank last week approved a 500 billion euros bailout for EU member states.

Africa has no bailout package at continental or regional bloc levels and is busy sending an SOS to the West and other development partners.

However, indications are that of the conservative US$100 billion the continent needs, it would be lucky to get a fifth as the benefactors are fighting for their own survival during this global pandemic.

The year 2016 marked the beginning of deglobisation process after the UK voted to leave the European Union.

Brexit was informed mainly by politicians who wanted to claw back some powers from Brussels and were complaining about what they termed disproportionate contribution to the bloc.

The British think they can do better outside the EU — probably driven by their imperial history when the sun never set on their empire.

Across the Atlantic, the US voted Trump into the Oval Office — a man who campaigned on the ticket of making America great.

Trump has brought to the front the notions of unilateralism and naked ultra-nationalism that had begun to fade under globalisation and multilaterism.

In Sadc, South Africa has created its own bailout fund for its companies and has, for good measure, started erecting a border fence along the Limpopo River to keep Zimbabweans and other nationalities from their northern neighbours outside their borders.

Botswana has also been deporting Zimbabweans and the result is yet to be fully felt.

President Emmerson Mnangagwa has also called a three-week national lockdown, but unfortunately, has an insignificant bailout package for vulnerable people.

It is not unthinkable that many companies would go under if the lockdown is extended and thousands thrown out of their jobs.

The Confederation of Zimbabwe Industries last week warned that its members cannot absorb losses for more than one month under lockdown without a bailout.

Zimbabwe faces the triple whammy of poor governance, declining commodity prices and dwindling foreign direct investment.

Its companies have no fair chance to survive, particularly with deglobalisation and the rise of nationalism.
Zimbabwe is on its own and has to swim against the tide or sooner than later it will find itself with an army of unemployed, closing industries and growing social instability.

After COVID-19, it is back to self-reliance and a new norm to a people who, for the last two decades, depended on aid for their social services and food security.

Paidamoyo Muzulu is a journalist and writes here in his personal capacity.

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