Key Speakers:  Maj Gen B.K Sharma, AVSM, SM**(Retd), Director USI, Maj Gen Rakesh Bhaduria, VSM (Retd), Maj Gen Pawan Anand, AVSM (Retd)

Moderator: Maj Gen Rajiv Narayanan, AVSM, VSM (Retd), Head CS3.

The COVID-19 pandemic is a crisis of historical proportions with incredibly palpable real-world implications. Given the rapidly evolving nature of this crisis and its impact, especially on geopolitics and the concomitant restructuring of the global system, it is useful to analyze the possible scenarios of competition and co-operation emerging in a post COVID world and their impacts both on regional and international politics. With an aim to explore these issues, the Centre for Strategic Studies and Simulation (CS3) at USI organized a web discussion. The discussants elaborated on the topic, while other participants questioned and discussed the issues at length, to derive a broad trendline in the political, economic and security domains.

Following are the key takeaways from the web discussion:

Geo-Political Trends:

This pandemic has exposed the existing vulnerabilities of the existing order. Post Covid-19 four alternate scenarios can emerge:

1. Decline of U.S.: A scenario where the United States fails to provide leadership and hence no longer holds the power it does currently.

2. Rise of China: A scenario where China is able to benefit and mobilize its experience of handling the virus and come out as a global leader.

3. Decline of U.S and China: A scenario where U.S and China both lose credibility as both lack the ability to handle the crisis.

4. Hyper Nationalism & Multi Vector Alignments: A scenario where there is a heightened sense of nationalism as also due to lack of any one nation emerging as a major player, countries pushed to multi vector alignments.

These four possibilities will be ordained by the future posturing of the United States, given its relatively greater Comprehensive National Power (CNP). In the event of the Democrats winning the upcoming ‘Presidential Elections’ and Democrat leader Mr. Joe Biden coming to power, the U.S. may lean towards liberal hegemonism, becoming more tolerant to other countries and reclaiming her position as the global leader.

China is facing a credibility crisis both internally and externally, given its opaque handling of the Corona outbreak. Externally, China’s initial attempts to change this narrative have not succeeded, as there has been push back from other countries. However, given economic dependence of nations on China, it seems difficult to replace Chinese economic dominance. Internally, China is using the narrative of victimhood to foster a nationalistic fervor among its citizenry and building greater allegiance to the CCP.

The confrontation between China and the U.S. could escalate further, considering it is already at its nadir. However, given the economic interdependence there is a possibility of them finding a new modus vivendi especially if a democratic government comes to power in the U.S.

The European Union may face an existential crisis. Possibility of it shrinking or getting balkanized into smaller parts cannot be ruled out. Individual states then might try to align themselves separately. The Euro-Atlantic alliance has weakened further due to United States decision to recall medical supplies mid-way, which was meant for Europe. Much of Russia’s response will be track two, focused and away from the public glare. They will work quietly on the sidelines. Authoritarian and quasi authoritarian governments such as South Korea, Singapore and Vietnam have been able to deal with this crisis better as compared to liberal democracies which were slow in reacting to the pandemic. The government as a state institution, therefore, will become more important, with significantly greater control and power in a post COVID world.

Efficacy of global institutions such as the WHO, WTO and the U.N has come into question. The lack of transparency and delayed action by WHO and the non-existent public acknowledgement of the pandemic by the UN Security Council has led to a crisis of performance legitimacy of these institutions. There could be a restructuring of the current multilateral institutions or a push towards alternative institutions that are better equipped to deal with such humanitarian crisis could gain traction.

In a post COVID world, bilateralism will take a lot of time to gain traction. Therefore, blocks like G-20, ASEAN and other such groupings which are more regional representative are likely to be re-energized and re-invigorated to play a more important part. Regional and trans-regional groupings might become a reality, post the COVID-19 outbreak.

Globalization has receded. Multilateral regionalism is likely to emerge as a replacement of globalization. Hence selective interdependence or selective globalization may become the new norm. There will be three kinds of selective globalizations:

1. Deep interdependence between trusting partners.

2. Co-operation between certain groupings.

3. Competing interests and competition.

The pandemic presents an incentive to establish an international regulation and code of conduct that can be utilized to hold the defaulting countries in contempt.

Economic Trends:

The shift in economic trends is of paramount importance as it impacts people directly and forms basis on which the domestic policies, countries interaction with each other and subsequent grouping depends.

The imminent global recession, capital flight, and rising unemployment due to COVID-19 will influence foreign policy considerations. President Trump’s recent ban on immigration to curb unemployment for American citizens is an early indicator for the same. Domestic economic considerations will influence alliances among nations even as international co-operation wanes and inward looking and nationalist tendencies resurge.

In India, the Micro Small and Medium Enterprises (MSMEs) are the backbone of the national economic structure. These are the businesses that face the maximum vulnerability given their scarcity of working capital. Job security, hence, is a difficult task.  Further, movement of unskilled labour from Middle East back to India will impact the foreign remittances, along with it the coming back of skilled labour from U.S., are issues which will need to be addressed while making future policies. Maintaining employment is important not only to stabilize the economy but also for the government to safeguard their political power. Here the role of private sector should be emphasized. The outbreak has shown that the private and public sector needs to work together to maintain efficiency. Further, India’s strong IT is an advantage. This sector is expected to face relatively less layoffs as major work happens over electrical channels.

Around the world, state leaders are announcing stimulus packages to deal with negative impact of Covid-19. While Japan’s package is almost 20% of its GDP, US (11%), Brazil (6.5%), Russia (3%) India is at the bottom with only 1% as its package. The scale of economies and population are also different for different countries for example the population of U.S. is 330 million, but has a huge $22.32 trillion economy, for China the ratio is 1.44 billion people and 14.3 trillion economy, while India has the population of 1.38 billion and with just $3.2 trillion economy.

However, the economic recovery of the U.S. economy will be dependent on its debt recovery of which 27% is with China, 25-28% is with Japan and 11-15% is with the European states. Therefore, there may be a cut back in U.S.’s involvement in Afghanistan, Syria and Middle East.

Strategic investments by China across the globe during this time have seen a backlash. India also has made the foreign investment from China stringent; this was in response to latter’s attempt to buy a 1% share in HDFC. This contrasts with the welcome decision of purchasing the largest minority investment in India when Facebook bought 9.9% stake in Jio.

The reluctance of the rest of the world to trade with China provides emerging economies like India the opportunity to attract foreign capital. India needs to build resilient domestic supplies especially in the defence and pharmaceutical sectors. A rearrangement of the supply chains and reassuring manufacturing hubs are important steps. For India to exploit the opportunity, she needs to establish herself as a manufacturing hub, with better infrastructure, cut down the bureaucracy obfuscation and provide a stable environment by maintaining law and order. India also needs to develop selective dependencies in the neighborhood and collaborative manufacturing hubs with the developed countries.

Security Trends:

Strategic industry will become the hub for every country. Each country will strive to make itself strategically self-reliant, or at least be selectively dependent for their strategic industry.

There will be restructuring of massive military forces and the relevance of blocks such as NATO will be examined to analyse their ability to address larger issues of humanitarian security. Technology will come to the fore, with impetus on niche technologies.

India would need to rethink its security paradigm. Focus on areas like cyber, CBRN, space, the oceans, apart from securing the borders. This also highlights that India needs to invest more in technology to tackle biological and cyber warfare. However, India’s defense budget over the past 10 years has not seen an increase commensurate with these new challenges. It may decline further as the health sector may assume importance and become a national security concern.

Social unrest in Pakistan due to the adverse effects of COVID is palpable. Since Pakistan’s major export is garments and with this sector getting impacted it will hit her economy, leading to increase in radicalization, affecting India’s security.

The Middle East is going to see greater turbulence due to both the collapse in the crude oil prices and because of dissent against authoritarian regimes. While a change regime may not happen, the existing fissures will be exacerbated.

India has an opportunity to shape the post COVID multilateral structure since it has not adopted an offensive or antagonistic posturing against any major power and therefore, it could have a larger say in reforming and strengthening existing global institutions.

Ending Remarks:

While the world is not new to global crises, the Corona pandemic is unprecedented in its potential multifaceted impact – on the economy, politics and security paradigms across nations. COVID-19 has exposed the existing vulnerabilities of globalization and the pitfalls of minimum state intervention in the markets. In order to emerge relatively less scathed from this crisis, countries need to adopt nimbleness in their responses as circumstances are evolving rapidly. The post COVID-19 world order would be shaped by the ability of states to build resilient and relatively decoupled domestic economies and form selective alliances between trusting partners.

Report prepared by Naireen Khan and Aastha Gupta, Research Interns, USI of India