The COVID-19 pandemic has changed the course of history in global politics and economy. The lockdowns across the globe and curbs on international transportation system have badly affected the supply chain management. The world is now spinning on a regionalist rather than globalist paradigm. Countries are now looking forward to focus more on domestic products, and conjoining their resources and wealth to local manufacturing and marketing, instead of importing finished goods from abroad.
In the prevailing global scenario, there is no encouraging situation for Pakistan as well. The nosedived economy of Pakistan for decades has been rented at the hands of corruption and political upheavals. It has badly affected the country’s financial system, too, while COVID-19 has added to this status quo with the relinquishment of normal economic activity on domestic front.
The blessing in disguise in this weird perspective is the Beijing-sponsored multi-billion dollar investment format which Pakistan is associated with – China’s Belt and Road Initiative (BRI) initiative, though at the cost of US relations. The American pressure on Pakistan to take a backseat is now current history, there is no doubt about this. The US, moreover, is now a strong Indian ally, whereas for Pakistan, there are many challenges ahead; in fact, either ways Pakistan has a cost to pay, whether it is in economy or foreign relations.
Introduction
COVID-19 virus originated from the Wuhan capital of Hubei Province in Central China in late 2019. Diagnosed as symptoms of pneumonia, the pandemic spread so rapidly that within few months it enveloped many countries. The Chinese government with its massive resources once seen struggling to counter the spread of virus, opted for lockdown and came up with isolation centers at Wuhan and adjoining cities. Earlier, it was assumed that the pandemic is territory-specific, but it proved to be lethal for the world at large.
“The virus spread rapidly around the world, and the World Health Organization (WHO) declared it a pandemic in March 2020. The new coronavirus has been responsible for millions of infections globally, and it has caused more than 2 million deaths. The mortality rate varies from country to country. In the United States, it is around 1.7%. [1]
Chinese exports and businesses across the world became the primary carriers of this virus to different parts of the world. Most of the countries badly affected were having substantial import/export and visitors to and from China.
COVID-19: The global outrage
“The COVID-19 is changing the world especially the status of global geo-political and power dynamics. While discussing the impact of uncertainty in future, most of the people argued that global order or disorder is very dependent on the fear of climate that pandemic has procreated.”[2]
The developed and under developed countries are worst affected by the pandemic, whether in Asia or Africa. There was a complete lockdown of global trade and communications and with the spread of COVID-19 virus globally, economic dysfunction and unemployment was the order of the day. The economic fallout of the pandemic maximized in developing economies as compared to UK, US and China. Fortunately, these developing states are indebted for infrastructural and industrial development on developed economies thus the environment was untenable to both donors and borrowers. The developing economies were stranded and were unable to meet indigenous expenses, what to talk of honoring their debt payments.
Accordingly, with inadequate health-care systems, limited capacity to deliver fiscal or monetary stimulus, and underdeveloped social-safety nets, the emerging and developing world is on the cusp not only of a humanitarian crisis, but also of the most serious financial crisis since at least the 1930s. [3]
These countries were eventually running out of capital and were possibly on the brink of default on many payments. Experts also believe that the economic fall-out is not only the direct product of the COVID-19 pandemic but a consequence of how the countries have responded to i.e. the measures governments procured and the reaction of the ordinary people, workers, and corporate firms to this crisis. Governments across the globe engaged to contain the virus that empirically exceeded all previous such crises in its severity. As result, it may have stifled the spread of the COVID-19 but has drained out the economies.[4]
COVID-19: A crisis for Pakistan
On 26 February 2020, a Karachi student returning home from pilgrimage to Iran was tested positive for COVID-19. Iran was than the worst hit country by COVID-19. The Pakistani government initially quarantined the returning pilgrims from Iran at the Pakistan-Iran border. They left for their homes without any adequate testing or prevention. Later, the pandemic was all over in no time. Lack of therapeutic facilities and some non-serious attitude at the government level; enabled this virus to establish its roots. Later, the then- government made efforts to counter this pandemic but many lost their lives due to early negligence, lack of facilities and inadequate measures. For months, there were major lockdowns in the country with complete cessation on public transport between the cities and within the cities. International travel was banned by many countries to and from Pakistan.
People across the world found themselves stranded – be they tourists, general visitors or business persons. A new norm had taken place by wearing masks and sanitization of hands which was made mandatory. Since the rupture in imports and exports the supply chain and demand achieved new lows.
In a webinar held at Pakistan Institute of Development Economic (PIDE), Dr. Maleeha Lodhi[5] observed,
“…. the resurgence of competition and tensions between the big boss such that US-China confrontation has become the most consequential geo political development. Like an example of highly intensified competition in the advanced technologies.”[6]
Pakistan being a former US frontline state during the Taliban era and then in the war against terror and now under Chinese influence with Belt and Road Initiative (BRI), lies in a somber position between the two hegemonic states. Dr. Lodhi further added that,
“…. the emergence of anti-globalization sentiment, western countries not all Western countries but many about remaking Global supply chains and this seems to reflect their intent to reduce their dependence on China and plans are being considered to move toward setting up local hubs of manufacture and supply. Most importantly, populous leaders will use the health crisis to reinforce their policy preference for closed borders and come down against immigration and the freedom movement of labor that seen in recent decades the future course of the most important bilateral relationship between China and US.”[7]
China was expanding massively on inter-continental linkages through its Belt and Road Initiative (BRI). Theoretically, the global leadership except China wanted the health crisis shield to strengthen their inclination for a closed border. The US and China positioned head-to-head, engaged in a much bigger crisis of economic rivalry and arms race. The probable outcome would be precarious for the biosphere and may upset the entire global politics and supply chain management.
Concurrently, Pakistan had to safeguard its economy as well as the growing security threats vis-a-vis situation in Afghanistan and with the belligerent neighboring India. The economic crisis and difficulties in global economic order changed the norms and traits of trade activity. So was the case with foreign relations. Pakistan had to balance its relations with the two major world powers. On its western border the exit of US forces had a tremendous impact whereas on the eastern border India was constantly violating border truce and committing atrocities in Kashmir. The Indian government’s disagreement with the Kashmiri Muslims led to the imposition of a longest lockdown in Occupied Jammu and Kashmir. India had stripped Kashmiris of their long-held constitutional autonomy in August 2019, since then Kashmiris were under full or partial lockdown.[8]
Critically analyzing the situation, former Chairman of Board of Investment (BoI) of Pakistan, Haroon Sharif emphasized on three significant factors in the post-pandemic world that may affect Pakistan and rest of the world,
• Globalization versus Regional Cooperation,
• BRI future investments
• Record breaker tension between China and USA.[9]
“It is almost a truism to say that the liberal international order based on Western values, norms and institutions which relied on the twin pillars of US military strength and its economic power has crumbled and with it the unipolar moment of the existing power structure has finally passed.” [10]
The globalization is at risk and the countries all over are considering new alliances and cheaper and accessible ways of survival.
Globalization versus regional cooperation
The debate amongst the intelligentsia post Covid-19 pandemic raised the question:
• Either the world economic order is undergoing a fundamental change or
• Is it shifting to regionalism?
Logically very few agreed with this argument, while a popular consent is against the notion that the old global order will persist and reestablish its footing in post-pandemic international system as well.
“…. the lesson of the new coronavirus is not that globalization failed. The lesson is that globalization is fragile, despite or even because of its benefits. For decades, individual firms’ relentless efforts to eliminate redundancy generated unprecedented wealth.”[11]
On the contrary,
“….. Optimists foresee the continuation of economic globalization after the pandemic; pessimists expect localization instead of globalization, given the pandemic’s structural negative consequence on the world economy.”[12]
In this rapidly changing world, there are economic discrepancies amongst the giant economies, whereas, the under developing and recently developed economies are back to square one.
“The coronavirus pandemic has forced nation states to shut down borders and to look decidedly inwards. In this newly emerging and highly tenuous global political economic landscape, a question that is being widely debated is what globalization will look like in a post-pandemic world.”[13]
As the COVID-19 pandemic is restructuring the world in hyperbolic ways, globalization is being wide-open for interpretation, particularly as the crises unfolds. The nation states have started thinking new ways and norms to protect economy, society and security.
- BRI Future Investments
In fact, the post COVID-19 atmosphere gave birth to new theories of international relations and economy, simultaneously, a tussle between the regionalist and global ensues. However, experts are optimistic about the Chinese Neo–polarization under the umbrella of Belt and Road Initiative (BRI). Ong Tea Keat, founding Chairman, Centre for New Inclusive Asia, reveals,
“….. The pandemic, for all its disruptions to global trade and economy, has ushered in a wave of cooperation notably among countries along the BRI, which helped each other out in a time of troubles.”[14]
While some consider the BRI would be the driving force in the post-pandemic global economic recovery as contributing countries have strengthened their ties in a cooperative response to COVID-19.
Conclusion
Even today, the situation is more precarious than it seems. The implications for Pakistan will be rather daunting because Pakistan, now a foremost state in China’s BRI initiative, has to watch its steps strategically, politically and economically. This comes at the cost of recasting relations with the US. Pakistan is hopeful of a viable strategic future with China, which is a lifeline to its economy and provides a secure security shield. The Pandemic has further fragmented the world and expectations of unifying ideologies in the international system is just a cross-thought. As a result, the balance of power will empirically shift to one of the major powers in the future. The polarization of global politics would again lead to a new international crisis in times to come.
[1] https://www.medicalnewstoday.com/articles/256521#covid-19
[2] Webinar on The Post pandemic world: A political economy perspective, Pakistan institute of Development Economics, https://www.youtube.com/watch?v=5Hi8qIMjlZ0&feature=emb_logon
[3] Mishra, Mukesh Kumar (2020): The World after COVID-19 and its impact on Global Economy, ZBW – Leibniz Information Centre for Economics, Kiel, Hamburg
[4] Alka M. Basu, Kaushik Basu and Jose Maria U. Tapia, ‘The complexity of maintaining of maintaining COVID-19: How important is good governance?’, Global Economy and Development at Brookings, pg. 25, www.brookings.edu/about-us/annual-report/
[5] Dr. Maleeha Lodhi was a former ambassador of Pakistan to United States and former permanent representative of Pakistan at the United Nations.
[6] Dr. Maleeha Lodhi, Webinar on The Post pandemic world: A political economy perspective, Pakistan institute of Development Economics, https://www.youtube.com/watch?v=5Hi8qIMjlZ0&feature=emb_logon
[7] Ibid
[8] Billi Perrigo, The Indian government is Revoking Kashmir’s special status. Here is what that means, 5 August 2019, https://time.com/5644356/india-kashmir-article-370/
[9] Haroon Sharif, Webinar on The Post pandemic world: A political economy perspective, Pakistan institute of Development Economics, https://www.youtube.com/watch?v=5Hi8qIMjlZ0&feature=emb_logon
[10] Dr. Riffat Hussain, Pakistan and the Post COVID world, The News International, 11 June 2021
[11] Henry Farrell and Abraham Newman, Will Corona virus end Globalization, as we know it? Foreign Affairs, March 16, 2020, https://www.foreignaffairs.com/articles/2020-03-16/will-coronavirus-end-globalization-we-know-it
[12] Wang, Z., Sun, Z. From Globalization to Regionalization: The United States, China, and the Post-Covid-19 World Economic Order. Journal of Chinese Political Science, 26, 69–87 (2021). https://doi.org/10.1007/s11366-020-09706-3
[13] Vinitha Revi, Regionalization: A Better Strategy in a Post-Pandemic World? ORF Issue Brief No. 397, August 2020, Observer Research Foundation.
[14] Ong Tea Keat, Interview: BRI cooperation to spearhead Post-Pandemic, Xinhua News Agency, ed. Huaxia, http://www.xinhuanet.com/english/2021-04/21/c_139896306.htm
