- This pandemic will go down in history as a crucial development in geopolitics and economics
- Extremists are peddling radical cures for alleged deficiencies of the capitalist system
- Leaders of the EU should have responded earlier to the COVID-19 emergency
This report is part of a GIS series on the consequences of the COVID-19 coronavirus crisis. It looks beyond the short-term impact of the pandemic, instead examining the strategic geopolitical and economic effects that will inevitably be felt further in the future.
The coronavirus pandemic is a historic event, its import likely to prove comparable to the terror attack on the World Trade Center in 2001, the dissolution of the Soviet Union in 1991 and the demise of the communist regimes in Central and Eastern Europe in 1989. The new virus and its emerging mutations have already shattered the lives of billions of people and our perceptions of the world.
The consequences of the disease are still unfolding. It is thought that, eventually, a combination of a spreading group immunity, new therapies and the development of an effective vaccine will reduce COVID-19 risks to the level of seasonal flu. Most commentators, however, expect us to find ourselves in a different world after the pandemic. Whether the crisis proves such a fundamental shift is an open question. But even at this early stage, one can try to assess how the disease may alter our economic, political, social and mental map.
Conditions of uncertainty
Right now, restrictive public health measures appear to have limited the number of infections. The more restrictive those constraints have been, the more difficult it is to keep them in place. In several countries, the number of adults in self-isolation was already dropping before the governments started phase 2 in May with the intent of easing gradually the restrictions and moving toward pre-pandemic conditions. As long as the population lacks sufficient herd immunity, the danger of new contagion spikes will remain. Forecasters have to account for this risk.
The theory was that the loss of life would not exceed that of average flu
There are still not enough tests for the virus to go around, so it is not possible to pinpoint every person who has contracted it and needs to be quarantined. Virologists and epidemiologists grope for strategies in the absence of sufficient and reliable data. As a result, the prognoses are inconsistent and change almost daily. Even several months after the outbreak of the pandemic, governments are acting under conditions of uncertainty and this will probably not change for the better in the foreseeable future.Initially, the United States and the United Kingdom were inclined to let their populations contract the new virus and quickly develop group resistance. The theory was that the loss of life would not exceed that of average flu and that any other strategy would be too expensive, financially and politically. European governments, however, seeing the tragic developments in Italy, opted in quick succession for nearly complete social lockdowns and economic shutdowns. Only the Netherlands and Sweden resisted the trend. As the crisis deepened, the U.S., the UK and the Netherlands adopted modified European models.
Gambles and wild theories
The last country sticking to the “let it happen” approach against the tide of radical strategies is Sweden. Relying on the civic virtues of the people, the Swedish government did not close schools, shops and restaurants. The increase in fatalities is less than many health experts predicted but much higher than in other Scandinavian countries. (As of April 30, Sweden had 244 deaths per one million population; for Denmark the figure was 76, for Norway 38, for Finland 37, for Germany 77 and for Austria 65, according to worldometers.info.)
Meanwhile, unusual alliances have emerged in the public debate. Prominent intellectuals such as Italian left-wing philosopher Giorgio Agamben and his conservative German colleague Peter Sloterdijk have argued like many libertarians. Both accused governments of exaggerating the danger to lay the ground for a totalitarian coup and establishing a “biopolitical dictatorship.” Other voices on the left and the right criticize the same governments for acting too late and not radically enough.
One could, of course, imagine light-footed and globally connected entities reacting faster and more efficiently to the pandemic’s challenges. However, this is an era of lumbering, highly centralized welfare states with overregulated health organizations. They are bound to remain behind the curve.
The sequestered citizens of Europe have not known comparable curbs to their liberty since the end of Nazism and Soviet Communism.Under the system of the rule of law, only extraordinary circumstances allow such drastic measures. The policies that governments enforce could only be justified by Jean Bodin’s maxim, “Rien n’est plus légitime que le nécessaire“ (nothing is more legitimate than the necessary), or Cicero’s, “The salvation of the people is the supreme law.”
Opinion polls in the first week of April showed soaring support for the governments promoting strict solutions. The “corona panic” supplied a reviving jolt to the ailing German coalition of Christian Democrats (CDU/CSU) and Social Democrats (SPD). Angela Merkel’s party recovered from a series of significant defeats in regional elections and has returned to popular support of about 37 percent, the same level the party achieved in national elections three years ago. The SPD improved its popularity rating and surpassed the Greens, which nobody would have guessed possible a few weeks ago. Even stronger is the support for the Austrian coalition between the Peoples Party (OVP) and the Greens in Austria. Chancellor Sebastian Kurz, the most popular Austrian politician even before the crisis, saw his popularity soar to 74 percent.
Austria has the highest unemployment rate in the history of its second republic
These are awful times for opposition parties, particularly for the nationalist Alternative for Germany (AfD) and the right-wing Freedom Party of Austria (FPO). The Greens owed their spectacular rise in the German and Austrian elections to climate change, which had dominated public discourse since Greta Thunberg set foot on the political stage. COVID-19 overtook the climate agenda and weakened the Greens in Germany, but it boosted their Austrian comrades, who benefit from their coalition with OVP.
Both countries witnessed massive employment losses. Small Austria shed more than 200,000 jobs in only three weeks – 65,000 of them in the hotel and gastronomy sector – and now has the highest unemployment rate in the history of its second republic. Germany is doing measurably better because its economy is less dependent on tourism. Berlin is providing 650 billion euros for German enterprises; Vienna is pumping up to 38 billion euros into the Austrian economy. In both countries, generous unemployment benefits and short-term allowances are strengthening national solidarity.
The policies of “whatever it takes,” (first invoked by the European Central Bank President Mario Draghi to avert the euro’s collapse in 2012), are likely to forestall social unrest. Eventually, though, the bill will land on the table. The scope of the economic crisis is already far broader than it was in 2008/2009. A high wave of political radicalization is sure to arrive in its wake: plagues have always been stress tests for governance systems’ resilience.
At present, politicians are focusing simultaneously on protecting life and health and creating conditions for the economy to work again. It may already be the case that the extraordinary measures for shielding public health do more damage than the pandemic itself.
Ideologues chip in
This issue does not seem to bother the political left. Social democrats, greens and communists use the crisis as an excellent pretext for pushing radical socialist and green agendas. In an article for the German weekly Die Zeit, Tilman Santarius, a sociologist, and Steffen Lange, an economist, proposed scaling down the economy and reducing the working time to 32 or 24 hours per week. Saskia Esken, co-president of the SPD, wants to tax the rich to finance the crisis. At the same time, the postcommunist Die Linke party is pushing for the introduction of a guaranteed basic income scheme and strict state control of rental housing prices. Rudolf Anschober, Austria’s health minister and a member of the Green Alternative party, pledged in a radio interview to tackle the climate crisis with the same political vigor once the coronavirus crisis is over.
There was no European crisis management, no early warning by the European Centre for Disease Prevention and Control
The prospects for returning to a more liberal society are bleak. As long as the risks of fresh epidemic outbreaks loom, the suspension of fundamental freedoms will remain a reality in many countries. People are already getting used to this situation.
The EU: a late start
The direst – and most common – predictions concern the future of the European project. At the onset of the crisis, the EU was conspicuously absent, as if it had given up on itself. There was no European crisis management, no early warning by the European Centre for Disease Prevention and Control (ECDC). True, public health is not one of the EU’s competencies, but the Union failed dramatically in its primary task of coordinating the member states’ measures. And also – a much more serious matter – it was unable to keep the common market open.
There was no decisive reaction from the European Commission when German customs authorities blocked the transport of protective suits and masks – already paid for – to Italy, Austria and Switzerland. The tensions between the member states in the west and the newcomers in Central Europe, which go back to the migration crisis of 2015-2016, have worsened and escalated into an open conflict with Hungary.
It would nevertheless be premature to anticipate the EU’s breakup. Experience shows that massive stimulus packages are always helpful on the way to an ever closer Union.