Life after the Pandemic
A geopolitical guide for entrepreneurs to gauge changes caused by Covid-19
1- Introduction: Markets and their environment
Covid-19 is a larger than life illustration that all markets, physical or digital, are tied to a real market place with its particular political, economic and societal, in short: geopolitical features. They determine any changes in the market itself. Observation of markets must thus include constant monitoring of their particular environment.
2 – Strategic and political changes
Contrary to the disasters of past centuries (the plague, wars) the virus has only slight demographic consequences in purely demographic terms. Not so in political and strategic terms. What are the significant changes Covid-19 has brought along in the global regions?
2.1. Demography: Pestilence in the 14th, the 30years War in the 17th, and the two World Wars in the 20th Century brought along demographic earthquakes which altered the world. In purely numeric terms that is not the case for the pandemic, but it will cause a number of significant strategic and political changes. What are the significant changes Covid-19 has brought along in the global regions?
2.2. Asia: The ‘Asian Century’ will continue to happen, but might well be more nationalist and antagonistic than before the pandemic. The existing fault lines between the two Asian-Pacific powers, China and the USA will open further. This will in turn force many Asian states to pick sides more than they would like to. India as the third superpower of the region emerges weaker from the crisis. Japan will surge and Australia will gain, too.
2.3. Middle East and North Africa: The schism between Schia (Iran) and Sunna (Saudi-Arabia) will continue to dominate but the means and the will of the antagonists to wage war will diminish.
2.4. Africa from the Sahel down: Even more than a medical and humanitarian crisis, the pandemic is an economic disaster for Africa, hobbled already on its trajectory towards sustainable development by conflict including terrorism, climate change and population surges.
2.5. Europe: Some national reactions to the pandemic, both from within (Hungary) and without (China, USA under Trump) will continue to challenge the EU even after withering the economic storms caused by Covid-19. It will have to strengthen its claim as the world’s foremost defender of democracy and the rule of law as well as start building its own security profile.
Regardless of formal EU-membership, it is a core interest of Switzerland to raise to these same challenges, together with its European partner nations.
2.6. The Americas: For ideological reasons, the US under Trump (‘America first’) have steadily moved away from their traditional role as global leader and beacon of the Western world. The tendency, if not the speed of this development might well continue to a certain extent under Democratic control in Washington, if only for budgetary reasons. Their largely failed policy to combat the virus will have political consequences in the US and in Brazil, the two key countries of the hemisphere.
3 – Economic change
The state has been the main actor in combatting the crisis and will consequently see its future role strengthened in the economic sphere. Within the private sector, the voices calling for more emphasis on the interest of all stakeholders, present before the pandemic already, will grow stronger.
3.1. Fiscal policy and regulatory activity: In tax policy and as a regulator, the state will guide and interfere with the private sector to a larger degree than before the pandemic.
3.2. ESG (Environment, Social, Governance): For many the pandemic is seen as an occasion to accelerate policies with a view to combat climate change and growing inequality, within and among different professional categories. Good corporate citizenship will be demanded and rewarded.
3.3. Trade mechanics: ‘Just in time’-production and the related global chains of added value will give way to more redundant, crisis resistant modes of production.
3.4. Major regional shifts: The pandemic will bring along significant changes in Asia (China’s BRI, the New Silk Road), in Europe (solidarity within the Union, the Single Market), in developing countries (indebtment) and in oil states (diversification).
4 – The Society
The virus is also an ethical and ideological challenge to society. Are we ready ‘to not let a good crisis go waste’? Ready to reflect, during this time-out in all spheres of life, what we could and should do better in the future? Are we ready to do what has been neglected in the aftermath of such world-wide disasters as the Spanish Flu at the beginning of the 20th Century and the financial crisis of 2007/8? The pandemic made all areas of digitalization explode, what should be our conclusions? Responsibilities will be attached with respective litigation to follow.
4.1. The battle of political systems: A large part of humanity lives in developing and emerging countries. Based on their experience with the pandemic, will they be more inclined to opt for a top-down society model (China) or one of more participation by all citizens? Through their mode of communication, the pandemic has laid bare the credibility of different systems.
4.2. Ideological battles: Has the pandemic shifted the balance between on the one hand national-populism as well as ideological and religious intolerance and on the other the pledge to honour basic tenets of equality, justice for all and good international cooperation?
4.3. Inequality: Together with ever more rapid globalization, the financial measures to combat the financial crisis of 2007/8 had a longer-term effect widening the rift between the ‘One Percent’ and the rest. Can we do better this time?
4.4 Digitalization: The pandemic has put fundamental tenets of digitalization into sharper focus: The tensions between data development and their protection, between human and artificial intelligence, between human and robotic activity.
4.5. Responsibility and Litigation: Within political systems and all along the commercial lines of business questions of responsibility for the cost of the lockdown, and consequently their judicial settlement will keep parliaments and courts busy.
5 – Looking ahead
The pandemic Covid-19, caused by the virus Sars-CoV-2, has basically hit everybody in the world, regardless of origin and status. Thus, it is comparable to a historic earth-quake such as the 2nd WW. However, it is less clear who comes out on top compared to the total victory of the allied powers against the axis in 1945. No final outcome can be totally discarded at this time, anything is possible between the extremes of simply going back to before-pandemic times and behaviour on the one hand and on the other a beginning of fundamental change. Our outlook is no more, but also no less than a
series of educated guesses.
Eventual change in the wake of the pandemic regarding geopolitical fundamentals is possible, just as the 2nd WW eventually led to decolonization. Geopolitical analysis, let alone respective predications, should thus never be written in stone but will have to go along with the flow of history.
Picture: nastya_gepp