Global cooperation in times of Covid-19: Expect global power shifts and a ‘million-euro opportunity’

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As COVID-19 has spread around the world, it has exposed weaknesses in international cooperation arrangements put in place to respond to health emergencies of this kind, as well as their economic and social repercussions. At this year’s annual The State of the Union Conference, the EUI invited Kristalina Georgieva, Roula Khalaf, Mari E. Pangestu, Jeffrey Sachs, Alexandre Stubb and Nathalie Tocci to reflect on these issues. Jonas Brendebach and Nathalie Tocci offer readers some key take-aways generated by the discussion. 

On 24 April 2020, the United Nations celebrated the second International Day of Multilateralism. The launch of this awareness-raising initiative in late 2018 is a clear indicator that multilateralism was in trouble well before the COVID-19 crisis hit. Its celebration amidst the spread of the global pandemic was bittersweet, with the UN Security Council bogged down in disagreement on a global cease-fire, the World Health Organisation (WHO) under stress with its biggest contributor, the United States, and nations around the globe closing their borders and repatriating their co-nationals from abroad. UN Secretary-General, António Guterres, ominously declared: ‘It is not enough to proclaim the virtues of multilateralism; we must continue to show its added value. International cooperation must adapt to changing times.’

This begs the question: what impact will COVID-19 have on multilateralism and how can global cooperation adapt? Recent discussions identify profound challenges as well as opportunities.

Multilateral emergency responses for developing economies are underway

Emerging markets and developing economies are among the first to feel the pain of export restrictions and tariffs that supplier countries imposed on vital goods in response to COVID-19. Shortages of medical equipment and price hikes in food and agricultural products aggravate the health crisis and risk hampering economic recovery in developing regions.

Multilateral financial institutions like the International Monetary Fund (IMF) and the World Bank have stepped in decisively with emergency responses. Kristalina Georgieva, director of the IMF, stresses that member states rallied to support the IMF’s efforts in protecting developing countries. The IMF increased concessional financing and doubled access to its emergency financing facilities, meeting the expected demand of about USD 100 billion. Providing liquidity in record speed to as many as 50 countries, the Fund has thrown a financial lifeline to emerging markets. At the same time, the World Bank is running emergency programmes to secure lives and livelihoods in about 100 countries.

Mari E. Pangestu, Director of Development Policy and Partnerships at the World Bank, points out that only a common effort that includes state and non-state actors, the private sector, the multinationals, foundations and civil society will be able to meet the challenges of the crisis. She sees the WHO led Accelerator initiative and the successful funding campaign run by the European Union as positive signs of global collective action.

Long-term challenges require stronger multilateral efforts and leadership

The ongoing support measures will hardly suffice to mitigate the long-term economic and social consequences of the coming global recession, both in developing and advanced economies. In the developing world, beyond the already severe economic disruptions the full impact of the pandemic remains yet to be seen. In advanced countries, the structural changes, such as the growth of the digital economy and the shrinking of the retail sector, will affect labour markets and raise income inequalities. Different economic stimuli according to the resources available in different world regions threaten, moreover, to deepen global economic inequality.

‘We know the way out’, says Jeffrey Sachs, Professor of Sustainable Development at Columbia University: rational, scaled and solidaristic policies starting in public health and including financial solidarity. Only, the lack of leadership prevents the global community from taking such action. Sachs blames above all the government of his own country, the U.S., and its ‘antithetical attitude towards multilateralism’. Instead, the deepening rift between the U.S. and China complicates collective action and adds to the problems the prospect of another trade conflict.

Global power shift to Asia

In this situation, COVID-19 may herald a global power shift. The Asia Pacific region, including countries like China, Korea, Singapore and Australia, appears the most successful in fighting the virus so far. The future global power balance will partly depend on how (fast) the different regions will get out of the crisis, says Alexander Stubb, former Prime Minister of Finland and now director of the School of Transnational Governance (STG) at the EUI. Asia has a head-start being the first to bring the pandemic under control and China did an excellent job in communicating its own successes. Stubb expects the pendulum to swing towards Asia in a post-Covid world.

President Xi Jingping’s latest speech at the annual member state conference of the WHO underscored China’s ambition. He ignored international criticism on China’s delayed reporting of the virus outbreak. Instead he stressed China’s assistance to Africa and announced a USD 2 billion support package for global health and economic crisis responses over the next two years. This was in stark contrast with the US’s withholding of USD 400 million of annual contribution to the organisation.

A ‘green and blue recovery’ and a ‘million-euro opportunity’

Nevertheless, experts agree that the coming re-building of the global economy harbours a singular opportunity to address issues such as climate change, poverty reduction, and the fostering of sustainable socio-economic growth. The ‘building back better’ idea, Pangestu of the World Bank holds, should guide us to a ‘green and blue recovery’ that produces a more climate friendly economy and less pollution of the oceans. Sachs encourages regional organisations such as ASEAN to follow the EU example and formulate ambitious ‘Green Deals’.

Yet, resources are limited and their efficient deployment will depend on coordination among a variety of international actors. The necessary multilateral effort will require negotiation and compromise, says Stubb of the STG. Who could be better equipped to take the lead than the European Union, a ‘laboratory of multilateralism’, with decades of experience in finding common denominators and forging compromise. Stubb sees a ‘million-euro opportunity’ for Europe to assume a mediating role between the U.S. and China and to grow into a leadership role in global multilateralism.

In this perspective, the current situation would seem to offer not only a ‘million-euro opportunity’ for Europe but one for global cooperation more generally post-COVID.

Dr. Jonas Brendebach is a Research Associate at the EUI’s School of Transnational Governance.

Dr. Natalie Tocci is Director of the Istituto Affari Internazionali and Honorary Professor at the University of Tübingen.


Video recordings of this session and others are available on The State of the Union 2020 website.

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