The Worst Is Yet to Come: Covid and the Future

(Photo: Christie’s)

By Samuel Butler – Contributor

Terms like ‘the pandemic’, ‘unprecedented times’ and ‘the new normal’ are all ones which I think I can say with confidence that the British public are tired of hearing. These phrases all resonate with us midway through the second national lockdown in less than a year, meaning that many have worked or studied from home for over 6 months. However, the broader change will not be confined to the office nor the measures we take to protect ourselves and others. It will be the long-term consequences of Coronavirus that will have the greatest impact on our lives and the lives of our children.

The worst of Coronavirus is yet to come. The countries which suffer the most will be the least well equipped to deal with the consequences of the pandemic. Nations with higher levels of food insecurity which are less politically and economically robust will face the brunt of the long-term impacts of this crisis. The Institute for Economics and Peace (IEP) reported that heavily indebted countries may find it more difficult to rebuild their economies in the wake of Covid, with the likely result being increased violence, riots and political instability. Here, it is important to note that the price of commodities fell to an all-time low in April and May of 2020, during which time many consumer economies were forced into national lockdown; thus people were moving less and buying less. This substantially lowered the price of oil as it fell from almost 60$ a barrel to roughly 11$ per barrel. Although this means that it was cheaper than ever to drive to the office or the seaside, it has also meant that economies which rely on oil have begun to suffer disproportionately.

If we consider this economic disruption to be a long-term trend, we might also consider the broader context in which it will take place. Ever more countries have begun to either complete or begin their transition from fossil fuels to renewable energies. This has taken place for two reasons. Firstly, not only does renewable energy provide a cheaper and more environmentally friendly energy source, but also supplies an opportunity for rapid economic growth. Renewable energy can revitalise the economy by creating ‘green jobs’, ensuring energy security and strengthening the economy against any future crises. Each million invested in the efficiency of fossil fuel is estimated to create about 10 jobs whilst each million invested in new green alternatives would create about 25. By universally transforming energy systems, the global economy stands to benefit by more than $90 trillion and create 63 million new jobs. This benefit is particularly crucial for developing nations like India and China who have the most to gain by completing this transition. ‘Home growing’ their energy allows both countries to cut the import costs of goods like coal and oil. India alone stands to benefit $90 billion between 2021 and 2030. If it is inevitable that the pandemic will lead to an increased interest in renewable energy sources, it follows then that the price of oil will remain low.

Europe is surrounded on 3 sides by countries whose economies rely on natural resources, North Africa, The Gulf Nations and Russia. We should expect that as oil prices remain depressed, that these countries will experience severe economic hardship.  If MEDCs (More Economically Developed Countries) continue to be forced into national lockdowns until such time as a vaccine is found (which is looking more promising after recent developments), it is likely that this economic disruption to the most vulnerable countries will continue to be repeated further worsening the economic situations in vulnerable countries.

The political elite will not be the ones who bear the cost of this economic downturn. In the past when these regions have suffered economically the regimes have put in place unequal policies which have failed to mitigate the crises. The response to these policies of inequality has historically been drastic, notably the 2011 Arab Spring Revolt. The risk of regional instability is further exacerbated by the current demographics of the Middle East and North Africa (MENA). MENA has the highest youth population share in the world, as well as some of the highest rates of youth unemployment and emigration, both strong indicators of political instability and conflict.

In order to mitigate these long-term consequences of the virus it will invariably fall to the most economically developed countries to help the most vulnerable nations. This will require the cooperation of multiple regions, nations and multinational institutions. We might then ask whether an international coalition of goodwill is likely? 

We live in a world of ‘clashing capitalism’. Highly competitive and unstable yet despite this, even strategically opposed countries like China and the USA are able to cooperate on multiple issues and work at international, regional and local levels bilaterally and multilaterally. It is important to note that these models of relationships are fundamentally based on a win-win outcome. On the other hand, the global response to the emergence of the COVID-19 virus, in the absence of sufficient cooperation, failed to control the disease.

Rather than cooperating on any joint plan to ensure the equitable supply of medical equipment there have been export bans, poaching and bidding wars. ‘Vaccine nationalism’ has taken place with countries each pursuing independent research. The WHO, an example of an international institution responsible for coordinating the global pandemic response, has been systematically undermined and delegitimised. Whilst the $8 billion raised by the EU global health pledging conference has gone some way to rectifying this lack of cooperation, the finance raised is only a fraction of what is required. In order for there to be any effective distribution of COVID-19 health technologies worldwide, more resources will have to be mobilised. There is no reason to doubt that if nations cannot cooperate in the short term that they will do so in the long term. The unavoidable conclusion, that there are no winners and only losers in a global pandemic, was just as obvious in 2019 as it is now in 2020.

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