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Post-Covid Transitions

Bernardo is currently Political Advisor to the Presidency of the Portuguese Republic

Post-Covid Transitions
In the wake of the 2008 financial crisis, we have seen the disintegration of the international order, the inefficacy of multilateralism, nationalist agendas dominating elections, and demographic explosions in major cities impacting public health responses, mobility, and housing. 

We have also seen the effects of economic growth on the surrounding environment, unregulated globalisation, vulnerable supply chains, increasing inequality from the technological revolution, inequity in economic models and the explosive growth of conspiracy theories putting more and more pressure on science, journalism, and politics. Whilst these trends had all been identified prior to Covid-19, the pandemic has provided all the ingredients needed to help accelerate a response to this malaise in three major areas: re-industrialisation and environmental ambition; regulated, moral digitalisation; and geopolitical balance and ascendancy. The conditions are in place for an optimistic outlook on the near future.  

 

REINDUSTRIALISATION AND ENVIRONMENTAL AMBITION 

The decline of globalisation is being cited as a possible side effect of the pandemic. However, the statistics highlight that the process was already underway with the worldwide flow of direct foreign investment and international trade already diminishing. The assault on globalisation started with the great financial crisis of 2008, followed by the alarming effects of the climate crisis and, more recently, the trade clash between the US and China. In addition to this decline in globalisation there has been a resurgence in regionalism, including the deepening of European integration - in the context of major Covid-related financial programmes – and Asian integration as demonstrated by the major Asia- Pacific free trade agreement signed in 2020. 

In the case of Europe, interlinking intra-European technological and industrial innovations will define the economy over the next few decades, supported by competitiveness and sustainability. The European Union has the necessary elements in place - a space for co-ordination, rules, regulation, and financial capability – to enable its member-states to advance, together, along the route of reindustrialisation, commercial diversification, trust in supply chains and global political influence. But this alignment in values, which is also geopolitical, relies on the generation of sufficient momentum to overcome challenges such as the fickleness of authoritarian regimes (such as Russia) and conflict-prone regions (such as the Middle East). The way forward must be supported by a coherent infrastructure network that will not isolate any member state, either in the as yet unbuilt energy pipelines or rail and maritime connections. 

One competitive advantage, within Europe, and between the EU and the rest of the world, stands out, and that is the evolution of a balanced and sustainable relationship between existing natural resources (most of them untapped) and new, highly innovative industrial players with a worldwide presence. The sustainability of a thriving internal market in Europe, as the basis for an equitable social market economy, will rely more on internal than external actions, connecting the development of skills to manage increasingly important raw materials (lithium, cobalt, rare earth metals, and more) with their correct integration in local communities, industry, commerce, economy, and consumption. Opportunities abound. 

 

REGULATED, MORAL DIGITALISATION 

The digitalisation of social, consumption and work habits goes back more than a decade, but the pandemic and its associated lockdowns has accelerated this process. Companies have adapted their offerings for online trading, a move that has kept pace with changing consumption patterns. Work relationships have also, for the most part, moved to digital platforms — similarly with education — resulting in companies such as Zoom now having as much market value as the world’s 15 largest aviation carriers. The transition of press and political communication to digital, has not only increased the influence of social media, turning social networks into an important connection point with readers and voters but has also fuelled the proliferation and spreading of lies and fake news. 

The political impact of the digital manipulation of information had already proven its influence on electoral outcomes, pre-Covid, as demonstrated by the rise to power of Bolsonaro in Brazil, Trump in the US and in the Brexit referendum in the UK that shocked the world. 

Post-Covid, the political electoral cycle needs to tackle digital deregulation and give it a sense of integrated, moralised governance. The infodemic laid bare through the pandemic has turned digital anarchy into a universal security issue and a public health imperative. There are, however, some positive signs emerging.  

The Euro-Atlantic agenda proposed in late 2020 by the European Commission has placed digital governance, tax equality and data security as fundamental pillars of globalisation, recommending the creation of a Common EU/US Trade and Technological Council to fast-track legislation and maximize influence beyond geographical borders. This initiative will in effect be a major siege of big tech, especially tax-wise, where they presently operate in a space of accumulated privilege without a hint of shame, depriving states, and societies of financial resources. This attack will be an exercise in fiscal justice, and one that is indispensable to the health of capitalism and democracies. 

After the symptoms of the Western model’s illness had been laid bare by the 2008/2009 financial crisis, slow and timid palliative measures were put in place. Any corrective action now, to restructure the West,  must be more fundamental and should include the channelling of resources raised from the taxation of unregulated and ascendant big tech to the four remarkably unshielded areas throughout this endless pandemic crisis — education, culture, press, and civic participation. The ability of the Euro-Atlantic to influence this and other international issues would also, once again, put democracies at the forefront of solutions, saving them from the spectre of decline, at least for a while. 

 

 

GEOPOLITICAL BALANCE AND ASCENDANCY 

In recent years, leading world powers have engaged in competition without diplomatic checks. The space for the sensible handling of matters of common interest having seemingly vanished and the authoritarian exertion of power defining international politics. 

However, it is important to note that liberal democracies are the historical exception, and not the rule, and their persistence comes from a security guaranteed by leading powers, a stability indispensable to the consolidation of the democratic grid, without which the liberal order would be fatally at stake, or decline. 

This moment in time is not, therefore, to be taken lightly. China is recovering faster than other world economies. Nationalism around the vaccine is strengthening its position, and the lack of co-operation with World Health Organisation (WHO) investigators early in the pandemic provided it with time to deploy some of the tactics that have aided its rise over the years: namely soft power (shaping the preferences of others through appeal and attraction rather than coercion), leading to a perception of harmlessness and general enchantment, military modernisation without matching moves from other countries, and unparalleled financial capabilities which it leverages with timing and methods tailored to each weakened target. 

Accommodating Chinese power has become the leading global strategic issue, validating alliances in pursuit of equilibrium, rather than more aggressive methods, or more diplomatic approaches. Each country or group of countries is trying to find the magical formula that will help it deal with Beijing. The evolution of Chinese-American relations and Europe’s positioning will dictate much of the dynamic in globalisation. The forecast is unclear. The climate crisis shows that increased trans-Atlantic ambition toward carbon-free economies does not necessarily mean alienating China’s contribution; one which is after all indispensable in reaching environmental goals. Gaining the advantage in this debate presupposes a double ambition with associated political risks: outwardly, to use COP26 in Glasgow later this year to set more ambitious goals for the next few decades; inwardly, to accelerate essential energy and economic developments to prepare for the future. 

Building a wide union of states helps overcome both constraints and to that end it is important, once again, to have China on board. In other words, one of the dividends from the pandemic and climate traumas may be the establishment of a trans-Atlantic stage that will build bridges with Beijing. 

That said, the technological area opens up ample room for grievance. The adoption of a common EU-US agenda assumes a more robust line on data protection, antimonopolist legislation, models of fiscal justice to govern major digital service corporations, and an online platform for moderation and counter-disinformation. In parallel, trans-Atlantic capacity-building for 5G, in preparation for 6G, capable of influencing good and more transparent market practices that safeguard individual rights is essential. Tension with the Chinese project is evident and perhaps incompatible. What must be avoided is naivety at the European level, inequality on the trans-Atlantic stage and a permissive attitude toward the Asian giant. 

A permanent forum for dialogue between the EU, the US and China for governance of the digital sector could be a step toward defusing distrust, insecurity and private or state vulnerability. If ever there was a dynamic accelerated by Covid, in addition to digitalisation of commerce, consumption, financial services and labour, it is that of international relations. 

In coming years, those who reinforce diplomacy as a priority of public policy will be at the forefront of the joint resolution of major global dilemmas. It will be necessary to anticipate them, plan responses and articulate strategies. But the best may be yet to come.



Bernardo Pires de Lima is a Research Fellow at the Portuguese Institute of International Relations, IPRINOVA. He is also an international politics analyst for the national Portuguese television channel RTP, for radio station Antena 1 and the Portuguese daily Diario de Noticias. He chairs the Luso-American Development Foundation’s (FLAD) Curators Council and has been a Research Fellow at the Johns Hopkins Center for Transatlantic Relations in Washington DC and at the National Defense Institute in Lisbon, Portugal. He has penned eight books on contemporary international politics, the most  recent being Portugal na Era dos Homens Fortes: Democracia e Autoritarismo em Tempos de Covid (Portugal in a time of strongmen: Democracy and authoritarianism in a time of Covid), published by Tinta-da-China in September 2020. 
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