Coronavirus puts world cooperation to sharp test

Kai Pfaffenbach/Reuters
European Central Bank President Christine Lagarde, seen here at a news conference in Frankfurt, Germany, March 12, 2020, has shrugged off suggestions the ECB might intervene directly in support of Italy.

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It’s the ultimate political stress test – striking locally, nationally, and above all, internationally. And it’s coming as the international political order, and trust in national institutions, is fragile.

To get buy-in for tough measures before a crisis fully hits home, for example, requires widely trusted national leadership. That’s in short supply in many European countries facing escalating COVID-19 cases, including Italy, France, and Britain. The weakened state of international institutions has also undermined a coordinated strategy. 

Why We Wrote This

International cooperation was a key factor in overcoming the 2008 financial crisis. Now that's in short supply, and the consequences for the coronavirus crisis could be significant.

In the 2008 economic crisis, individual countries took measures to deal with the immediate crisis. But Britain then used a meeting of the Group of 20 – the world’s leading economies – to chart an international response.

What’s striking now is the absence of such steps. The World Health Organization has attempted to assume the lead. But its funding and influence have been eroded by the United States and several European countries. Only gradually did it ramp up its more urgent messaging. Nor was there coordinated international effort to apply the lessons of successful policies of Singapore, Hong Kong, Taiwan, and South Korea. 

The question now is whether the spiraling effects of the coronavirus could prompt renewed appreciation of international cooperation.

It is the ultimate stress test.

Yet the crisis surrounding COVID-19 is different from the international challenge often cited as a parallel: the viral economic emergency of 2008. Then, the stress test involved banks and financial institutions. Now, it’s a political test striking at all levels: local, communal, national. But above all, international.

And while it’s too early to reach definitive judgments, one thing is clear. Just as major banks and finance groups were woefully unprepared for what hit them in 2008, COVID-19 has come as the international political order, and trust in national institutions, have been getting ever more fragile.

Why We Wrote This

International cooperation was a key factor in overcoming the 2008 financial crisis. Now that's in short supply, and the consequences for the coronavirus crisis could be significant.

That’s particularly evident in Western Europe, which the World Health Organization (WHO) last week identified as the epicenter of its COVID-19 concerns. The worst-affected countries are now dramatically tightening restrictions on their populations, after long delaying the main consensus means of limiting the crisis: so-called “social distancing.”

Complacency may well have played a part in the delay. Yet to get buy-in for restrictions on movement before a crisis fully hits home requires credible, widely trusted national leadership. That’s in short supply in a number of the European countries facing sharply escalating COVID-19 cases, including Italy, France, and Britain.

Italy has been in the grip of partisan political feuding. In France, the initially popular President Emmanuel Macron has been dealing with street protests against his economic reform agenda. Britain remains divided over Brexit, championed by its polarizing prime minister, Boris Johnson.

Yet the weakened state of international political institutions has also undermined a coordinated strategy to deal with a virus that disregards borders. 

WHO has been attempting, at times almost plaintively, to assume the lead. But its funding has been cut in recent years. Its influence has eroded, too, amid nationalistic moves to devalue the importance of international institutions by the United States and by a number of countries in Europe.

That’s in striking contrast to the response to the 2008 world economic crash.

Individual countries took measures to deal with the immediate crisis. But Britain’s prime minister at the time, Gordon Brown, then used a meeting of the Group of 20 – the world’s leading economies – to chart an international response. The result, which ultimately helped rescue and revive the world economy: coordinated interest rate cuts, fiscal stimuli, and moves away from protectionism by individual states.

What’s been striking with COVID-19 is the absence of anything like that degree of coordination. WHO, possibly out of concern of further weakening its influence, initially echoed China in downplaying the severity of the crisis. Only gradually did it ramp up its messaging.

Nor was there coordinated international effort to apply the lessons from policies adopted by several Asian governments – Singapore, Hong Kong, Taiwan, and South Korea – that have proven relatively successful so far in limiting the effects of the virus. 

The U.S. and much of Europe let weeks pass without putting in place widespread testing and tracking of those who showed signs of exposure, or effective social-separation policies. And even as the crisis deepened in Europe and America, the response has been limited almost completely to individual national governments.

The European Union has yet to achieve a broadly coordinated approach. Last week, the president of the European Central Bank, Christine Lagarde, shrugged off suggestions it might intervene directly in support of Italy, whose already struggling economy has been pushed into recession by COVID-19.

The key question now is whether the spiraling effects of the coronavirus could prompt a renewed appreciation of the value of international cooperation.

In recent days, there have been indications of that in at least one area: heading off the risk that the world’s financial markets could seize up. The U.S. Federal Reserve coordinated with the central banks of Canada, Britain, Japan, Switzerland, and the EU to cut interest rates and inject liquidity into the markets.

And Saudi Arabia, current chair of the G-20, has announced plans to convene a “virtual” meeting in the coming days.

Yet there have been less encouraging signs so far in response to the root of the economic concerns – COVID-19 itself – despite the potential benefits of a coordinated international strategy for securing and distributing urgently needed items like face masks and sanitizers, testing kits and respirators.

Even within the EU, Italy was initially limited in getting masks and protective gear from states like Germany and France, which were stockpiling supplies. That practice has been abandoned. But the EU as a whole has now effectively barred the export of such items outside the union.

And in a stark indication of the fraying bonds between Europe and the U.S. over the past few years, a major controversy has erupted in Germany over newspaper reports alleging that the Trump administration offered a large sum of money in hopes of gaining exclusive access to a COVID-19 vaccine under development by a German company.

A number of senior German politicians said any such move would be blocked. A prominent member of parliament caught the prevailing mood. “A pandemic is a matter for all humanity,” said Bärbel Bas of the Social Democratic Party, which is part of the governing coalition, “not for ‘America First.’”

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