Now that 2020 has produced its own unique global crisis, people like the Financial Times’s Alan Beattie are wondering whether the system will work again. Looking back at the arguments I made in “The System Worked,” I have mixed news to report. The system is not working nearly as well as it did in the fall of 2008.
It is worth remembering why the system worked back then. Despite pre-crisis bickering among the great powers, by fall 2008, the global distribution of interest, power and ideas all pointed toward a coordinated response that lasted for the next 18 months. Global supply chains were so tightly integrated that it mitigated the traditional protectionist impulse that rises during a recession. The distribution of power was more powerfully stacked toward the United States than commentators at the time recognized — particularly in the financial realm. And for all the bashing of neoliberalism and the Washington Consensus during the worst days of the subprime mortgage collapse, a viable and universally appealing counter-narrative never emerged. There was no Beijing Consensus, nor did the Chinese promote one. In the absence of a better idea, public support for globalization proved to be resilient, actually strengthening in the wake of the crisis.
Fast-forward to 2020, and it is extremely difficult to spot actors behaving like there is any shared interest in containing or mitigating the novel coronavirus that causes the disease covid-19. This crisis went global because China was less than transparent about the nature of what was going on in Wuhan in January. For six weeks after the crisis was obvious, China continued to rebuff outreach from both the World Health Organization and the Centers for Disease Control and Prevention.
Even as the crisis begins to subside there, China continues to act from a “China First” perspective. It has imposed a de facto export ban on surgical masks. A Ministry of Foreign Affairs spokesman has spread baseless conspiracy theories that the U.S. Army is behind the coronavirus. Now China is erecting barriers against foreigners coming in to prevent a renewed outbreak. Little wonder that frictions with the Trump administration have increased as well.
If China’s lack of cooperation was an ominous harbinger, the Trump administration has furthered the spiral of distrust. When Trump announced the ban on European travel, he did so without any consultation with our traditional allies in Europe. For weeks, Trump has responded to the spread of the pandemic by stating that it would be good for the United States because Americans would confine their tourism to domestic places.
And then over the weekend, the story broke that, according to the New York Times’s Katrin Bennhold and David Sanger, “the Trump administration attempted to persuade a German firm developing a possible vaccine for coronavirus to move its research work to the United States.” Understandably, this is “raising fears in Berlin that President Trump was trying to assure that any inoculation would be available first, and perhaps exclusively, in the United States.”
In both the Sino-American and transatlantic relationships, the three years of bad blood from prior Trump administration missteps has exacerbated the perception that there are no shared interests. This means that even the slightest misperception could trigger even more recriminations. Even within Europe, the breakdown of cooperation is rather evident.
Turning from interest to power, there is a mixed story to tell. This crisis has two tracks, economic and epidemiological. U.S. financial hegemony persists, so the coordinated announcement of swap lines for dollars matters. This is the area where the parallel to 2008 is strongest, in a good way.
Monday’s Group of Seven leaders’ statement has less impact, however, both because it was mostly boilerplate (although markets might not have appreciated that getting the Trump White House to sign on to boilerplate is promising) and because the G-7 economies do not carry the same weight they did even in 2008.
Group of 20 action would be more significant, and the failure of movement in that venue is disturbing. Heck, South Korea is asking Trump to convene a G-20 teleconference summit to offer best practices for combating the coronavirus, but it has not happened. This is the international relations equivalent of an uncontested layup, and the White House is not bothering to shoot. And let’s be honest, given the shambolic response at the federal level, no one is looking to the United States as the leader in the public health response.
One of the paradoxes of the 2008 financial crisis was that even though its epicenter was on Wall Street, U.S. power strengthened in the wake of the crisis. It is possible that this dynamic could play out again, but for China. Even though the pandemic started there, it is China that has proffered vital health equipment to besieged states such as Italy and Spain.
President Aleksandar Vucic told a press conference on Sunday evening that he has sent a letter to his Chinese counterpart Xi Jinping asking for help after the EU imposed limits on exports of medical equipment amid the coronavirus crisis.“I sent a letter to President Xi, in which for the first time I officially called him not only a dear friend but also a brother, and not only my personal friend but also a friend and brother of this country,” Vucic said.“As of today, as you know, we cannot even import goods, according to the European Union’s decisions, [European Commission President] Ursula von der Leyen said this a while ago, we cannot import medical equipment from EU countries,” he added.He said that he had asked China to send Serbia “everything” – “even to send us doctors, [because] our doctors are already tired”.
Public health capabilities are not like finance or cyberspace, which are much more tightly networked. The United States does not possess structural power in this area. It is possible that, by the end of this pandemic, many countries in the world will view China as the leader in offering global public goods in health.
So, to sum up: The sense of shared interests is much weaker now than in 2008, and the distribution of power is more fragmented. That is not a recipe for the system working.
As for the marketplace of ideas, that is the source of the greatest danger and greatest misperception from this pandemic. More on that topic Wednesday.