The Unfolding of the Economy in the Coronavirus Era
After the financial crisis of 2008, the world is now facing the most difficult economic challenge yet, caused by the of COVID-19 pandemic. Governments all around the world have taken lockdown measures to avoid a humanitarian catastrophe. Many economists argue that this crisis is similar to the Great Depression of 1930s, while others argue that this is an unprecedented crisis, and being unprecedented makes it even more difficult to tackle.
Going through economy’s history we can see that economic crises have always been different from one another. Economic, social and political contexts change over time, and so produce different realities. It is no surprise that the world economy is struggling now that it found itself in a new economic environment in which Gross Domestic Product (GDP) does not play its previous role for the economy, economic growth does not necessarily affect the economy qualitatively, fiscal policies pose serious questions, in which the liquidity trap is present even more and monetary policy could not intervene conventionally…etc
According to the International Monetary Fund’s outlook, the economic contraction was 16% during the 2008 financial crisis, and the current one is 6%. To be clear, the crisis we are currently facing has caused less damage than the financial crisis of 2008. The fact that this crisis is unprecedented does not mean it is more serious. Each economic crisis is different from one another, as it occurs in different conditions and economic contexts, as well as seeks different types of policies and responses for the economy to recover.
The Liquidity trap has been a huge gap for Central Banks over the last years in order to raise their effectiveness while dealing with monetary policies. And if we look carefully, an interest rate of about 0% has practically no effect on the economy, at least in the short turn. The reactions of an economy are obviously based on the factors that influence its trends. Low rates of economic growth have led to low savings, economic uncertainty, unemployment, and therefore, the economy remains contracted. The limits of Central Banks conventional instruments are pretty obvious. There is no guarantee for their effectiveness. The Federal Reserve and the European Central Bank are using unconventional monetary instruments to support the economic growth. Thus, the liquidity trap is currently structural rather than temporary.
The global economy is also experiencing an important shift in the labour market. During and after the emergency, this trend could potentially intensify. Why? Because the digitalization of economy seems to be an alternative choice for businesses and workers in such a difficult time. The economy must be robust in difficult situations, and digital channels have undoubtedly contributed to the way the economy worked during the blockade. The shift towards digitalization of work environments began a few years ago and was obvious to everyone, including those with modest knowledge in the field of economics.
Emerging markets have been hit a lot by the lockdown of the global economy and the disruption of the international supply chain. Especially the South Asian markets, where a significant part of the global volume of retail products is concentrated. According to the World Trade Organization (WTO), trade disruptions will range from 13% to 32%.
National debt crises in emerging markets are not a novel problem. In fact, they have been steadily increasing over the past two years and are indeed resulting in “debt spiral”, as Joseph Stieglitz called it. In addition, some emerging markets, such as Argentina, have to face private debt as well.
An important factor affecting the ability of emerging markets to be resistant to foreign investors is related to the dependence on the US dollar as a borrowing and trading currency in international markets. We have to be honest: the dominance of the dollar in international finance is neither random, nor unknown. The US dollar dominates the international trade and finance since the end of World War II.
After all, what is noticed during the COVID-19 crisis is the lack of cooperation between governments all around the world, or, at least, the collaboration does address urgent matters. Even with such a humanitarian crisis, a national approach prevails, although the problem is common. The emergency response policies to COVID-19 vary from country to country. There is no reason to be surprised of the fact that there is a lack of coordination measures on an international scale, as nationalism and protectionism manifest in earnest.
In fact, the emerging protectionism has a direct impact on growth. The escalation of trade tension has had a significant impact on the global economy and has led to a decrease in the intensity of global supply chains. With the lockdown of the economy, demand, at least in the short term, seems to be problematic. The shock of the global supply chain may raise the question of the future of globalization. Protectionism has always been there, but the emergency situation of COVID-19 just gave it the opportunity to be noticeable.
Another issue of which governments are pretty wary, is a sharp increase of unemployment. Just before the crisis, unemployment rate in U.S. was at its lowest historic level since 1960. It has been at 7% In Europe. Unemployment is likely to exacerbate inequalities between and within countries. The most vulnerable part of society is the working and middle-class. The poor and the middle-class will be the ones to suffer most. According to Nouriel Roubini, in case of U-shape recovery scenario, the time required for the economy to recover will at least be till 2021, as well as in case of the L-shape scenario. In both cases, in a realistic, so as in a pessimistic one, all evidence warns of widening inequality, especially in advanced economies.
The purpose of this article is to emphasize that the global economic crisis we are going through is only one side of the coin. Governments and Central Banks should keep in mind that crucial and deep structural anomalies held the economy back before the COVID-19 did. The lockdown of the economy is temporary; the structural economic crisis is already constant in the global economy.
Edited by Hiba Arrame
The Militarisation of COVID-19: The Armed Forces and Human Rights
“The Army will heal the people”, declared AMLO in April 2020 (Lopez Obrador cited by Herrera, 2020), when referring to the pivotal role the army will play in addressing the COVID-19 caused pandemic. This statement is illustrative of the global changes which have in recent years drastically impacted the security field and its agencies. The latter typically would not be directly involved in health issues. Regardless, globalisation processes have highlighted the deepening internal-external nexus and given new rise to new interactions between the state and external security forces. In this world, as the threats figuring in the international arena become increasingly transnational and ambiguous in nature (Brandão, 2015), a natural health threat such as COVID-19 overlaps with its own framing as a security threat.
Dominguez, J., P. (2017) Source
However, until fairly recently, the ruling Real Politik paradigm of the Cold War would not have included a pandemic when considering security studies (Eriksson e Rhinard, 2009). Recognising the virus as a security threat sets new securitary dynamics into play. In several countries, regardless of the current political regime, these external security agencies, namely the army, have been mobilised and have been contributing to safeguarding public health by building medical tents and hospitals (Graham, 2020). One could interpret the attribution of this responsibility as an illustration of the internal/external security nexus, which highlights the integrated nature of a previous binary understanding (Bigo, 2000). Conversely, other occasions have witnessed armed forces tagging along with police agencies in enforcing brutal measures and crushing human rights (de Waal, 2020).
The shifting role of traditionally external security agencies, traditionally tasked with addressing external defence concerns is mirrored by this point and raises new questions. In the context of the COVID-19 pandemic, and the profound engagement of military agencies in the response, it is productive to weigh the responsibilities imposed on security agencies by state actors, continuously bearing in mind that security is a “powerful political tool in claiming attention for priority items in the competition for government attention” (Buzan, 1991 p. 370). As such we will explore of the militarisation of the pandemic through an analysis of the repercussions of the parts external security forces are currently playing. To this end, it will be fruitful to first map out the fundamental concepts in security studies which may help unpack the dynamics at hand. Lastly, we will focus on the concrete effects of the involvement of the military in the pandemic response, from positive results, to negative ones. Considering the diverse results in the employment of the armed forces to the service of public health, we will once again come back to a derivative meaning of security.
The Militarisation of COVID-19
For the past decades, external security agencies have participated in supporting responses to large scale outbreaks or natural disasters (Godefroy, 2020). In reality, the new reality linked to the 9/11 attacks imposes a more integrated understanding of security. These attributions also come to emphasise the concept of Human Security (CIVIC, 2020). Ultimately, this vision the individual as the referent security object, against all alternatives, corresponding to an extension of the meaning of security (Newman, 2010; Rothschild, 1995). This notion is also linked to a more connected world, where ultimately the notions of security and defence are blurred.
Accordingly, in the midst of the pandemic and all its consequences, the army is suited to address the pressing need to support the state apparatus in various ways (Branco, 2020). In parallel, the threat posed by the virus has been painted time and time again as if a war enemy, which directly legitimises the involvement of armed forces for the protection of the State, even if within the domestic territory. On the other hand, the militarisation of the pandemic raises questions on the civil-military relationships. The deepening of the relationship between the government and the armed forces is worth highlighting, and especially so when memories are fresh of brutal violent State policies acted on by the armed forces (Noko, 2020).
Moreover, the active framing of the pandemic as pertaining to the military universe is not without consequences, starting with the role played by security agencies and its impact on societies. In reality, as UN High Commissioner for Human Rights Michelle Bachelet points out:
“We have seen many States adopt justifiable, reasonable and time-limited measures. But there have also been deeply worrying cases where Governments appear to be using COVID-19 as a cover for human rights violations, further restricting fundamental freedoms and civic space, and undermining the rule of law.”
Whereas realist authors criticise the expansion of the security concept and privilege the material dimensions of responses to strictly military threats in the definition (Ceyhan, 1998; Deudney & Ayoob apud McSweeney, 2004; Walt, 1991), a critical point of view would point to the intrinsic link between politics and security (Williams, 2008). In these terms, security becomes a much more complex issue, considering that its meaning derives directly from the political understanding of the one interpreting or producing it (Krause, 1998; Bigo, 2000; McSweeney, 2004).
Accordingly, this line of thinking would also privilege a constructive lens when analysing the threats included in the security agenda (Haftendorn, 1991) through processes of naming and framing, contradicting the inherent threatening character of the phenomenon in question (Bigo, 2000; Eriksson & Rhinard, 2009). As Nunes (2008 p. 4) put it, we are now looking at the “relations of mutual dependence between the security representations, the normative choices and the way security concerns and practices play out in the social and political world” (“relação de dependência mútua entre as representações da segurança, as escolhas normativas e a forma como preocupações de segurança e práticas se desenrolam no mundo social e político”).
As previously noted, this realisation accompanies the expansion of the range of topics susceptible of being considered security (Fierke, 2007; Schlag, Junk & Daase, 2016), as the individual therefore becomes the central referent object when thinking about security (UNDP, 1994; Commission on Global Governance, 1995; Rothschild, 1995). Through the lens of Human security, the concept of security may reach a large variety of topics, such as positive peace, social and economic justice, climate change and public health (Ullman, 1983; Buzan, 1991; Booth, 1991). Accordingly, military operations tied to a traditionally narrower, state-centric understanding of security become linked to a broader security agenda (Godefroy, 2020).
As ISSAT (2020) points out, the COVID 19 pandemic reinforces Human Security’s place at the “forefront of the world’s concerns”. Health issues are therefore listed on the security agenda as a threat, opening the way for it to be met as so, by mobilising security agencies. This point is perfectly mirrored in the current COVID-19 response, which has generally become a top security priority for States at this point. After having reflected on the evolution of security definitions in the context of a globalised world, it is also worth diving into the responses addressed to securitised phenomena.
Navarro, W. (2019). Source
To this end, we will focus on the roles played by the state security agencies through which the legitimate monopoly of violence is operationalised. This strategy will allow for a deeper debate on the political priorities which drive and frame security issues, and will contribute to our understanding of the repercussions of the involvement of the security agencies in responding to a public health issue, framed as pertaining to the security field.
External Security Forces Responses
We have briefly explored the evolution of the security arena towards a much more complex configuration in recent decades. A growing number of actors, an array of ambiguous and shifting threats and a wider configuration of conflicts compose a difficult environment. In this same line, security agencies also suffer unorthodox shifts (Bigo, 2000; Brandão, 2015; Gebhard & Norheim-Martinsen, 2011). A clear division of security spheres (internal/external) entails a sharp division of labour between security bodies (Fierke, 2007). Nowadays, however, we witness the involvement of the military in domestic conflicts in ways alike to warfare, deployed by external security agencies who address the internalisation of typically external phenomena. On the other hand, the internationalisation of domestic security priorities leads to a large array of civilian external missions, where police and domestic intelligence and border services play a fundamental key (Bigo, 2000; Brandão, 2015).
In the context of the internal/external security nexus, which points to the increasing indissociability between these two fields, a definition of internal security as the “protection of national territory against internal threats by using traditional means” (Bigo, 2000 p. 322) is no longer effective. In consequence, innovative answers to new and ambiguous threats leads to the internalisation of transnational phenomena, exemplified by the current pandemic. As previously noted, external security forces are a useful resource to diminish the virus’ terrible impact.
Africom (2020). Source
On the other hand, critical scholars question the legitimacy and coherence of deploying security measures to non-traditional security phenomena (Booth, 2007). The first obvious argument is that it is not possible to tackle the virus through pure military force (McSweeney, 2004). On the other hand, there are also inherent risks deriving from securitising and subsequently militarising civilian topics (Dalby apud McSweeney, 2004; Fierke, 2007). The active portrayal of a certain issue, such as COVID-19, as an active urgent matter in the security agenda leads to calls for “urgent”, “abnormal” actions. Such urgent actions go through a process of normalisation, thus opening the way for potential consecutive breaches of fundamental human rights standards.
Media outlets have documented cases of security agencies brutality against civilians. This dynamic also bring to life the indissociable relationship between security and politics, as states are now taking advantage of the framing of public health issues as a security crisis to apply traditional military solutions. Armed forces take on supporting roles not only for the health bodies directly targeting the pandemic, but also to internal security agencies who currently carry repressive policies designed to fit authoritarian and violent political objectives. Considering the derivative nature of security, the inherently dependence of security agencies, and their constructed role according to the political views of the actors involved, it is important to stress once more that external security forces may be a valuable part in the strategy for tackling the pandemic. Indian external security agencies, for example, have also been mobilised to building health care facilities, such as hospitals in the region of Kashmir and Jamil (PTI, 2020).
Conversely, they may also become the state’s armed wing in enforcing brutal domestic measures. On the other side of the spectrum, Indian armed forces took the pandemic to double down on the pre-existent crushing security measures (Mir, 2020). Tensions have been aggravated in the region during April 2020, as attacks took place and Indian armed forces set up artillery weapons in Kashmiri villages. 5 Rwandan soldiers have been arrested after being accused of brutalising, raping and killing civilians during the country’s lockdown. South African civil society has already risen up to condemn the army, along with the police, for using “violence, excessive force, torture and assault” when enforcing lockdown measures. Peru, on the other hand, has recently passed a law which has been described by Amnesty International Americas Director as “sending a message of impunity for abuses committed by security forces”.
Ministerio de la Defensa de Perú (2018). Source
In parallel, external security forces such as the army may offer important resources, organisational and logistical capabilities, experience and knowledge on crisis management and high-quality medical facilities (ISSAT, 2020; WOLA, 2020). According to ongoing experiences, the militarisation of the pandemic in the simple sense of involving armed forces may be a productive strategy. That is, if these organs who in principle act beyond the State’s territorial boundaries act under the ultimate control of civilian bodies, and provided they respect principles of legality, necessity, proportionality, and precaution (OHCHR, 2020). Many international actors have thus turned to the military to provide critical resources to a militarised pandemic response (Mani, 2020; EUROMIL, 2020).
This point illustrates the inherently derivative nature of security in that it directly responds to dominant political interests. Moreover, it comes to show that this no longer binary categorisation of security spheres and agencies may ultimately call into play emergency measures and responses. In turn, these measures are highly framed by the securitisation of the pandemic and are acted upon by security forces, distorting checks and balances and harming human rights.
References
Aijazi, O. (2020, May 7). India uses coronavirus pandemic to exploit human rights in Kashmir. Retrieved from The Conversation: https://theconversation.com/india-uses-coronavirus-pandemic-to-exploit-human-rights-in-kashmir-137682
Armed forces and COVID-19. (2020). Retrieved from European Organisation of Military Associations and Trade Unions [EUROMIL]: http://euromil.org/armed-forces-and-covid-19/
Bigo, D. (2000). When Two Become One: Internal and External Securitisations in Europe. In M. Kelstrup, & M. Williams (Eds.), International Relations Theory and The Politics of European Integration. Power, Security and Community. Routledge.
Booth, K. (1991). Security and Emancipation. Review of International Studies, 17(4), 313-326
Booth, K. (2007). Theory of World Security. Leiden: Cambridge University Press.
Brandão, A., P. (2015). O nexo interno-externo na narrativa securitária da União Europeia. JANUS-NET e-Journal of International Relations 6(1).
Branco, C. (2020, May 1). How Armed Forces Help Fight COVID-19. Valdai.
Buzan, B. (1991). People, states, and fear: an agenda for international security studies in the post-Cold War era. Brighton: Wheatsheaf Books.
Ceyhan, A. (1998). Analyser la sécurité : Dillon, Waever, Williams et les autres. Cultures & conflits, (31–32).
CIVIC (2020, March 30). Center for Civilians in Conflict. Retrieved from As COVID-19 Continues to Claim Civilian Lives Around the Globe, CIVIC Calls on Governments to Demonstrate Restraint in Enforcing Response Measures: https://civiliansinconflict.org/publications/testimony/covid-19-enforcing-response-measures/
Commission on Global Governance. (1995). Our global neighborhood: The report of the Commission on Global Governance. Oxford: Oxford University Press.
de Waal, A. (2020). Coronavirus: Why lockdowns may not be the answer in Africa. BBC.
Eriksson, J., & Rhinard, M. (2009). The Internal—External Security Nexus: Notes on an Emerging Research Agenda. Cooperation and Conflict, 44(3), 243–267.
Fierke, K. M. (2007). Critical approaches to international security. Camridge: Polity.
Gebhard, C., & Norheim-Martinsen, P., M., (2011). Making sense of EU comprehensive security towards conceptual and analytical clarity. European Security, 20(2), 221-241.
Godefroy, B. (2020, April 1). Linking Human Security and Health Security in the Age of COVID-19. Retrieved from Center for Civilians in Conflict: https://civiliansinconflict.org/blog/linking-human-security-and-health-security/
Graham, E. (2020, April 8). The armed forces and COVID-19. International Institute for Strategic Studies.
Haftendorn, H. (1991). The Security Puzzle: Theory-Building and Discipline-Building in International Security. International Studies Quarterly, 35(1), 3.
Herrera, R. (2020). Ejército va a curar al pueblo.- AMLO. El Norte.
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COVID-19 THE ECONOMIC COST: A Preview of the Current Situation
The COVID-19 virus has dominated the international news and affected our lives. Currently, the world's policies are busy protecting humanity against this virus, by taking many measures that will decrease the pervasion of the virus, including media and social media to spread awareness about the danger humanity is exposed to due to this pandemic.
After declaring it a pandemic by the World Health Organization, each country in the world has become officially isolated, so they were in the obligation to declare the situation of health emergency by avoiding circulation between cities, closing all public utilities, and restricting people's circulation by lock-down or social distancing (quarantine) until further notice.
The charts below show daily and total case trends. Data was added, and the charts were updated as of March 30th, 2020 (source)
"Total Cases" = total cumulative count (737,577). This figure therefore includes deaths and recovered or discharged patients (cases with an outcome) (source)
The data collected so far on how people are getting infected and how the epidemics is involving are unreliable.
There are three parameters to understand the situation in order to assess the magnitude of the risk posed by this novel coronavirus:
Transmission Rate (Ro) - number of newly infected people from a single case
Case Fatality Rate (CFR) - percentage of cases that result in death
Determining whether asymptomatic transmission is possible
The Economic Impact
The coronavirus outbreak, which originated in China, has infected more than 200 000 people; its spread has left businesses around the globe, counting losses.
It is too early to talk about an economic crisis caused by the COVID-19 pandemic, but we can evaluate the impact of the virus on economy so far.
"This virus is as economically contagious as it’s medically contagious," said Richard Baldwin, a professor of international economics at the Graduate Institute of Geneva.
It is considered as phenomena for the manufacturing sector in most high economies: Supply chain disruptions overall, and a decline in the demand on cars, electronics and many other manufactured goods as people take a step back and observe the turnout of the crisis.
A Nervous Stock Market
It is certain that we cannot consider the state of the stock market as a big economic factor, but it could be a sign that the investments in stock exchange will, surely, be affected, due to the virus, during the upcoming years.
The same applies to the travel and tourism industries, which have been pounded by the outbreak, by the cancellations of all events that regroup more than 50 persons, and cessation of all the trips around the World.
We cannot ignore the fight of oil production between Saudi Arabia and Russia that caused a decline in oil prices, and enhanced fears of a broader slow down.
Businesses are already taking a hit, but how bad it gets depends on how the virus lasts…
Strong companies like Nike and Apple are not going to be ruled out by this virus, "those are two companies that manufacture a significant amount of their products in China" - Randy Frederick vice president of trading and derivatives at Charles SCHWAB.
As considered, all businesses relying on China as part of their supply chains, and having big retail presences within the country, face the phenomena.
"I don’t think the Amazon platform has seen such a massive amount of inventory problems as we are about to see" reported the World Street Journal in February.
Then there are the airlines, which some experts say could lose as much as 100 Billion Dollars, and all the other businesses related to tourism as hotels, casinos, tour companies and more…
The question now is about whether this situation is going to lead the world through a global recession.
Everybody wants to know if this virus is going to cause a global crisis or not, the short answer is that it could.
"A recession is generally defined as a macroeconomic term that refers to a significant decline in general economic activity in a designated area, it had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators like a rise in unemployment" - Investopedia
What is happening in China, being the Octopus of the world's economy, will heavily affect the rest of the economies, the Eurozone countries are definitely simulating, their GDPs only increased by 0.1% by the end of last year, any unexpected movement may push them to a negative growth.
The United states being one of the strongest economies of the world, its GDP grew 2.1% in the last fourth quarter, so it could be more protected comparing with the rest of countries.
The New COVID-19 detonation has definitely exposed the weakness of companies, especially those that rely heavily on china regarding their supply chains and manufacturing.
This may engender companies to cut some of their dependence on China, and start to diversify supply chains to protect against major crisis that impact one country more than another.
Moreover, this virus is a good reminder for companies that are not relying on China, to start looking for other alternatives regarding their economies, because no one knows where or when the next pandemic might happen.
References:
https://www.weforum.org/agenda/2020/03/should-you-self-isolate-self-quarantine-or-self-monitor/
https://www.ncbi.nlm.nih.gov/pubmed/21871188
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/advice-for-public
https://www.worldometers.info/coronavirus/
Edited by Hiba Arrame