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An Era of Deglobalization
The state of globalization was in ruins long before this pandemic hit the globe. After the last financial crisis, global trade had started contracting and hence many international firms and banks were rolled back. Trump’s trade war against China exacerbated the erosion of globalization, bringing forth an era of deglobalization.
The dipping oil demand before the pandemic was already alluding to the decline of interdependence between countries; the current pandemic is the last nail in the coffin. Many economists have forecasted that it would take years for the demand to bounce back to the pre-crisis level; in a worst-case scenario, it might never stabilize.
The international landscape is more polarized than ever. The remaining bits of semblance of multilateralism dissipated when Donald Trump raised the roof with his applause line “America first”. Following the footsteps of the U.S., Australia, too, demanded a transparent international investigation into the origins and spread of COVID-19.
The European Union hasn’t fully convalesced from Brexit, which is still in its transition phase, or even from the euro crisis. Against this backdrop, it was axiomatic that the EU would be ill-equipped for a crisis. The eurozone economy is set to shrink between 10 to 12 percent, or more with the ongoing second wave, the sharpest decline ever predicted that could trigger a recession twice as deep as the last financial crisis.
Moreover, there is mounting debt on countries like Italy and Spain, which many fear to slide feeble EU states into recession. The Frugal Four initially raised eyebrows and have been wary of the decision regarding the neutralization of the loans; the critics even stated that it would end up going to the deeper-pocketed states to cushion only their economies.
Crises are endemic to capitalism. Many marketers and investors have been reassessing this approach and reckoning to understand how volatile and ominous the system of global trade is getting. In 2007, the crisis that broke out in the U.S was felt even in Russia. Similarly, in the present scenario, the supply chain that disrupted in China has had a global impact and fomented a widening gulf between supply and demand worldwide.
The prompt global transmission of the virus exposed the underlying fissures that free-moving trade and travel hold. The travel restrictions and closure of borders would possibly cultivate an inward-looking prejudice towards self-reliance and self-sufficiency, prompting governments to shore up protectionist policies.
According to the Economist, in the first quarter, Chinese venture investment in the U.S. had dropped by 60%, as compared to the first quarter last year. Moreover, the UK government has widened its powers to keep FDI in its grips, adopting stronger intervention powers to prevent hostile countries, specifically China, from taking major stakes in strategic firms.
Protestors on the Streets
International institutions and the policies of the free-market, which have worsened the lives of many people, are denounced by labor movements across the world. In Pakistan, workers and employees accuse the IMF of its vicious policies and usurpation of the entire economy. In Indonesia, on the other hand, the anti-Omnibus demonstrations have shaken the whole country with students and workers at the forefront.
As early as May, when George Floyd was wantonly murdered by a police officer, giving rise to unprecedented protests, the indignation of the protesters was directed at the financial oligarchy and the barbaric system of inequity. People brought down buildings and shattered the windows of those franchises which were the hallmarks of globalization thus challenging the extant system.
This magnified the deeper social evil which knows no boundaries. Injustice and disproportionate distribution are drawing the ire of the already frustrated workers. The eruption of demonstrations cutting across all the regions has been finely dovetailed with the financial deprivation, spurring the potency and kindling the demonstrators to demand an equal society.
The Deepening Divide
The erstwhile financial crisis spawned politicians like Trump and Modhi, and this time could not be any different. Deflating wages, massive layoffs, and bankruptcies of SMEs continue to lay the ground-work for the populist rant, where populist leaders would scapegoat foreigners for economic turbulence.
The economic crunch would reinforce the trepidation of the ”other” and brace the xenophobic impulse of the people. Incidents of xenophobia and racism have already seen a colossal hike. The virus has already been given the moniker ”Chinese virus” by Donald Trump, and so the repercussions of this are that people of Asian descent have been targeted and hurled slurs at.
Even more concerning is the rapid buildout of violence-driven, radical and racist cults—white supremacists, Qanon adherents, Proud boys—which are rearing their heads in the United States. They all are firm believers of their intrinsic superiority over other races and religions.
Their angst and malevolence towards people of different faiths and races have also spilled into other parts of the world, even in countries as inclusive as the UK and Canada—a 58-year-old man was fatally stabbed outside a mosque in Toronto last month by a white supremacist—and is likely to intensify as the U.S. President has claimed an election fraud coupled with speeches bashing the state institutions.
After looking at these uncertain conditions and the menaces they pose, especially to the piteously deprived groups, one is disposed to think that what awaits us beyond the health crisis is the abhorrently ruthless economic crisis. The world we would move into after all this is over will be draped in xenophobia, nationalism, and protectionism, though these trends were unfurling long before Covid-19.
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