Coronavirus Ushers in the Globalization We

Were Afraid Of
Welcome to a new age of decreasing free trade
and global cooperation, and rising nationalism and
geopolitical rivalry.

Like the Sept. 11 attacks and the Great Recession, the coronavirus
pandemic is an economic and geopolitical shock that will remain
vivid in our minds long after it passes. But it is something more:
Coronavirus is the historical marker between the first phase of
globalization and the second.

In the first phase, which lasted from the end of the Cold War
until very recently, globalization was about free-trade agreements,
the building of global supply chains, creating and enlarging middle
classes while alleviating extreme poverty, expanding
democracy and vastly increasing both digital communications and
global mobility. Despite all the setbacks — such as wars in Africa,
the Balkans and the Middle East — Globalization 1.0 was basically a
good news story, about intensifying planetary unity. It was friendly
to optimists.

The second phase of globalization is different. Globalization 2.0 is

about separating the globe into great-power blocs with their own
burgeoning militaries and separate supply chains, about the rise of
autocracies, and about social and class divides that have
engendered nativism and populism, coupled with middle-class angst
in Western democracies. In sum, it is a story about new and re-
emerging global divisions, more friendly to pessimists.

The first phase of globalization began to end a few years ago, while
the second phase has already been in progress for some time.
There’s been overlapping and intermingling between the two
phases. But historians like chapter breaks. And the coronavirus has
come along at a moment just when then these two phases of
globalization have been clarifying themselves. It is deepening the
processes of separation that mark this second phase of globalization
— from jet-travel reductions to international conference
cancellations to global business stoppages to nativist reactions.

Colossal crises, like wars, put history on fast-forward. Processes that

normally take half a decade or longer to play out in a particular
country will unfold in a couple of years. Here’s a prime example: The
coronavirus will have geopolitical second- and third-order effects in
countries such as Iran, Iraq, Russia, Nigeria and Venezuela, whose
social peace relies on oil and gas, the prices of which have sharply
declined, partially due to the coronavirus.

It was in the context of a weakening consumer market for

hydrocarbons, brought about by China’s initial virus-related
economic slowdown, that Russia and Saudi Arabia stepped up
arguments about whether to slow oil production to stabilize prices.
Failed attempts at brinkmanship by Russian President Vladimir Putin
and Saudi Crown Prince Mohammed bin Salman led to a price war
that could last months. Miscalculations about the domestic
economic and political effects of sustained low prices might create
far more trouble than the two leaders anticipated.
Iran, a leading hydrocarbon producer that is also a nodal point for
the spread of the coronavirus — even as it reels from U.S.-imposed
economic sanctions — is now in acute crisis. A regime collapse is not
imminent, though, since in the name of ideology and religion the
Iranian clerics, aided by the Islamic Revolutionary Guard Corps and
the Basij militias, are willing and able to kill large numbers of people
in order to remain in power. Iran is a strongly institutionalized
state, unlike neighboring Iraq, which was on the brink of failure even
before the collapse of oil prices and the spread of the coronavirus
across the Iranian border. Iraq is now more fragile than it has been
in years, which is amazing to contemplate.
Nicholas Maduro’s oil-dependent Venezuelan regime is in an
analogous situation. It has basically devolved into an oil-and-
narcotics state governing greater Caracas, with various gangs
elsewhere in the country allied with it. Given the fall in oil prices to
less than $25 per barrel from roughly $60 in mid-February, the
regime, such as it still exists, will have significantly less money for
the bribes that keep the military and its other supporters from
deserting to the democratic opposition. The public continues to
starve. Venezuela could see a regime change or crumble into
anarchy because of the aftershocks of an oil-price war indirectly
connected to the coronavirus.

Nigeria has historically depended on oil revenue to grease the

wheels of officially sanctioned corruption. It has held together,
despite dire predictions for decades, because of a phenomenon the
political scientist Samuel Huntington identified in his 1968 book,
“Political Order in Changing Societies” — that corruption in weakly
institutionalized systems can be socially and politically stabilizing.

Algeria constitutes an opaque and unpopular national security state

that, too, has depended on hydrocarbons for revenue and survival,
in order to essentially bribe its population. Its rulers have been
locked in a tense dialogue with civil society protesters over the
country’s political direction. In each of these cases, it is the
interaction of the direct effects of the coronavirus upon unfolding
political dynamics that can alter the direction of history in this new
decade. A geopolitical shaking-out process is underway. Because
people are too afraid or unable to gather in large numbers to protest
in the streets, it will be a while before we can properly register the
full political effect on embattled regimes. But there will probably be
an uptick in upheavals abroad in the pandemic’s aftermath.

The interaction of the pandemic and tumbling oil prices has been
just one prominent example of the pandemic’s second- and third-
order effects. There are others. For example, the coronavirus has
intensified suspicion between an authoritarian regime in China and a
populist administration in the U.S. This has been marked by anti-
Americanism and anti-Chinese sentiment among nationalists in
each. It will deepen economic decoupling and the creation of new
and more politically sustainable supply chains, which in turn will
further aggravate great-power competition.

For years we have been told that the U.S.-China rivalry was less
dangerous than the U.S.-Soviet rivalry of the Cold War because
America and China were too enmeshed economically to be able to
fight a war. Think again. As U.S. firms divert supply chains from
China to more friendly countries in Asia and elsewhere, a process
that was already underway is being further encouraged by the
spread of the coronavirus: Both nations will soon have greater elbow
room to contemplate more aggressive military activity in the South
and East China Seas, for example.

Relations will worsen, as competition intensifies over the sale of

each country’s 5G network across the globe, particularly because
China’s Belt and Road Initiative is not only about land and sea
routes across Eurasia, but about a high-technology corridor as well.
As mistrust and misunderstandings increase, the U.S.-China cold
war, in the lower-case sense of the term, will have a further
fracturing effect on globalization. We are about to witness a
multidimensional great-power rivalry in an age of global demons
— pandemics, climate-related catastrophes, cyberattacks — starkly
different from the straightforward, sepia-toned struggle over
ideology that marked the Cold War.

As for other second- and third-order effects of the pandemic,

borders will harden within North America and Europe to halt the
spread of the virus. They may remain hardened as governments,
urged on by populists and nationalists, find benefits in further
limiting entry to foreigners. After decades of proclaiming European
unity and moral superiority to the U.S., the countries that comprise
the European Union have collectively shut the door on Italy, denying
that heavily stricken country even basic medical supplies. Covid-19
has been like an X-ray, exposing the basic survival instincts of
countries and pan-national organizations beneath the cant of their
official pronouncements.

There is this, too: A German newspaper reported that President

Donald Trump offered significant sums of money for exclusive rights
to a Covid-19 vaccine being developed by a German company, a
claim both the U.S. government and the company vehemently
denied. Europeans were outraged nonetheless, and within days the
EU announced it was investing $90 million in the company. In other
words, expect countries — especially those in populist fervor — to
fight like cats and dogs for access to new vaccines and medicines
arresting the disease. Rather than bring the world together in the
spirit of post-Cold War globalization, the pandemic is unleashing
divisions between the U.S. and China, within the Atlantic alliance,
and within the European Union.

Another critical issue is the degree to which the pandemic spreads

to India and sub-Saharan Africa. Blessed by warm climates that are
friendly to bacteria but perhaps less friendly to specific viruses and
respiratory disorders, these countries may yet have a comparative
advantage. Though, also because of the warmer climate, their
teeming populations are often outdoors and in close proximity amid
a relative lack of sanitary and health facilities, so they may be
particularly at risk. Assuming the disease spreads rapidly, fragile
regimes in Africa rocked by a decline in commodity prices and
further aggravated by a virus-induced global recession could be
widely destabilized. In India, the upshot of a pandemic could be
intensifying religious and ethnic tensions, along with the resultant
conspiracy theories and propensity to violence and electoral
instability.

There is, of course, an alternative future, one that will cheer those
Globalization 1.0 optimists. While nationalists and populists may at
first benefit from the political divisions instigated by the pandemic,
the coronavirus crisis — along with another cataclysmic event of the
natural world, climate change — may in the longer term further
assist the development of a global consciousness. The more that
people the world over experience the same traumas, even as they
are in contact with each other through mass media and digital
communications, the more they become psychologically immersed
in the same community.

But all that is for the longer term. For the next decade, the
coronavirus will be the political, economic and psychological event
that provides a direction for much of the geopolitical upheaval we
are likely to see. Globalization 2.0 will deepen and be with us for
years. Only in the fullness of time will it turn out to be just another
phase that humanity passes through: not the end of history.