Piotr Palusiak 31.12.2020
COVID-19 Geopolitics and Its Impact on
Contemporary Eurasia Development
According to World Health Organization, COVID-19 is
an infectious disease, caused by newly discovered coronavirus[1].
In the moment when this essay is being written, about 1,5 million people died
from this virus, and almost 67 million were infected, which caused huge
and hard to predict consequences
throughout the world.
Because
of rapid increase of coronavirus cases, many countries started to make
decisions which resulted in smaller amount of peoples contacts, which in many
countries, ended in lockdown of all economies. The economic collapse of many
countries (which had problems since 2008 financial crisis) is a fact and will
have results for many years. Limiting scale of production or closing businesses
causes smaller GDP, rising unemployment and very big national debts. It changes
geopolitical situation of many countries (especially in Europe) and will force
them to change their strategic plans and abilities to affect other players.
It is
still too early to say, how it will end, but for some players it means changing
the place and revision of power. The world’s architecture is changing and
coronavirus is probably a factor which will accelerate this phenomenon. Before
COVID-19 we had a hegemon (USA) and pretender (China). Post-covid world will be
more Asia oriented and situation in which countries from this region suffer
less from disease and economic downturn may be a gamechanger for whole region,
especially China. But this scenario is not 100% sure, because it depends on
decisions which will be made by most important decision makers.
Before
coronavirus, we have seen for many years the same trend throughout the world -
globalization. China strongly benefited from it, because cheap labor, high
production capacity and wide range of products/services were a great solution
for Western companies to reduce costs and make profits rising consistently[2].
Everything was working fine, until decision makers in USA realized, that China
has grown too fast and their companies (like Huawei) were competing on a global
scale. Donald Trump’s administration not only realized what is a real
geopolitical problem for USA, but also made few decisions, which may lead to
extension of their leading role in the world. One of them had a place in 2018
and started a trade war by imposing tariffs and trade barriers on China. US
president’s administration realized that China, their biggest competitor, is
benefiting from globalization and this trend should be ended and ultimately
inverted. To do it, Trump reduced taxation for companies, which should
encourage them to move back production to USA.
From
geopolitical point of view, the situation (trade war between USA and China) is
crucial for pretender. China is probably the second biggest economy in the
world and has a leading role in the region. The trend based on moving
production to countries with lower costs for many years helped to build wealth
and it’s not easy to change. Unfortunately for them, Covid-19 helped to
realize, that depending on one country (or even group of countries) is not
reasonable solution. Throughout coronavirus pandemia, countries understood that
they cannot depend on pharmaceuticals production or other essential products
and will try to move it back to their homeland.
If this
trend will continue to develop, USA and European countries will push forward to
support law, which will help to do it and on the other side, Asian countries
will suffer from drainage of investments. Consequence of coronavirus for Eurasian
countries will be different, and will depend on area. European companies will
have to face dilemma – moving back production from China and suffering from
higher costs or be in contradiction to governments, which are aware of
importance of higher independence in this area. Asian part of Eurasia, with
also cheaper costs, will probably suffer on some level (but less than China,
because they are not so strong economies) from the same problem, but in the
end, it shouldn’t be drastic for them.
Necessity
of supply chains reconfiguration is one the most important issues in the
Eurasia. Decrease of trade exchange, affecting all the continents, may reshape
the way how the production will place in different areas in the world. It is
clearly to see at the moment, that many hubs and ports suffer from lower volume
of transported goods, so many important places on maps way be less important in
the global trade.
Tab. 1. Liner shipping connectivity of major Asian
container ports
Source: https://unctad.org/system/files/official-document/dtltlbinf2020d1_en.pdf
Tables 1
and 2 shows the situation between Q1 and Q2 this year, comparing to 2019. Maritime
transport is known as the cheapest way of delivering goods.
Tab. 2. Linear shipping connectivity of major
container ports in Europe
Source:
https://unctad.org/system/files/official-document/dtltlbinf2020d1_en.pdf
After
analysis of these two graphics, we can see that even first phase of coronavirus
caused in slowdown in major ports in Eurasia. Latter data would show much bigger
slide. It’s not only an issue for well-known ports in Europe but a big problem
for much younger and rapidly developing ports in Asia. Port town are often hubs
for intermodal transport. Lack of trade volume may cause a negative effect on
their role and importance.
We can
suppose that economic (and trade) problems are temporary, but COVID-19
affection on maritime cities and their answer for supply abilities. For
Eurasian countries which are basing on
maritime power as a source of dominance (A. Mahan point of view), current
situation is very inconvenient, because also ships building (warships too) may
be reduced if whole sector will not be subsidized.[3]
Table. 3. TOP 10 World container ports
Source: https://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports
To show influence of Eurasian ports, we can just imagine that in 2018, seven out of ten biggest container ports were placed in China.
COVID-19
is a major gamechanger for Eurasian countries, which are basing on raw
materials (oil, gas etc.) export. Global energy market is having an inevitable
swift into green energy, which has growing influence on oil or gas producers.
It is not only connected with net zero-emission plans ( for example 2050 for EU
or 2060 for China), but also with lower demand for fuels, which is caused by
(post-covid) smaller economic activity. 2020 was a year, in which economic
decline was so strong, that pushed oil price below 0 (-37$)[4].
After information, that remaining storage
capacity for oil in USA is running out, in April, traders were paying money to
get people to accept oil in May. It happened despite OPEC’s countries agreed to
cut production before that situation It showed how vulnerable market can be and
how big shift may occur if country is basing too strong on one product.
Seven
out of ten biggest oil producers are based in Eurasia. Coronavirus emphasized fragile
dependability on economy based on oil. OPEC countries’ revenue is down for
about 50%, comparing to 2019. COVID might be an accelerator, which will
ultimately change the role of the Middle East Eurasian countries. Ease of
blocking oil transport was also a virtue for countries with developed navy,
controlling the bottlenecks.
Slide of
price will not last forever and petrol will still be very important energy
source and essential fuel for a decade, but megatrend on energy market, moving
most of companies into green energy may be dramatic for societies in countries,
which will not be prepared for changes. From geopolitical point of view, for
the region and their countries like Saudi Arabia or Iraq, current pandemic
situation, diminished importance in global contest.
Nowadays,
controlling critic straits may give now less importance in case of blockage oil
transport. In recent decades, it was a normal situation, where in case of
possibility of military intervention in the Middle East, oil price started to
soar up in response to drop of supply. If the economic slowdown lasts longer,
it will remain oil prices relatively low. Even among OPEC members there was a
problem this year to response in a collective way.
Too big
surplus of supply, will have a significant influence on all countries exporting
oil and it will be easier for many countries strongly depending their economy
on bought oil, to be a little bit more independent. In short term, there will
be (with some deviations) a status quo, because it’s impossible to replace just
like that, raw materials like oil. But on the other side, PV, gas and green
energy will give a wide range of possibilities for importers. These players,
who will not change the previous model of national economies will suffer from
their diminishing importance.
Tab. 4. Ten biggest
oil producers in the world in 2020 (barrels per day)
Source: https://www.ig.com/en/trading-strategies/world-s-biggest-oil-producers-200722
In many
cases, low price of oil will have consequences in bankruptcy of companies in
those countries where breakeven point of production is relatively high, because
of different technologies and conditions. In this situation there is also
important to mention about Russia. The biggest country in the world is always
suffering of economic slowdowns because of dependance on raw materials export.
COVID-19 left a mark on this important Eurasian player. Russian backward
economy is not able to be vigorously rebuilt into digital and effective green
mechanism of XXI century. Decreasing fiscal revenue may force their political
elite to change their economic diplomacy into more warfare.
Russian cooperation with Germany,
basing on gas export, may be harder to perform, because of sanctions imposed by
USA on Nord Stream 2. The scenario of cancelling this investment, can stop
Germany from being as big hub of gas exporter as they would like to be. On the
other side, Russian problems can push them into Chinese hands, despite
cooperation with Berlin. Gas export is a geopolitical idea from Russia to make
EU/European countries being addicted and easier to be affected by their policy.
United States’
gas, supported by gas from Middle East is a reason, why Russian geopolitical
position is weakening now. Countries like Poland, building own pipeline (Baltic
pipe), or Ukraine and Baltic countries are becoming more independent, because
of diversity of sources nowadays. Cooperation with Germany will not be ceased,
but may have less influence, especially in context of strong cooperation of USA
in Poland. It means that limitrophe states on west of Russian Federation will
be harder to manipulate and overcome, so there will be strong fight for
dominance in central and east Europe.
COVID-19
will have also very interesting influence on all countries, in the way they
affect each other. We can suppose that important players on geopolitical map
(USA, China, Russia etc.) have their stories to sell. All of them have
political systems which try to show as the best for all societies. Liberal
democracy and freedom was an idea that has been selling for years by United
States to all countries, which were in their area of interest. Coronavirus made
a one big thing – most affected countries by it, have to implement
unprecedented interventions, which are in contradiction to what they are
spreading throughout the world. Liberal democracy is a reference point for
those countries, which would like to develop their economies and societies in
the XXI century, but current situation is more in favor of countries, which are
more autocratic. It will be easier to undermine the idea of complete freedom
and countries like China and Russia will have an additional attribute to show
that not libertarianism, but strong government and controlled economy is what
they need[5].
COVID-19
case can be also used by USA as a reason for putting pressure on China when it
will be reasonable for them. Donald Trump and his administration suggested that
the virus was established in laboratory in Wuhan[6]. It
may be a convenient argument if there will be need to decrease Chinese
international position.
It is an
interesting issue, how the pandemic repercussions will influence the China’s
“one belt one road” initiative, which was announced by Xi Jinping in 2013[7].
Economic depression and finance problems didn’t hit China as strong as other
countries, so the idea of development of their trade routes will surely be
continued. From geopolitical point of view, Chinese decision makers are aware
that American fleet have possibility to block crucial strait[8]s.
Silk road is an instrument to make Chinese trade more independent and their
position more respected – also for their currency – renminbi. In consequence it
should put China into new level of dominance in Eurasia region, because of
their influence abilities on the Hartland
and Rimland area, according
to Mackinder and Spykman theories[9].
One belt, one road map
Source: https://www.researchgate.net/figure/The-map-of-One-Belt-and-One-Road-initiative-Source-McKinsey-Company_fig1_323247730
The Silk
Road 2.0 can be, in post-pandemic world, more important than it might be in
2013, when was announced. China, as a pretender to be the world’s hegemon, will
be under pressure, because United States foots the bill of the pandemia and
might be more eager to block Chinese ambitions, comparing to normal situation.
American economy problems will not end very fast, and (theoretically) much more
effective control over COVID-19 in China makes the gap between both countries
smaller. Despite of development of Chinese navy, the main player still controls
global sea area.
There is
question what will happen if coronavirus will affect Eurasian economies so
strong (in the negative way), that it will be essential to postpone
investments. If countries will have to take on their responsibility some costs,
it will be impossible for some of them to increase indebtedness and the whole
project will have to wait. It will give Americans some time to put the balance
point on Asia and Pacific Ocean.
USA
opinion about silk road 2.0 is obvious. Chinese way to build dominance on land
and rise influence on seas, is a huge concern. This project will be build and
developed for many years, but it shows the way they want to go, and for
Americans it’s a threat – especially in situation where Chinese sea power is
stronger every year (as an element of basis of power) and aircraft carriers are
being built[10].
In that point it’s very interesting what rest of the countries will do.
European
Union consists of 27 countries, but at the moment, it’s not easy for find for
them east fields for cooperation. It’s a big game of national interests and
each player tries to have it’s part of the pie. It can be easily seen in the
2050 climate neutrality strategy, where countries with big portion of coal in
their energy mix will have to sacrifice significantly more (than much wealthier
countries) without appropriate support. EU has its own hegemon and it’s the
German nation. Size of their economy causes their willingness to rule the whole
organization. It’s very significant that EU (German) strategy is unpredictable,
because one on hand, Germany cooperates with Russia on Nord Stream 1 and 2, and
on the other hand they accept sanctions on Russia for Crimea appropriation or
Navalny’s murder attempt. Germany wants to be a hub for Russian gas, to sell it
to other European countries, but problems with Nord Stream 2 and American
Sanctions may change their point of view.
This is
a good example of realpolitik,
which shows that there
will be different options for China to choose some partners in UE, because
organization as a whole, will not be able to accept Chinese regime and will try
to sustain good transatlantic cooperation (basing also on NATO)[11]. It
may be a crucial decision for all sides what to do to prompt Russian Federation
to cooperate. They are weaken after COVID-19 and their economy is suffering
from dependability on raw materials, but their location and military strength
must be taken into account.
It’s not
easy to predict what will happen in the future, but for sure we can see that
COVID-19 is a phenomena which accelerated some trends in the world. It changed
our world irreversibly – how we live an how we work. Because Eurasia is a
continent which consists of many different regions, it will affect them
differently. The most obvious consequence of coronavirus is economic slowdown.
European countries are strongly suffering from high number of deaths (and in
consequence overloaded and ineffective health service) and lockdowns, which put
societies into road to poverty and economies into crisis. Europe’s stimulus
pack for EU (Next
generation EU) economy gives a
hope that Europe will be able to ultimately overcome economic consequences, but
at the moment their position on world map is weakening. Coronavirus is (next to
aging society and rising indebtedness) another issue hard to defeat, which
shows that divided and quarreling EU is losing its position.
Asian
countries, have much better figures, which shows that their societies are more
responsible and obedient. It allows them to have faster restoration of the
economy and better outlook for future. In this environment, there is a Chinese
powerful player, demonstrates that is ready to take the reins of world
leadership. As it was shown, their economy also suffered, but despite this, coronavirus
probably only delayed their ambitious advancement. This is why USA will pay
more attention to eastern parts of Eurasia, at the expense of Europe. Whole
Eurasian continent, in the context of weakening of the American economic hegemon,
may be a place of dominance, more than in past years[12].
Eurasia
after COVID-19 will probably rise in uneven way, but as a whole, the continent in
the nearest future will play more important role in our world. Crucial moments
ale also opportunities for some players, and the most important country – China
may play a leading role among Eurasian countries in a way for a dominance.
Sources:
1.
Literature:
a.
Burchill S., Linklater A.,
Devetak R., Donnelly J., Paterson M., Reus-Smit C. and True J., „Theories of
international relations”, Palgrave Macmillan 2005
b.
Flint C., „Introduction
to Geopolitics”, Routledge 2006
c.
Hudzikowski M., „Wybrane
metody badań polityki globalnej”, Częstochowa 2014, Polskie Wydawnictwo
Geopolityczne
d.
Potulski J.,
”Wprowadzenie do geopolityki”, Wydawnictwo Uniwersytetu Gdańskiego, Gdańsk 2010
e.
Sykulski L., „Geopolityka
skrypt dla początkujących, ”Wydawnictwo naukowe Grategia, Częstochowa 2014
2.
Websites:
a.
https://www.who.int/health-topics/coronavirus#tab=tab_1
b.
https://www.rsm.global/insights/deglobalisation/changing-nation-effects-globalisation-china
c.
https://unctad.org/system/files/official-document/dtltlbinf2020d1_en.pdf
d.
https://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports
f.
https://www.ig.com/en/trading-strategies/world-s-biggest-oil-producers-200722
g.
https://www.tandfonline.com/doi/full/10.1080/15387216.2020.1840414
i.
https://blogs.worldbank.org/eastasiapacific/china-one-belt-one-road-initiative-what-we-know-thus-far
[1] https://www.who.int/health-topics/coronavirus#tab=tab_1
[2] https://www.rsm.global/insights/deglobalisation/changing-nation-effects-globalisation-china
[3] Leszek Sykulski, „Geopolityka skrypt dla początkujących, ”Wydawnictwo
naukowe Grategia, Częstochowa 2014, p.66
[4] https://energetyka24.com/zapasc-na-rynkach-wojna-cenowa-miliardowe-straty-czyli-rok-naftowej-apokalipsy-komentarz
[5] https://www.tandfonline.com/doi/full/10.1080/15387216.2020.1840414
[6] https://edition.cnn.com/2020/04/30/politics/trump-intelligence-community-china-coronavirus-origins/index.html
[7] https://blogs.worldbank.org/eastasiapacific/china-one-belt-one-road-initiative-what-we-know-thus-far
[8]https://depot.ceon.pl/bitstream/handle/123456789/14852/Nowy_Jedwabny_Szlak_jako_proba_stworzenia_mocarstwa_ladowego_w_mysl_klasycznych_teorii_geopolitycznych.pdf?sequence=1&isAllowed=y
[9] Colin Flint, „Introduction to Geopolitics”, Routledge 2006 , p.17, 22
[10] Mateusz Hudzikowski, „Wybrane metody badań polityki globalnej”,
Częstochowa 2014,Polskie Wydawnictwo Geopolityczne, p.40
[11] S. Burchill, A. Linklater, R. Devetak, J. Donnelly, M. Paterson, C.
Reus-Smit and Jacqui True, „Theories of international relations”, Palgrave
Macmillan 2005, p. 29
[12] J. Potulski, ”Wprowadzenie do geopolityki”, Wydawnictwo Uniwersytetu
Gdańskiego, Gdańsk 2010, p.59
Comments
Post a Comment