The COVID-19 pandemic has caused havoc to the economies of most countries, with a number of them needing to start afresh. It has caused a change in people’s attitudes, perceptions and behaviours. It has caused us to reassess a number of things we used to take for granted. I have written before, as have many others, that the new normal post-COVID-19 will not be like the old normal of pre-COVID-19.
COVID-19 is also very likely to leave an impact on relations between countries, and as a consequence on international economic relations. Before the pandemic struck we were already experiencing tensions among countries that had led to the imposition of trade tariffs. Then towards the end of 2019, it appeared things had calmed down, and so we were all hopeful that economic relations between countries were slowly getting back to normal.
The outbreak of the pandemic led to a souring of relations once again between the United States and China, with the latter being blamed for the pandemic. There was also talk that the virus was developed in a laboratory and then exported to other countries.
Even before the pandemic, the US had already shown that it was not willing any longer to act as the world’s number one economic superpower. It was clearly taking the view that it would put its own interests first, even if it meant quarrelling with friendly nations and less friendly ones.
It is unlikely the EU will want to take sides if there is a new cold war, this time between the US and China
As countries start licking their wounds caused by the pandemic, it is more than likely that the US will not come to everyone’s help as it had done in the past. It may even go back to the idea of imposing trade tariffs to safeguard American businesses. China is likely to act in a similar manner to make sure that it goes back to high growth rates.
But what is becoming increasingly evident that we have come to the end of a US-led global economic system. COVID-19 can be seen as a turning point. I do not believe that another country will take its place for the very simple reason that no other country has the type of economic muscle the US has.
This brings me to the role the European Union may wish to play in international economic relations. Whereas the obvious choice for the EU in the past was to shift the balance in favour of the US, this time round it could be different. There is pressure on the EU to act differently to the way it acted in the past.
In spite of the traditional good relations between the US and the EU, the latter had started to look more sympathetically at China. However, China has not always reciprocated these overtures. Recent events and pronouncements have pushed EU leaders to start thinking differently. As such, in a world where there is no longer a single economic superpower, the EU could be unwilling to allow itself to be instrumentalised and would be expected to assert its position more strongly.
It is unlikely the EU will want to take sides if there is a new cold war, this time between the US and China, to be fought mainly on an economic battlefield. On the other hand it cannot be a bystander. As such, the only option it has is to develop as a third pole, by asserting its own interests and values.
If it were to do this, then the EU’s international economic relations will take on a different dimension and the global economic scenario could take a path to which we are not accustomed.