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The pandemic caused by coronavirus disease 2019 (COVID-19) is a massive systemic shock entailing both a public health catastrophe and a profound economic crisis. This blog briefly examines the dual crisis especially as it affects countries of the Global South. The dual crisis lays bare cleavages and structural weaknesses both in individual countries and in the highly interconnected global system. It poses a critical challenge to governments and multilateral institutions to formulate and implement an effective and coherent response. It amplifies pre-existing dynamics of inequality and fragility both within states and in the international system. Although today the United Nations tripled the global humanitarian need appeal to $6.7 billion, without bold international action, more deaths, economic turmoil or collapse, and follow-on emergencies caused by food shortages and widespread public unrest and instability will likely result.
Shocks to public health and the economy
As of 2 May, COVID-19 has infected and killed nearly 220 000 people worldwide. Although countries in East Asia and Europe have succeeded in slowing the rate of contagion, in countries in the Global South where it arrived later the impact is only now becoming visible.
In order to slow the spread of COVID-19 infections, many states halted virtually all non-essential activities, closed borders and imposed varying degrees of testing, contact tracing, quarantine and social distancing. The lockdown of societies has resulted in a dramatic shrinking of retail sales, industrial production and employment. The International Monetary Fund (IMF) predicts a 3 per cent global contraction for 2020, marking the worst recession since the Great Depression of the 1930s.
Advanced economies have attempted to mitigate some of the social and economic effects of the extended lockdowns by measures that include the delaying of tax deadlines, supplementing payrolls, subsidizing workers’ wages, covering lost paycheques, and providing additional unemployment insurance. These measures will be financed by borrowing from their central banks to create fiscal space. However, less developed countries possess far fewer means to manage the impact and face not only an economic crisis, but what the UN Development Programme (UNDP) terms a ‘systemic human development crisis.’
Impact in the Global South—new and old challenges
As COVID-19 spread from East Asia to Europe and North America, global trade came to an abrupt standstill. Developing countries’ major sources of income were immediately affected as tourism collapsed, commodity prices fell, and remittances dried up. Nearly $100 billion of foreign investment fled from emerging markets and the developing world, triggering large currency depreciations. Collapsing commodities prices has had particularly devastating effects for budgets of oil, metal and mineral product exporting states in Africa and Latin America. Low-income developing states and especially middle-income emerging markets have accrued high levels of debt since the 2008 global financial crisis, which now leaves them with few means to gain fiscal space to implement measures to contain and mitigate the social and economic impact of COVID-19.
Health systems are often severely underfunded and under-equipped in the least developed countries, which have on average 7 hospital beds, 2.5 physicians and 6 nurses per 10 000 people, compared to most developed countries’ average of 55 beds, 30 physicians and 81 nurses per 10 000 people. According to the UN, 56 per cent of sub-Saharan Africa’s urban population lives in overcrowded slums, and only 34 per cent of households have access to handwashing facilities; many are hard-pressed to observe the most basic contagion mitigation or suppression measures through lack of clean water and sanitation facilities, inadequate medical facilities, and lack of means to stockpile food or practice self-isolation. The UN estimates that between 300 000 and 3.3 million Africans could die as a result of COVID-19, depending on which intervention measures are taken. As COVID-19 disrupts efforts to combat other infectious diseases, further illness and deaths in Africa will result, with malaria deaths alone expected to double to 769 000.
The socio-economic impacts of the crisis will be similarly harsh. World Bank experts estimate that the crisis caused by COVID-19 will push 49 million people into extreme poverty this year—including 23 million in sub-Saharan Africa and 16 million in South Asia. The International Labour Organization (ILO) predicts that 1.6 billion workers in the informal economy—mostly in developing countries—will suffer ‘massive damage’ in their capacity to earn a living. The pandemic will compound pre-existing food insecurity resulting from climate change—droughts, flooding and extreme weather—as well as the worst locust infestations to afflict East Africa and South Asia in 25 years. A severe food security crisis is likely to result from reduced agricultural production, disrupted global supply chains and reduced food imports. According to the UN World Food Program, the economic impact of the coronavirus is expected to almost double the number of people experiencing acute hunger to 265 million people by the end of 2020.
Conflict-affected countries are particularly vulnerable, as COVID-19 poses grave risks for traumatised populations in environments where state authority is often distrusted, contested or absent, and where there is weakened state capacity to provide essential public services including healthcare. Crowded refugee and internally displaced people camps will be hotspots of COVID-19 as displaced people are often already weakened by hunger and are especially susceptible to the disease because of their limited access to water, sanitation, hygiene and medical facilities. The pandemic may further exacerbate political violence as political actors as well as militias, rebel groups and other non-state actors seek to use the public health and economic crises to gain more followers or strengthen control over groups or regions.
Is a coordinated international response possible?
Geopolitical tensions that have placed multilateral governance bodies under strain have impeded a coherent global response to the pandemic. Leadership by the UN Security Council is absent, as are coordinated actions by major powers towards the most vulnerable low-income countries. China–United States tensions and rivalry to control the narrative on the origin of the virus responsible for COVID-19 has undermined even the appearance of solidarity by the UN Security Council and the Group of Seven (G7) countries. A UN Security Council closed meeting convened on 9 April, three months after the pandemic was identified, resulted only in a brief statement. In contrast, the UN Security Council meeting in 2014 regarding the Ebola outbreak in West Africa formally recognized the outbreak as a threat to international peace and security, triggering the full force of international law to back UN efforts to counter it.
UN Secretary-General António Guterres appealed on 23 March for a global ceasefire which has met with partial success; however, in Libya, and the Sahel and Lake Chad regions, there has been an upsurge in armed conflict during the pandemic, driving further displacement and impeding efforts to build community resilience to the pandemic. The quest for a UN Security Council resolution on the global ceasefire is blocked by the opposition of the USA and Russia, who seek to maintain counterterrorism operations. The USA has refused to lift sanctions on Iran and Venezuela, and has used its clout to block their requests to the IMF for emergency loans. A $2 billion humanitarian appeal—now tripled to $6.7 billion—for those most at risk of the pandemic in countries affected by conflict, disaster and climate remains largely unfunded by early May.
The World Bank has made up to $160 billion in emergency grants and loans available, especially to low-income countries, over the coming 15 months to assist in COVID-19 response and recovery. On 15 April the Group of Twenty (G20) announced a moratorium on bilateral government loan repayments for 76 low-income countries. Nevertheless, these measures do not go far enough to address the scale of the emergency in developing countries and merely postpone payments for countries that will fall further into debt. Far more concerted action to provide greater funding assistance and broader debt relief will be necessary to avert humanitarian tragedy and economic disaster.
Efforts to coordinate far-reaching solutions have so far failed. A call for a debt moratorium, comprehensive aid for developing countries and expanded Special Drawing Rights (SDRs) was made in an appeal by 18 European and African political leaders. This included German Chancellor Angela Merkel, French President Emmanuel Macron and was echoed in an initiative led by former British Prime Minister Gordon Brown that was endorsed by over 100 former presidents and prime ministers. The proposed expansion of the IMF SDRs was rejected by the USA, a decision that sought, according to some analysts, to avoid opening new sources of funding for Iran, China and Venezuela and arousing the ire of Republican hawks.
Some observers have suggested the pandemic is a portal, a gateway between one world and the next, confronting us with the choice of either recovering on a business-as-usual path or rebuilding by breaking with the past and Build Back Better.
The disproportionate impact of the COVID-19 virus on the disadvantaged has led to a growing recognition that more resilient societies are less unequal. Similarly, in a highly interconnected and globalized world, helping the poorest and most vulnerable to combat COVID-19 and its effects on human health and economy is not only a matter of humanitarian need, but in the direct self-interest of the more advantaged.
As documented by SIPRI, world military expenditure has consistently grown over 20 years, reaching $1917 billion in 2019. Yet as also demonstrated over the past four months, the instruments of ‘hard’ security—armed forces and major weapons systems—have proven largely irrelevant in the face of the global public health emergency posed by COVID-19.
Resilience to withstand future shocks will require refocusing global efforts on those issues that have been recently displaced in international attention by COVID-19 and its dual crises—environmental degradation and climate change, poverty and inequalities, and fragility and armed conflict. Visionary thinking and coordinated action are needed more than ever.
The 2020 Virtual Stockholm Forum on Peace and Development: Sustaining Peace in the Time of COVID-19, takes place on 11–22 May 2020.
Click here to subscribe to SIPRI’s YouTube channel to watch the event.
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