Is the fallout from COVID-19 helping to nudge us towards a new world political order?
Authored by Juan Santiago and Gary Smith
The response to the COVID-19 pandemic has been consistent around the world - most nations have decided to focus first on themselves. This is especially true of the Western nations, and this in turn has left doors open for China to fill gaps, and build influence. China has sent resources in the form of surgical masks, ventilators, testing kits, and medical personnel to hard-hit countries such as Italy, Serbia, Pakistan, and Israel. The delivery of these goods was usually surrounded by fanfare at the airports with dignitaries receiving Chinese experts in hazmat suits. Despite the fact that many deliveries were purchases rather than gifts, and not all of the equipment was of the highest standard, China has been able to present itself as providing serious alternative leadership as the US adopts a lower profile on the world stage. In every previous crisis since WW2 the US has assumed the role of global response coordinator. This pattern was followed after the 2008 Global Financial Crisis, and even the Ebola outbreak in 2014. However, even though the US is the rotating chair of the G7 this year, it fell to French President Emmanuel Macron to suggest and organize a virtual summit on the Covid-19 pandemic. At this summit, the G7 agreed to a short term suspension of debt repayments for 77 of the world’s poorest countries, but only to the end of 2020. Notably, this agreement was contingent upon the support of the G20, which was a means of ensuring the support of Saudi Arabia, and in particular, China. While China has agreed to the G20 debt moratorium, it is also known to meticulously account for all the aid it gives out. Back in May, Chinese President Xi Jinping promised USD 2 billion in COVID-19 aid over the next two years. Given that this amount includes the USD 50 million it pledged to the WHO and how closely China computes its compliance with financial aid pledges under the Forum on China-Africa Cooperation, it is likely that the USD 2 billion also includes the G20’s debt service suspension. Through its Belt and Road Initiative, China had already become one of the largest lenders to developing countries. Despite concerns over debt-trap diplomacy, many countries turned to China for funds out of desperation, preferring “red flags” over “red tape”. The economic strain on these countries as a result of the COVID-19 collapse in economic activity may push some into default in the coming months and years. Defaulting on loans to Chinese lenders can have serious consequences. Memories are fresh of what happened to the Sri Lankan port of Hambantota in 2017. Financed with Chinese loans, the port fell under Chinese control on a 99-year lease when Sri Lanka defaulted on the debt. Next on the block may be Mombasa, Kenya’s main port. It was allegedly offered as collateral for loans of over USD 5 billion taken to construct the Mombasa-Nairobi Standard Gauge Railway in 2014, a project that has been operating at a loss. Another country that may be worried is Tonga, which owes China’s Exim Bank roughly 25% of the nation’s GDP. Notably, these loans have already been deferred twice. Although China would like to present itself as a benign power, the current crisis may present tempting opportunities to extend influence and control that can not be ignored. China’s use of both soft and hard power in the absence of western influence may result in lasting changes to the geopolitical landscape. In this time of crisis some developing nations will simply not be able to brush aside partnerships with China, when there is no western alternative offer. The west should wake up to the fact that the new normal after the pandemic will be more than just washing hands and working from home.
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