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Viewed from the other side of the Atlantic, the coronavirus crisis will have significant geopolitical implications in the near term, becoming possibly even more significant over the next few years.
With this in mind, we should expect politics in Europe and the US to be more focused on the current health crisis and its follow-on implications. Political leaders will have little time to devote to issues outside their borders, and the spillover impacts at home will demand fiscal resources and induce domestic socio-economic pressure that will have to be dealt with as a priority. This will reduce attention to global matters for some time and absorb massive resources.
China, in my view, does not come out as a winner in any way from the crisis. There is little doubt that the West is painfully aware of the grave risks of the interaction with Beijing. Both government officials and the general public are smart enough not to give credence to the CCP’s word. Both sides of the Atlantic are aware of where the contagion originated, and equally aware of how China’s leaders distorted the scale of the contagion. Both realise that China's orchestrated disinformation cost US and UK lives. Far fewer people today believe that China can be trusted. It may represent itself as taking on a global humanitarian role, but it cannot erase the devastating costs that its repressive system allowed to occur. So, I see China as weakened geopolitically in the near term.
Why Will the Coronavirus Crisis Have Geopolitical Implications?
First, the scale of the impact has to be appreciated, again from a Washington viewpoint. The scale in terms of the human, fiscal, economic and job impact is shocking. While previous pandemics in the 1950s and 1960s caused more global deaths, the speed and economic impact of this crisis is unprecedented. In human factors, the US has lost over 35,000 lives and that total cost could double. The current total is the equivalent to more than 10 catastrophic attacks like 9/11, in a little over a month. The losses are now already five times the equivalent of all the US military fatalities in Iraq and Afghanistan, conflicts which spread over 15 years of combat. In terms of fiscal impact, the economic stimulus package approved by Congress to mitigate the economic destruction the pandemic has caused represents another $2 trillion increase in debt. But the economic shutdown will deprive the US Treasury of tax revenues from businesses and individuals. Thus, this year’s budget deficit of $1 trillion is likely to be $4 trillion, and possibly half that for the next year of recovery. This will bring US debt levels (already 107% of the economy before the crisis) to over 120% of GDP, which will restrain recovery and future spending. These kinds of shocks and burdens will alter ongoing political dynamics and induce changes in the US.
The 2008 fiscal crisis is a useful measure of the impact this event will have on what Americans view as vital to their interests. The human costs of a devastated economy are severe, but probably temporary. The US economy contracted 8% in one quarter during the great recession of 2008, and the best estimates from the US government is a 7% contraction this quarter, and 14% in the second quarter, possibly twice as bad as the worst three months of our last crisis. It is no longer a question of whether the US economy will enter a recession, it’s just how steep is the dive going to be, and for how long. Again, the human impact will exceed the great recession of 2008. Already some 22 million Americans have been laid off in just over one month, and more will lose their jobs soon. Again, this is probably going to be reversed in six months, but the shock effect will be felt in political terms over a longer period. The sheer scale of these factors will colour how Americans view their government, what they expect from Washington, and how US leaders look at any international role.
How has the US Responded, Compared to China?
The current US government reaction to the crisis reflects its view of the role of limited federal government in both international and domestic roles. It does not perceive itself as leading an international response to a tragic transnational crisis. Freezing funding to the WHO is an example of its view of multilateral solutions. It is not throwing its support aggressively behind a substantial international response to support those in the greatest need, such as Italy, leaving a leadership void that China and Russia have tried to fill. That said, the US is sustaining ongoing diplomatic and military missions in the Middle East, South Asia and around the globe.
The real irony of the crisis is that the Chinese government, whose authoritarian regime bungled the identification and containment of the virus, is having a better narrative put out. Its foreign ministry and social media organs have hideously deflected blame to visiting US forces, while also highlighting the medical support provided to Italy and other European countries. While Washington has again found its feet and is effectively taking a more proactive approach at saving lives and reducing the economic fallout at home, it has not yet taken its traditional role and mobilised resources internationally. It has distributed some funding and medical supplies, including a controversial distribution to China in February 2020, but it has not been effective in public diplomacy. China, ironically, would like to present itself as the responsible stakeholder that the foreign policy community has long sought. I don’t know how to say Chutzpah in Chinese, but it’s appropriate.
How Might This Impact the US?
Regardless of who wins the presidential election in November, and how fast the economic picture expands back, America is likely to look inward and continue to retract in its geopolitical influence. Economic slowdowns at home will weaken public support for a robust international role abroad. The progressive wing of the Democratic Party will gain impact and pull the party centre left, as the conservative nationalists of the GOP will also demand more restraint. The latter’s resistance to international leadership and global forums will grow.
Furthermore, the new levels of national debt being accumulated take us into unprecedented terrain. This will force a harder lens on priorities which will lean first and foremost towards improved income and health security, and better resilience and infrastructure. There will be a recognition of an international dimension, but the priority on fiscal stability, human security and higher debt levels will negatively impact the resources applied to international efforts. Instead, the parties will see the need to be restrained in foreign policy. Public health infrastructure and recovering from the economic devastation will be paramount, no matter who sits in the White House come January 2021.
The defence budget might be impacted differently under a number of scenarios. I can envision three potential alternatives that come from the pending recession that will impact the geopolitical landscape. The first scenario is no change, and scenario two cuts the size of the Pentagon’s budget by about 8% (the amount assigned to Overseas Contingency Operations), bringing the Department of Defense down from $748 billion to about $693 billion. This would be the new ceiling. The third, and worst, scenario would bring the base budget back to ‘austere’ sequestration levels planned before the Trump administration came to office. That would be roughly $610 billion, a level that could require force reductions, reduce US basing and exercises overseas, and cuts in modernisation plans. This ‘panquestration’ scenario would mandate changes from the current National Defense Strategy. I doubt that any change will be implemented immediately, unless the economic recovery faces strong headwinds. But the second scenario is more likely. With public support waning and funding for economic recovery and public health reforms rising, US strategic planners will struggle to coherently align commitments to available funding.
This assessment suggests that Henry Kissinger is incorrect, this crisis does not compel a dramatic change in world order. It accelerates some ongoing key trends regarding globalisation and nationalism, particularly among the major players. Overall, the coronavirus is likely to sharply accelerate a contraction of US global engagement and reach. It should also highlight the limitations of China’s governance model and decrease its influence. Any forecasting of the resulting fallout, even with the significant human casualties, has to be speculative at this point. But anyone who thinks this does not alter geopolitics, US security strategy, and the defence budget in particular, is not being realistic.
Frank G Hoffman is a Senior Associate Fellow with RUSI and works for the National Defense University in Washington DC. He earned his PhD in War Studies at Kings College, London. These are his own views and not those of the US government.
The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.
Dr Frank Hoffman
Senior Associate Fellow