Our Fragile World: Stresses and Strains Post Covid

The world learned many things during the Covid pandemic, but in geopolitics there were three big and surprising lessons. The first was that the comforting remarks reportedly made between Ronald Reagan and Mikhail Gorbachev at a 1985 Geneva summit, to the effect that if aliens from outer space were to invade the planet America and the Soviet Union would help each other despite all their differences, did not apply in the 2020s in the case of an invading virus. Great power rivalry, now chiefly between America and China but still also Russia, was if anything intensified by this common threat.

The second lesson was that Western countries proved much stronger in the face of that threat than did China, Russia or indeed the budding great power, India. For all their initial mistakes and flip-flops, the West displayed a clear technological lead as well as proving fiscally stronger and surprisingly socially resilient, and as a result enjoyed a faster and more robust economic recovery. An important addendum to this lesson, however, was that for all its strengths, the West had neither sufficient resolve nor capacity to be able to lead a fully global response by helping poorer and weaker countries, and as a result left a legacy of resentment in what has now become known as the Global South.

The third lesson has become clear only as Covid’s longer-term economic and social effects have emerged, and as other shocks including Russia’s invasion of Ukraine and the war between Israel and Hamas have occurred. This is that rather than today’s great power rivalry being a matter of formidable giants tussling for advantage, the contest is in fact one in which all of the superpowers are revealing frailties and inadequacies. None is dominant nor looks likely to become so in the near future, none can be confident about the durability of their political and economic strengths, and none can cope comfortably with what the world is throwing at them.

We have become used, especially since the fall of the Soviet Union in 1991, to seeing the world as consisting of an established Western supremacy being challenged, and perhaps eventually overthrown, by an ever-rising China. What the strategic shocks over the past 15 years, but especially the past five, should wake us up to is that neither of these features holds true any longer. All the superpowers are weak, and it is in that weakness that the greatest dangers may lie.

Western countries proved much stronger in the face of that threat than did China, Russia or indeed India.

In line with our naturally Western-centred worldview, let us start with the United States. Its economy is robust, its capacity for technological innovation undiminished, its military power still unmatched. Yet it is still reeling from the twin shocks of the first decade of this century, namely the atrocities of September 11^th 2001 which led to the ultimately failed, hugely costly and discrediting wars in Afghanistan and Iraq, and then the American-created global financial crash of 2008 which worsened the country’s divides, tarnished its economic and financial reputation, and bred extremist populism. 

Without those shocks, Donald Trump would never have got within a mile of the presidency. But the fact that he did, and then the way he behaved in office, mean that American long-term leadership has been placed into serious doubt even among its allies. Once he and his supporters attempted to subvert the 2020 election result, so too was America’s status as a beacon of democracy and the rule of law. That status was always flawed, but until 6 January 2021, others could believe that America was forever on a mission of self-improvement. 

Now, the durability of America’s democracy is itself in serious doubt, making the recurrent accusations against the West of double standards – most recently over condemning Russia for war crimes in Ukraine but not Israel in Gaza – even more corrosive of its claims to stand for an international rules-based order. With that background, the fact that President Joe Biden has largely restored America’s relationships with its allies and created a more coherent foreign policy — seemingly confirming the late Madeleine Albright’s description of America as ​“the indispensable nation” — may be welcome, but it is inconclusive: everything could change again in a year’s time.

China’s mantra that the West is in decline is contradicted by America’s economic and technological prowess, but seemingly confirmed by the fractures in American politics and society. Meanwhile however the other half of the mantra – that the East is rising – is itself looking distinctly questionable. 

A decade or so ago, when China was widely seen as an unstoppable juggernaut, my former colleagues at The Economist published an interactive chart which invited readers to put in their own guesses about future economic growth rates so as to see by what date they thought China would become the world’s biggest economy and by how far it might then power ahead of the rest. If the chart were to be repeated today, what would the consensus prediction among economists be? Never.

This may or may not prove correct, but it does reflect China’s current economic weakness. Early admiration of the Communist régime’s strict, technologically enhanced use of local lockdowns and closed borders to control the Covid pandemic turned into harsh criticism of policies that were unsustainable and had been backed by third-rate vaccines. The country’s sudden policy U‑turn to end the controls did not then produce the consumer-spending rebound many hoped for as other, more negative factors neutralised it — chiefly the collapse of property and construction that had been accounting for one-third of annual growth — and a sharp rise in unemployment especially among the young and migrant workers.

The costs of the property collapse will mainly have to be borne by the public finances, as that is how debt write-offs and bailouts have to work in a state-run banking system. This, combined with the longer-term factor of a now shrinking total population and a rising average age, means that the room to use public spending and borrowing to support the economy is limited, unlike at the time of the 2008 global financial crisis.

The now-common shorthand description of China as experiencing ​“Japanification” may or may not prove fully apt given the differences between post-bubble Japan in the 1990s and China today, but the mix of a huge debt-overhang with a burdensome demography is certainly resonant of the deflationary, slow-growth decades that the Japanese experienced. What this means in geopolitics is that the idea of China as continuously expanding its global interests and influence needs to be revised.

America’s economic and technological prowess contradicts China’s mantra that the West is in decline.

A stagnant or merely slow-growth China will remain enormously powerful and important. Its economic troubles are, however, already making it less confident, some might say less arrogant, in its international relations, especially as glimmers have appeared of domestic criticism of Xi Jinping’s economic policies, and as China’s president appears to have had to renew his anti-corruption purge by removing senior figures from the People’s Liberation Army as well as his recently appointed ministers of foreign affairs and defence. More fundamentally, perhaps, the flood of Chinese capital overseas that had spread the country’s influence through sovereign loans and the Belt and Road infrastructure initiative is now ebbing.

One of China’s most striking public declarations of its geopolitical intentions was the Joint Statement that Xi Jinping and Vladimir Putin signed in Beijing on 4 February 2022, less than three weeks before the Russian president ordered his armed forces to invade Ukraine. That statement, a 5000-words-long allegation of western malgovernance and hypocrisy, confirmed what was already known – that Russia and China were now strategic partners, even if in a marriage of convenience rather than of deep affinity – but disclosed nothing about how that partnership might in future be put into operation.

From China’s point of view, that was probably a good thing. For what Russia’s failure to conquer, or even subdue, Ukraine has also confirmed is that the highly nationalist and aggressive turn that Putin has taken since his brief war in Georgia in 2008 and his annexation of the Ukrainian province of Crimea in 2014, is a reflection of Russia’s weakness, not its strength.

Its military technology has been shown to be outdated and its organisational and command capabilities to be woeful. What it does have is the world’s largest arsenal of nuclear weapons with which to threaten its opponents, and sufficient saleable commodities, including oil and gas, to keep financing the war. Yet wartime emigration has lost it a significant number of skilled young people, and the basis of its economy and public finances is set to erode as those fossil fuels lose out in the long term to greener energy.

The war that has been under way in Israel and Gaza since the Hamas atrocities of 7 October is tragic, as all Middle Eastern conflicts are, but it also stands to be an illuminating test-case of the consequences of this period of superpower weakness. 

America remains, as always in Israel’s wars, Albright’s indispensable nation, but its only real tool is the hard power of carrier strike groups and weapons deliveries. Its ​“soft” powers of persuasion now look weak, if not non-existent. 

Having re-established itself as a Middle Eastern power during Syria’s long, deadly civil war after 2011, Russia is now largely disregarded in the region, whether as a weapons supplier or an influence of any kind, except by Iran which sees the Russians as military customers. 

Iran itself is certainly a regional power to be reckoned with, thanks to the proxy forces it finances and supplies in Yemen, Lebanon and Gaza, but it is preoccupied by its internal battle between generations and these days lets off a fin-de-régime whiff. Any idea that it could link up with Russia, China and North Korea in a coherent ​“axis of resistance” against the West looks far-fetched.

That idea gained currency when China helped broker the resumption of diplomatic relations between Saudi Arabia and Iran in March 2023, which seemed to presage a growing Chinese role in the region. However the Israel-Hamas war put this notion firmly into perspective. China is important in the Middle East, of course, as a huge market for oil and as an investor, but so far its political weight among the Arab countries is chiefly as a hedge – sometimes a provocative hedge – against potential American perfidy rather than a true alternative. For this to change, China would need to show a willingness to deploy hard power in the region, a prospect which looks remote. Perhaps to keep a safe distance is a sensible choice, but it certainly means that China is not looking eager to displace American influence, even as that influence is put to new tests.

Each conflict, each region has its own characteristics, difficulties and peculiarities, the Middle East above all. Yet what can be said is that all share the basic current reality that far from our recent wave of strategic shocks coming to benefit one or other among the superpowers, what they have shown is that all the great powers are vulnerable to such shocks and none is in a strong enough position to take decisive, lasting advantage. The West remains the strongest, especially as and when it proves able to combine its efforts as over Ukraine, but even if it is indispensable it is far from omnipotent.

Some general conclusions therefore apply about this turbulent geopolitical world we are all trying to navigate:

• Superpower weakness promises to put more onus on other powers, especially regional middle powers, to take responsibility for solving problems. This also means that, despite the shadow cast by great-power competition, there is also more scope for middle powers to act and show their agency, if they can collaborate effectively with others. In many regions, notably but not only the Middle East, there is both room and a need for what might be termed strategic self-determination: the shaping of the security, political and economic environment by regional actors, whether in concert with one of the superpowers or in opposition to them. A long-term future test of this will be whether the members of the Association of South-Eastern Asian Nations (ASEAN), particularly the populous and fast-growing nations of Indonesia and Vietnam, will eventually exert themselves to shape the contested security environment of the South China Sea.
• The flip-side of that opportunity, which might also be seen as a vacuum, is that if leadership by the superpowers continues to be weak or absent, the resulting lack of discipline and direction promises to add to the disorder we are already seeing. With the United Nations Security Council as paralysed as it was during the Cold War thanks to superpower divisions, if no one – notably America – proves willing to step in as a global policeman then opportunities for the security-equivalent of crimes will proliferate. So, indeed, may nuclear weapons.
• In response to their own frailties and inadequacies, the great powers themselves risk evolving in directions which could reinforce this problem: a superpower such as America, which is consumed by fear and paranoia, risks revisiting its disastrous inter-war experiment with isolationism and protectionism; a superpower such as China, conscious that its growth and power has become disappointingly stunted, risks responding by replacing global ambition with an aggressive regionalism, designed (rather as Russia has attempted in Ukraine) to establish a clear and uncontestable sphere of influence around its borders. An inward-looking China is quite predictable if domestic economics and social concerns continue to coincide with a desire for technological self-sufficiency, but a China that seeks to protect its internal security by becoming even more of a regional bully would be one to be feared.
• The pivotal role in how this develops promises to be played by the United States and by whether it retains its alliances and partnerships that we call the West. The fate of its democracy will be central to this, and so too will its acceptance or rejection of the basic truth of the 2020s: that with partners, America can achieve a lot and serve its national interests, even if it cannot achieve everything; but without partners, what it can achieve or serve will diminish dramatically.
• There is an old saying common among political thinkers who see themselves as realists: that the strong do what they can, while the weak suffer what they must. The way the world looks now, a more realistic version would turn this around: the strong can’t do what they’d like to, while if the weak can combine forces they might make the best out of a bad lot.