Isolationism possible in the battle against global challenges

09:39 AM | April 22, 2020 | Francinia Protti-Alvarez

The world could retreat into increased isolationism as global solutions and organizations struggle in the battle against global challenges and nations face inwards, says Carlos Pascual, senior vice president/global energy and international affairs at IHS Markit, in his speech at WPC 2020 Online. 

“We are likely to see in the near-future a retreat to isolationism. That isolationism will have an impact throughout international institutions,” Pascual says.

This paradigm shifts as depressed economies feed into nationalist sentiment and threaten to take hold of governments around the world, compounded by underlying social tensions across many countries. Meanwhile, unconventional warfare—by state and non-state actors—is likely to increase against a background of anemic international institutions.

“Disruptions in the international system will [likely] lead to a backlash in globalization, and the main reason for that is fears unbound,” Pascual adds. “For governments, there has been fear of the inability to access certain goods. In the United States, there’s the impact on antibiotics supply, 95% of them supplied by China, and on the national inventory of goods such as masks and ventilators,” he says.

The battle between China and the US for international leadership continues. As China moves past its ‘Chernobyl moment’—attempting to hide the pandemic—it is now positioning itself as an international leader, offering gifts and assistance to other countries. China’s influence and economic power is not likely to wane overnight, despite the effects of the pandemic. Its existing trade relationships throughout Asia represent a larger share of global GDP than the shared GDP of the countries that attempted to form the Trans-Pacific Partnership (TPP) trading block—13%, once the TPP talks fell apart.

In the US, Republicans and Democrats efforts converged to pass a $2-trillion stimulus package. This stimulus could be a factor in its battle with China. But much will depend on how the US uses that capability in an international setting, Pascal argues.

In the Middle East, conflicts are likely to intensify. The oil glut and a dearth in demand that has sent prices spiraling down hinders the ability of Middle Eastern countries to balance their budgets. Complex domestic dynamics and regional identities that underpin the social fabric of Middle Eastern societies will resurface, he adds.

Meanwhile, the impact of coronavirus disease 2019 (COVID-19) in the developing world will be devastating. The brutal reality of slums and urban poverty means that countries such as India and a region such as Africa will not be able to implement recommended containment measures, Pascual notes. 

“Larger migration flows—whether from a poverty-stricken Africa or an unstable Middle East—will place tremendous stress on Europe,” Pascual says. “Migration flows and weak economies will create pressures to close borders and test the economic precepts underpinning the Euro.” Relations between EU member states will come under new strain.

The means of warfare is evolving in a weakened international system and amid fluid and volatile geopolitical dynamics. The devastation from COVID-19 will create disincentives for the physical wars of the past due to their cost. However, technology—cyber tech and drones—opens the door for attacks by state and non-state actors. 

Despite the possible retreat into isolationism, globalization and multilateralism that proved beneficial in the aftermath of WWII could still be. The crisis is “global in every dimension except the response,” Pascual says. “We’d need to recognize the inevitability of the interconnectedness of the world.”