The novel coronavirus does not respect borders, but they loom large for heads of state and CEOs responding to the global health crisis. Geopolitics as much as public health will determine how the pandemic proceeds and its lasting effects on people and business. Ian Bremmer, president and founder of political risk consultancy Eurasia Group, says the crisis is exposing the world’s divisions, and could force the US and China into a more hostile and economically independent relationship. Bremmer recently met with a group of WIRED reporters and editors. An edited transcript follows.
Coronavirus is the largest global crisis since the 2008 financial crisis. How are the world’s largest powers handling it?
I think this is a turning point. The political response to 2008 was really strong inside the US, between Bush and Obama and the bailouts of Wall Street and Detroit, but also at the G7 and G20. We’re not doing any of that right now. Instead it’s massive mutual recrimination. There was an emergency G7 meeting but no communiqué or coordination.
We are in what I would call a geopolitical recession. Political institutions inside advanced industrial democracies are becoming more delegitimized, and so we see the rise of populism and polarization and nationalism in their politics. Internationally, you have the Americans and Europeans further apart on national security, the Russians in decline and blaming and trying to undermine the United States, and the Chinese building competitors to our institutions.
WIRED once said technology was going to make the world a richer and better place.
Everyone in the foreign policy establishment believed that if China got wealthier they would align with us and be a responsible stakeholder. That was completely wrong. The second thing we got wrong was this belief that technology was empowering liberal democracies and would completely undermine authoritarian regimes.
There’s an idea that the surveillance state is somehow going to give you better data and response to big shocks like coronavirus. Maybe in Singapore, which is a wealthy democracy that people trust. But in China the surveillance state got you the opposite. Mistrust prevented accurate information from being shared and encouraged patriotic posting on social media.
President Trump’s trade war with China has pressured US companies like Apple that rely on Chinese parts and manufacturing. Now China has shut down factories and cities to contain the virus. How will they respond?
Three months ago, my view was that we weren’t going to see significant movement of supply chains or labor out of China, but I have changed that view. The incredibly poor handling of coronavirus in China in the early weeks, and the vulnerabilities it exposed in just-in-time supply chains, are going to get a lot of companies to say, “I just don’t want to have that level of exposure to China and I’m going to move closer to where the customers are.” That means the US and Mexico.
That would be very costly. Won’t companies just make temporary changes and then return to China later?
One of the most interesting things in US politics is that everyone is beating the crap out of China except Trump, who continues to say Xi Jinping’s a good guy. But if the coronavirus gets to the point that it’s starting to affect Trump’s reelection possibilities, he’s not going to be outflanked by the Democrats on being soft on China. He’s going to flip immediately and in a very hard way, pulling out of the phase one trade deal and snapping those tariffs back. The coronavirus and this election, simultaneous with a geopolitical recession, makes a real cold war a plausible risk in the next three to six months.
What does a cold war look like in the 21st century?
It looks like every area where the Americans and Chinese are interacting is more competitive and combative. Hong Kong and South Korea and the South China Sea look much more tense; there’s a lot less coordinated trade between the two countries and tariffs go up; fewer students and technology being exchanged. In that kind of environment, it becomes patriotic for American corporations to leave China.
What happens when you add coronavirus to that situation?
You can wage ideological warfare with coronavirus. We see [former deputy prime minister Matteo] Salvini in Italy saying we’ve got to close the borders with the Africans and Trump saying we’ve got to close the border with the Mexicans. If you end up with migrants with coronavirus, what do you think the reaction is going to be in the US or France or Germany?
What does the world look like if there is a new cold war?
Structural inequality is going to grow, given climate change and institutions not changing themselves quickly, and the US not being a big part of the solution. I think there might be larger pieces of the world that are functionally ungoverned or undergoverned. When you look at a globe today it looks so neatly divided into countries. I think that there’s a good chance in 20 years it’s a lot more gray.
Is there a route out of that scenario?
It’s possible that climate change or the coronavirus are things that allow us to respond effectively, with political coordination, but I think for the foreseeable future we’re heading for exactly the opposite. More short-termism and “my country first.”
Even the furthest-left progressives on climate, like Alexandria Ocasio-Cortez or Bernie Sanders, are talking about a Green New Deal, not a Green Marshall Plan. They’re not talking about the fact that the Americans, with our wealthy country allies, have done virtually all of the planet’s emissions of carbon and the Chinese and Indians haven’t. What we really need to do if we talk about equity is to massively subsidize the poor countries, but that’s not a vote-getter in the United States and I don’t know how you would get there.
You have clients in tech and finance and other sectors. How are different industries responding?
Many companies are reaching out to us and I will say there is a fundamental difference between the kind of questions we are getting from Big Tech, which is kind of talking them off the ledge, and Big Finance, which is just better at handling a crisis. They’ve been through 2008 and they’re not being run by engineers, they have governance and strategists.
There have certainly been instances of major tech CEOs that have incited internal panic at their companies. I think it’s really destructive in this era of fake news and a president who is not, to be kind, helpful. We need the CEOs to say “Let’s listen to the CDC,” and I am not seeing that consistently.
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