By Anis Chowdhury and Jomo Kwame Sundaram (*)
SYDNEY and KUALA LUMPUR, Mar 24 2020 (IPS) – The economic impact of the coronavirus pandemic is hard to predict as events are still unfolding, and estimates vary dramatically. UNCTAD estimates lost output in the order of US$1 trillion, just over a third of Bloomberg’s expectation of US$2.7 trillion in losses. The OECD expects global economic growth to halve from already anaemic levels.
Dire consequences for achieving the already failing Agenda 2030 for the Sustainable Development Goals (SDGs) are inevitable. Developing countries are particularly vulnerable, with meagre resources available for the new threat and its consequences.
As resources are urgently needed to cope with the pandemic, their ability to spend on other development priorities will be even more constrained. As with previous economic and health crises, poor and vulnerable sections of the population will be worse affected.
Ahead of the forthcoming G20 leaders’ virtual emergency meeting, the UN Secretary-General warned that current national responses to the coronavirus pandemic “will not address the global scale and complexity of the crisis”.
Millions could die without a more “coordinated global response, including helping countries that are less prepared to tackle the crisis”, as “global solidarity is not only a moral imperative, it is in everyone’s interests”.
Impact on developing countries
Besides the direct socio-economic impacts of the Covid-19 crisis, the pandemic will affect developing countries otherwise via: global value chain and tourism disruptions, falling commodity prices and foreign direct investment, as well as the consequences of capital flight and a stronger dollar.
Analysts project reduced investments in global value chains, energy, mining, and other sectors, as well as falling travel and tourism in African countries due to reduced Chinese demand for raw materials as its economy slows further. Sub-Saharan Africa is also expected to lose up to US$34 billion in export revenue due to reduced global demand, especially collapsing oil prices.
Commodity prices have already fallen sharply, and exporters expect more problems due to falling demand as the global economy slows. Heavily indebted developing countries are in a particularly difficult situation as their exports decline with falling global demand, and import and debt service costs rise due to weaker currencies as money flees to ‘safe havens’.
The Institute for International Finance estimates that around US$67.45 billion has flowed out of emerging countries since late January, an amount larger than emerging market capital outflows in the aftermath of the 2008-2009 global financial crisis and the 1997-1998 Asian financial crisis.
Impacts on working people
A new International Labour Office report
projects almost 25 million jobs could be lost worldwide, and workers could lose
some US$3.4 trillion in income by year’s end.
Without paid sick leave, workers in the informal economy cannot afford to stay home.
Lockdowns will disproportionately hurt low-income households, casual workers and the poor, especially where social protection is grossly inadequate. Many lack the means to stockpile food or seek medical treatment.
Malnutrition, poverty and hunger induced health stresses compound vulnerability and feed vicious cycles of disease, destitution and death. As the Ebola epidemic revealed, poverty worsens contagion, which can, in turn, deepen poverty.
Studies of 11 sub-Saharan African, South and Southeast Asian countries found that without universal health coverage, poor people respond to health shocks with impoverishing ‘distress sales’ of their limited assets and by taking on more usurious debt.
Urban slums and refugee camps can become virus hotspots. For the world’s more than 65 million displaced people, who have fled war and persecution, and live precariously, the risks posed by the pandemic are dire.
By disrupting economic activity and cutting incomes, the pandemic is a new cause of impoverishment, besides limiting the ability of vulnerable households to escape from – and stay out of – poverty.
Support measures lack coordination
As of 9 March 2020, ‘donors’ (including governments, multilateral organizations and private funders) had pledged or given an estimated US$8.3 billion – directly to countries and to the WHO – for COVID-19 responses.
This included US$15 million from the UN’s Central Emergency Response Fund to help vulnerable countries, not very much as the organization struggles with its own persistent underfunding.
Meanwhile, the World Bank announced US$12 billion in immediate support, while the International Monetary Fund (IMF) made available about US$50 billion in emergency financing for low income and emerging market countries, and “stands ready” to use its US$1 trillion lending capacity to help countries coping with the pandemic.
Concessional support from the IMF and the World Bank usually comes with onerous “one-size-fits-all” policy conditionalities, typically favouring influential shareholders.
The Bill & Melinda Gates Foundation and the Wellcome Trust have set up a US$125 million coronavirus drug fund, while Michael Bloomberg’s US$40 million plan seeks to stem the coronavirus spread in developing countries. Philanthropic support is typically oblivious of national development priorities, and may ‘distort’ public health or social protection.
These funds are inadequate, given the scale and complexity of the problem, especially as an early end to the pandemic remains highly unlikely. Different modes of pandemic control need to be considered to minimize the scale of disruption and threat.
Crucially, multilateral coordination remains seriously lacking beyond the valiant efforts of the WHO in the face of persistent criticisms and its own financing problems. The UN should show how slow progress on the SDGs has made us all much more vulnerable to the pandemic and its various consequences.
It will be important for the UN to play a stronger coordinating and leadership role, e.g., with the UN Sustainable Development Group (UNSDG) rapidly assessing the adverse impacts and funding needs of the Covid-19 pandemic in relation to Agenda 20.
(*) Anis Chowdhury was born in Chittagong, Bangladesh. He was schooled at the Government M.E. School; Chittagong Collegiate School; and Chittagong Government College. Anis obtained Honours and Masters degrees in Economics from Jahangirnagar University (Bangladesh) in 1976 and 1978 respectively, and M.A (1980) and Ph.D. (1983) degrees from the University of Manitoba (Canada). Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.
Armies are mobilising against the coronavirus
Soldiers are patrolling streets, running hospitals—and cancelling drills
TWO WEEKS ago Xi Jinping, China’s president, made a triumphal visit to Wuhan, capital of Hubei province, ravaged by covid-19, to declare that the virus had been “basically curbed”. His first stop was a hospital built at breakneck speed and run by the People’s Liberation Army (PLA). Now armies across the world are temporarily putting down their guns and playing a frontline role in the war against the virus. That will ease the burden on overwhelmed civilians, but it may have far-reaching implications for the forces’ military proficiency.
In Italy and Spain, where death rates have spiralled upwards in recent weeks, thousands of soldiers have been deployed to quarantined cities to patrol the streets and enforce lockdowns. Turin “seems to have conformed to the rules and camouflages”, noted La Stampa, an Italian newspaper. In Bergamo rows of army trucks carried away bodies to ease the load on overflowing crematoriums. Hungary, Lebanon, Malaysia and Peru have all sent their armies to cajole recalcitrant citizens back into the safety of their homes.
Many countries are uncomfortable with state-mandated lockdowns, enforced by gun-toting soldiers. But they have found other uses for their soldiers. Armed forces are good at mounting big logistical operations at short notice. They have lots of pliant manpower and heavy vehicles, and expertise in moving large amounts of stuff from one place to another. In an average week, the Pentagon’s Transportation Command conducts more than 1,900 air missions and 10,000 ground shipments. “The military has the capacity to plan while it is implementing in a way that most of the civil service does not,” says Jack Watling of the Royal United Services Institute, a think-tank in London.
On March 19th Britain, which had thus far taken a laxer approach to the enforcement of social distancing than Italy or France, announced a new “COVID support force”, which will comprise over 20,000 personnel, bolstered with reservists. Military planners will be deployed to Regional Resilience Councils to identify and resolve bottlenecks in the provision of medical care for the most vulnerable, says Mr Watling. Other military personnel are being trained to drive oxygen tankers for the National Health Service. Other countries are doing much the same. On March 22nd National Guard (ie, reservist) units in three states—California, New York and Washington—were deployed to perform similar duties.
Armed forces are also well placed to help out overloaded health-care systems. For one thing, they often have large stockpiles of vital medical kit. The Pentagon has promised to hand over 5m respirator masks and 2,000 ventilators to civilian authorities. They tend to be good at rapid innovation, too. Israel’s military-intelligence technology unit is not only producing low-tech masks, but also working on the conversion of simple breathing-support devices into more advanced ventilators, according to the Times of Israel. Britain’s Defence Science and Technology Laboratory at Porton Down, which has expertise in biological threats, is supporting the development and testing of vaccines, and the mapping of covid-19 cases. The US Army alone is working on 24 vaccine candidates, in collaboration with other agencies and companies.
Wartime experience can also yield useful insights for civilian medicine. The development of mechanical ventilators to ease Acute Respiratory Distress Syndrome (ARDS)—a potentially fatal condition in which lungs cannot provide vital organs with enough oxygen, common in patients who die of covid-19—emerged from work during the second world war. In recent decades military doctors have made important contributions to advances in ventilation and intensive care.
Military medics also train to operate amid chaos, with insufficient infrastructure and resources. Since January 25th China has sent over 10,000 military personnel into Hubei. In Wuhan, control of medical and essential supplies was handed entirely to the PLA. In Mulhouse in eastern France, where local hospitals have been overwhelmed, army medics are building a 30-bed field hospital for covid-19 cases. Mexico’s president, who said last summer that he hoped to disband the army, has given control of ten new hospitals to the army and navy.
Elsewhere military doctors are taking on more routine cases to free up hospitals for the flood of more serious ones. America is sending a pair of naval hospital ships to Los Angeles and New York to release medical capacity for covid-19 patients; the army is preparing two mobile hospital units. Switzerland’s citizen army has sent one of its four 600-strong hospital battalions to support civilian hospitals.
Military medical aid can also be a tool of diplomacy. On March 22nd Russia’s army, whose operatives are more accustomed to using toxic substances to poison foes around Europe than cleaning them up, began sending nine transport planes full of military disinfectant vehicles, eight brigades of medics, about 100 virologists and epidemiologists, and testing kits to the worst-affected parts of Italy. The lorries and planes bore the slogan “From Russia with Love”, in Russian and Italian.
It is understandable that overwhelmed states want to mobilise their armies for policing, logistics and medicine. But armed forces are designed first and foremost for killing people, rather than issuing fines on street corners or delivering food to supermarkets. And covid-19 will affect military preparedness, both directly and indirectly.
Military personnel are typically young and fit—a group that has been better able to shake off the effects of the virus. But they are not immune. Over half of coronavirus cases in New York state are aged 18 to 49. Troops often live in close quarters, increasing the likelihood and pace of transmission.
Iran’s Islamic Revolutionary Guard Corps, the country’s main armed force, is believed to have been hit badly by the epidemic; a veteran general died on March 13th. The army chiefs of Italy and Poland have both tested positive for covid-19. By March 23rd 133 American military personnel had been infected by the virus. On March 22nd a Pentagon contractor became the first American military fatality of the covid-19 pandemic. Many experts ridicule China’s claim that not a single member of the PLA has been infected.
But even if armies do shrug off the immediate health effects of covid-19, the disruption to their work will have longer-lasting consequences. Self-isolating officers cannot gain access to classified networks from their homes, so many will have their productivity drastically limited. Meia Nouwens, of the International Institute for Strategic Studies, another think-tank in London, says that the crisis has disrupted the supply chains for China’s defence industry.
Social distancing is also preventing armies from honing their fighting skills. Britain has halted almost all its basic training for new recruits. On March 11th Norway called off joint exercises with America and European allies in the Arctic, shortly after 23 American soldiers were quarantined after exposure to an infected Norwegian colleague. Two days later America scaled down Defender 2020, an exercise that would have involved the largest deployment of American troops to Europe since the cold war. America’s top general in Europe was forced to self-isolate after crossing paths with an infected Polish general at a planning meeting for the exercise.
Other European drills have been cancelled entirely; America and South Korea have postponed their annual joint exercises. But armies that stop exercising are liable to grow rusty. “The challenge is when you have the next armoured battlegroup coming through and they haven’t done a stint in BATUS [the British Army’s training area in Canada], for instance, do they still have a certification to deploy into NATO?” asks Mr Watling. On March 23rd Russia offered at least a little respite, saying that it had called off war games on its western borders “as a sign of good will”.
Yet as armies grapple with the pandemic, geopolitical jostling goes on. On March 10th, as Mr Xi visited Wuhan, America’s navy conducted a so-called freedom of navigation operation near a Chinese-controlled island in the South China Sea. On March 19th at least 29 Malian soldiers were killed by suspected jihadists. A day later two Turkish soldiers were killed in a rocket attack in Syria’s Idlib province, and two dozen policemen and soldiers were shot dead in Afghanistan. Troops may be distracted and diverted, but war does not pause for viruses.