A major shock

The current pandemic crisis is a major global disruptor. It will have a complex cluster of impacts in many areas, from the political one up to the behavioural. Some of the consequences might end up by being positive transformations. When I say that I have in mind an increase in the work from home, which saves time and keeps fewer people in crowded and long commutes. I also think of greater investments in preventive health and more equal access to basic health services. On the other hand, it will have dramatic consequences on jobs, on poverty and despair, and on the performance of major economic sectors, including the banking one. The longer this crisis lasts the more complicated the recovery will be. And we have a prolonged period in front of us. This should mean that we must do whatever we can to prevent the transmission of disease.  

Fighting the extremes

Polarisation and radicalisation of views might become two of the main consequences of the current health tsunami. People will withdraw into their little familiar spaces and will end up by seeing everybody who is outside of the small circle as a potential threat. Everyone will be perceived as either belonging or being a stranger. In the best of cases, they will look at them with a great dose of indifference. Political activists, from both extremes will try to take advantage of those feelings. There is a serious risk of seeing the extremist positions becoming more combative. The point is to be able to spot such trends early enough and be able to decry them. There are many tasks ahead, in these extraordinarily complex times. One of them is for sure to oppose any move towards radicalisation and identity politics.

New disparities in a changing world

People were queuing this afternoon to get into the most expensive shops in a well-to-do area of Brussels. The other shops, normally patronised by the medium-income people had almost no customer. And then, there was this incredibly sad sight of closed restaurants and bars and a big hotel, a huge tower, completely empty. For me, it was a vivid example of how the crisis is seriously affecting some segments of society whilst others are just returning to their old habits, as if the past were back. But it is not.

Times of change

We all agree the economic recovery is pressing. Truly, we are confronted with extreme urgency. There are too many people without income, or with a reduced one, too many companies close to insolvency, plenty of sectors working below capacity. The economy is seriously disrupted, in many countries, including in the EU states. Speed is, therefore, the key concern, in the minds of the politicians as well as in the private sector.

Then, a number of intellectuals have come forward and said this post-pandemic time is the big opportunity to change direction and make the economy greener and people-friendly. I agree with their proposals. They are not all of them entirely realistic, but they are well-meaning and the right type of utopia we need to make this world a better place. It would be a mistake not to give attention to them.

There will be some changes, for sure. More people will be working from home, there might be less commuting, and we will witness a lot of pressure from the politicians for the entrepreneurs to bring home some of the investments made far away. There will be a new impetus to move on to a greater share of renewable sources of energy.

But the urgency might upset some of these proposals. Jobs, investments, and revenue generation will be the key criteria for decision-making. And they might not coincide with the new economy we would like to see. But there will be progress in that direction. People are coming out of this crisis with a different approach to life and their own priorities. That is why I think it is important to keep insisting on progressive modifications to the way we produce and trade goods, and a new approach to the worth of some services the pandemic has shown to be of essential importance to our daily lives. 

  

There will be a process of change. Not as much as we would like, but we should not give up. This is an appropriate time to talk about a more balanced world.

May Day 2020

It is International Workers' Day. That is an important date for many in Europe and in other regions of the world. We celebrate the working people’s rights. And I add to that my deep appreciation for those who keep struggling to survive. Particularly currently when most of the economic system is upside down. At the same time, as I look ahead, I see continued disruption and new levels of hardship. And I do not see the collective political will that a situation like the present one would require. Each leader is hiding behind national border walls. That is the wrong approach. We need regional and international joint efforts. As we need to promote cooperation between the big economies, including the US and China. Harsh words, bellicose statements, at this stage, do take us in the wrong direction. Leaders that follow that path will be severely assessed by future generations.

Preparing for a new world

It’s time to start thinking about the shape of the world that is emerging in front of us. This pandemic is a deeper and wider challenge than what the politicians want us to believe. Tomorrow’s world will not be just a resuscitation of yesterday’s living styles. Some people say it is a call for a new paradigm. I would say that it is more than a call. It’s a must. Too many people will be excluded if we do not change the way we look at human security and dignity.

The big fight ahead of us

Besides the public health dimension, the main risk associated with the current world crisis is called isolation. Peoples have moved behind national borders and felt that was the only way to get safe. Before this calamity, there was already a growing mistrust on regional associations and multilateral organisations. In a few countries, the politicians were getting dividends out of that distrust. They were throwing fuel at it. I am afraid we might see a lot more of that as we get into the next stage of this global challenge. That would destroy the multilateral system, the UN and its main agencies, and other entities such as the European Union. At least, it would contribute to further marginalise them, making them irrelevant, walking ghosts.

Our response must address that menace. We must find the words and the platforms that would make our voices heard. It´s not going to be easy. But we should not expect any easy times ahead of us. We must be prepared to fight for international cooperation. We must be able to win over the leaders that want to take advantage of the crisis to build new walls.

Time for exceptional leadership to step up

This is a time of great anxiety. It’s a global challenge. It would require global political leadership, men and women in decisive positions of authority that would come together and would address the crisis with a single voice. It is not enough to have the G7 or the G20 finance ministers talking about debt relief and access to tremendous amounts of theoretical money. It is also not enough to get statements from the IMF, the WB or the WHO. Even the UN Security Council, if it could agree on a resolution, that would be good but insufficient. We need the key heads of State and government to agree on a joint declaration that would be some guide of roadmap out of the crisis. It would send an exceptionally important message of togetherness, cooperation and hope.

Unfortunately, we are very far from such a common position. The world is leaderless and more fragmented than ever.

If we can’t have a global message, why don’t we try to agree on a common European position at the leadership level? Is it too difficult to formulate a joint way forward, that would be larger than just talking about the post-crisis recovery, something of a shared vision about the kind of European society we would like to build together, after such a unique test?

The moment calls for leadership that can unite people and envision tomorrow’s world.  

Dreaming ahead

I have been asked that question, but I try not to respond to it. And then, they ask it again, my opinion about which country is likely to gain from the current dreadful crisis, in terms of geopolitics and dominance. They want me to say China, others they expect me to mention the possibility of an open confrontation between China and the US, and some people are ready for an answer that would foretell the end of the European Union. All this is very negative. There will competition after the crisis, as there has been before it, but I think it is too far-fetched to predict war or the demise of the EU.

Competition aside, the crisis underlines the need for a greater level of international cooperation and complementarity among the nations. We live in an extremely interconnected world, as we can see from the expansion of the pandemic to every corner of the planet. Unfortunately, some leaders are not getting the message. They have decided to fight a global threat through erecting national barriers. My hope is that this will be challenged once the crisis is over and that we will be able to make it clear that it is better to cooperate. That is certainly a debate that must take place at that time. We should not go back to the past.

Competition has been the model. We must go beyond that. Call it history. As we look into the future and learn from today’s difficulties and consider the next challenges, including the environmental one, we should be moving towards a new stage, that will put the emphasis on joint action and human cohesion. That could be one of the positive results of the present-day drama. It is idealistic, I accept the observation, but we must base ourselves on new dreams.  

What lies ahead is simply unique

The economic dimension of the crisis is huge. That’s now obvious to everyone, as the figures about unemployment and temporary layoffs become known. And that explains the gigantic size of the recovery programmes that have been announced. The amounts are just mind-boggling, difficult to imagine, because of the large number of zeros that follow the initial figure. Hundreds of billions, many of them close to trillion figures, or even above, as it is the case in the US. We are talking about funds that are simply not available. They will have to be printed.

It is a dramatic situation to many families and a move to extraordinary levels of indebtment by the States, the corporations and firms, and the families. Large amounts of debt, both public and private, were already a key feature in many countries. Our economies have been in the red for several years. But the previous debt levels will look as small fish when compared with the numbers in the next phase, the recovery phase. Most of that debt will be untenable and will have to be write off, sooner or later. That will cause major changes in wealth ownership. The point will be to manage such transition in a way that would avoid the ruin of key sectors of the economy, including the pension mechanisms, the banking and insurance systems, the bond and the property markets.

It is indeed a completely new ball game. We will have to play it and keep defining the rules as we move on. It will require an extraordinary level of international cooperation. That means wise leadership, plenty of foresight and political courage. Unfortunately, wise leadership seems to be a dimension that is seriously absent in the current international relations scenario. In my opinion, that’s one of the key risks that can seriously disrupt the next stage of our life in this small planet. These will be exceptional times.