Co-operation or Conflict?

This week we try to assess whether the Covid-19 pandemic is driving the world together or pushing it further apart. From US-Chinarelations to tensions within the EU, we discuss how coronavirus is exacerbating existing tensions and how it might overcome them. Are we going to see new forms of international co-operation? What does it mean for globalisation? And is the politics of competence making a comeback? With Helen Thomson and Hans Kundnani from Chatham House.

Talking Points:

The crucial issue between the US and China right now is supply chains.

• A huge percentage of antibiotics used in the US involve supply chains that include China.
• Helen thinks it’s unlikely that we will continue to live in a world in which the production of pharmaceuticals is so integrated.
• Will interdependence push towards cooperation or conflict?
• Two big things have changed since 2008: Trump is in the White House, and central relationships (US-China, US-Europe) have deteriorated.

There are different degrees of globalization. There is, for example, a more moderate version, and what Dani Rodrik calls ‘hyper-globalization.’

• If you think of globalization as consisting of movement of goods, capital, and people, you might have different degrees in all three areas.
• The thing that’s come to a sudden stop in this crisis is the movement of people.

China does have a dollar problem. Right now, the Fed has provided swap lines to a number of states, but not the Chinese Central Bank.

• At the moment there’s no need for it to do so.
• But this crisis may have opened up a possibility that wasn’t a possibility a month ago.
• Could that then become a problem for the United States? You would need to think more about exchange rate cooperation.

Does Europe need to pick a side between the US and China?

• We were already moving in this direction already; look at the battles over 5G.
• The more competition there is over supply chains, the more European countries will have to choose.
• Transatlantic rifts tend to become intra-European rifts as well.

The current crisis is an emphatic demonstration that, in the Eurozone, the coercive power of states remains the prerogative of member states.

• Different states use power differently. Orban is willing to go much further, for example.
• If some EU states deal more effectively with this than others, what happens to freedom of movement?

Mentioned in this Episode:

• The Globalization Paradox by Dani Rodrik
• Hans’ book, The Paradox of German Power

Further Learning:

• Hans’ piece for the Observer, ‘Can a nation be both open and in control? The UK is about to find out.’
• The FT on Peter Navarro’s remarks about supply chains and bringing home manufacturing
• Our most recent episode with Adam Tooze

And as ever recommended reading curated by our friends at the LRB can be found here: lrb.co.uk/talking

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