Coronavirus and the Future of the World and Ukraine

Victor Hvozd
Doctor of Military Science

The global spread of the coronavirus epidemic raises a strategic question: what geopolitical implications will this process bring in the near and long-term future? To date, many experts (well known ones included) are trying to answer this question. Their forecasts are different, sometimes even opposite in content. But then, such differences can be explained by the complexity of events, phenomena and trends caused by the pandemic in political, economic, military and other spheres. Therefore, it is virtually impossible to draw clear conclusions on the subject matter. But it is quite possible to define certain boundary limits for the development of world events according to the best (moderate) and worst scenarios. Let’s analyze them in more detail.

Option One — if the scale of the consequences of the epidemic will be relatively small. Namely: if the number of patients is on the average no more than 3–5 % of the population of individual countries and, in general, in the world; the economic downturn does not exceed 5–7 % (up to 10 %) in developed countries and no more than 3–4 % — globally; the spending of national and international reserve funds remains at an acceptable level — up to 50–60 %. In this situation, we should expect the following:

• at national levels — the stability of the state structures of most countries and their ability to control the development of the internal situation will remain; the stability of the socio-political situation will be relative, without mass unrests and anti-government protests; national economies will be able to recover fairly quickly.

At the same time, even the relatively limited scale of the crisis will necessarily worsen the living conditions of the population, and will also force governments to take anti-crisis measures, including unpopular ones. In particular, social expenditures, taxes, and democratic freedoms can be reduced (including free movement of people, ban on gatherings, etc.).

In some cases, this will cause dissatisfaction with government policy, intensify the opposition’s actions, unauthorized protests will begin, the crime will grow, which will force governments to resort to new restrictive, including forceful, actions that will trigger cyclical processes of growing internal tensions. And in some countries may be repeated the situations of the Arab Spring of the early 2010s;

• at the international level — there will be an increase in tensions between the leading powers of the world, first of all, in the USA — China — Russia triangle, when they will mutually accuse each other of an epidemic, of not all conscientiously counteracting it, instead, trying to take advantage of the circumstances for their own purposes and to the detriment of other countries. At this, traditional geopolitical contradictions between different centers of power will remain.

Though the same danger of a global pandemic for all countries may encourage them to find some compromise. The same applies to geopolitical opponents and those countries in conflict, including long-term ones. However, such compromises are unlikely to last long, as fundamental differences between countries will not be resolved.

Option Two — if the epidemic causes sharp problems both in individual countries and in the world as a whole. In particular, if 50–80 % of the population of the world’s leading countries and other developed countries are affected by the epidemic; the level of economy, of both, individual states and the world, falls 1.5–2 or more times; national and global financial reserves are fully used, which makes impossible further financing of anti-crisis measures. All this will have catastrophic consequences, including:

• at national levels— in some countries that lose control of the situation, state systems will be destroyed; national economies will not function, shortages of food and commodities will arise; through riots and disorder, crime and looting will increase dramatically; attempts of coup d’état are not excluded; the confrontation between different groups, clans and mafia structures will intensify; the sentiment of separatism will increase sharply up until the disintegration of some countries and armed conflicts within their territories; there will be mass flows of refugees;
• internationally — most countries will choose selfish policies and isolate themselves, focusing on resolving domestic problems.

As a consequence, existing unions and other interstate associations may break up or their unity may be substantially broken, and all collective security systems in the world, including the UN and OSCE, will lose effectiveness. International financial institutions, including the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development, will suspend their work. This will create prerequisites for disintegration of the world economic system due to the significant restriction of economic ties and transport communications between countries.

Some of the states that will manage to maintain relative internal stability and certain economic and military capabilities may try to take advantage of the problems of other countries to pursue their foreign policy interests. Among other things, to draw other countries into the orbit of their influence, to seize territories or to control individual sectors of the economy and natural resources. Political, economic, special or military methods may be used for this purpose. In the light of historical experience, it is characteristic of totalitarian countries with aggressive foreign policy.

This may change the geopolitical map of the world, including the disappearance of some and emergence of other centers of power. In particular, it is quite possible that Russia will lose some of its sovereignty and actually come under China’s control.

As of today, the current situation in the world is more like the first option. For example, China, as the primary source of the epidemic, has already effectively done with it without significant casualties for its population (given its overall size) and critical losses of the Chinese economy.

The spread of the disease in Europe is slowing down, allowing individual countries to consistently mitigate quarantine measures. The EU leadership has promised to open European borders as soon as the epidemic is over. The situation is still more complicated in the USA. At the same time, the government of the country announces gradual passing of the peak of the pandemic.

The coronavirus epidemic’s effects in the economy are serious, but not catastrophic. In particular, according to the IMF, the US economy could shrink by 5.3 %, China’s — by 6 %, and the European zone’s — by 7.7 %.

Many other economically developed countries are less affected by the epidemic, including in the economic sphere. It refers to India, Japan, South Korea (despite the second after the PRC highest number of the infected in Asia, managed to quickly overcome the epidemic), as well as Brazil, Argentina and Turkey. Given this, the global economic downturn equals no more than 3–4 %. Moreover, in 2021 its growth will resume.

The geopolitical situation in the world is  so far developing according to the first scenario. Thus, the United Nations, the G7, G20 and other international organizations are trying to combine efforts in the struggle against the spread of infection. In April 2020, the IMF and the G20 agreed to suspend debt service payments (to freeze both principal repayments and interest payments) for the world’s poorest countries and 40 African countries. In turn, the Board of Directors of the European Investment Bank has decided to set up a 25 billion Euros COVID-19 European Investment Fund. First of all, the money will go to support small and medium-sized businesses. All the EU member states will make contributions to the fund. It may also accept contributions from other countries or international organizations.

Interestingly, even those countries or organizations that are in conflict, make concessions to each other. For one, the NATO leadership has allowed NATO member countries to help Russia in fighting coronavirus. The agreement between India and Pakistan, which are in a long-standing border conflict, is also quite indicative of a temporary reconciliation to join forces in the struggle against the pandemic.

We should also point out the compromise between the leading oil producing countries to stabilize the global oil market. In April 2020, the OPEC member states, with the support of the USA, Russia and Saudi Arabia, have decided to reduce oil production. In this way, an attempt was made to eliminate another key factor affecting the global economy.

However, Western countries and international organizations are not making concessions to Russia over its neo-imperial course. For example, the United States and the EU have refused to lift sanctions because of the “joint fighting the epidemic,” as the Russians insisted.

However, all this does not guarantee that in the world there will be no more difficult situation, that is, a scenario with catastrophic consequences. All the more so, given the likelihood of the next wave of the epidemic this autumn. After all, according to IMF experts, the world can plunge into a new, much larger scaled than it was in the 1930s, Great Depression. The probability of such a prospect is also confirmed by American and European economists.

Extremely difficult economic problems can also hit Russia. According to the forecasts of the National Rating Agency of the Russian Federation, losses of the Russian economy through the pandemic of coronavirus can amount to 17.9 trillion rubles, and profits from oil exports will be reduced eight times. However, the total amount of the accumulated reserve funds in the National Welfare Fund is only 12.9 trillion rubles. Of these, only about 10 trillion rubles are actually available. Therefore, Russia can have used its reserve funds by the end of this year, and face a full-blown crisis of the Russian economy.

All the above-mentioned negative processes will affect Ukraine too. According to the IMF, Ukraine’s GDP may fall by about 8 % in 2020, inflation will rise to 7 %, investment — by 15 %, and the state budget deficit will reach 5.6 %. Unemployment will also increase significantly. Besides, Ukraine’s conflict with Russia will be playing a negative role. Therefore, Ukraine will need external economic assistance, for which the IMF and EU demand to execute programs unpopular in the Ukrainian society or unacceptable to certain political and oligarchic circles of our country.

Russia also seeks to take advantage of such a difficult situation by imposing its assistance on Ukraine, provided that it returns to the sphere of Russian influence. And again, Russia relies on the Russian lobby in Ukraine, which voices corresponding initiatives. At this, Russia supports its political and economic actions on the Ukrainian direction, demonstrating military force near the borders of Ukraine, as well as in the annexed Crimea and the occupied territories of the Donbas. This theme is covered in more detail in my previous article, “A War During the Epidemic. Russia Against the USA and NATO”.

At the same time, the worldwide coronavirus pandemic has opened up new prospects for developing Ukraine’ s cooperation with the USA, NATO and the EU. Thus, Ukraine is involved in the EU strategic aviation communications, which provides access to resources from other countries in the struggle against coronavirus. For example, Ukraine’s largest An-225 Mriya transport aircraft is involved in transportation of medical supplies from China to Europe. Thus, Ukraine is not only the West’s outpost to curb Russia’s neo-imperial policy, but also an important partner in fighting the coronavirus pandemic. NATO Secretary General J. Stoltenberg has already pointed out this, announcing the Alliance’s plans to further deepen its cooperation with Ukraine and to bring it to a new level. In particular, J. Stoltenberg reported that NATO could provide Ukraine with a new assistance package to strengthen its defense capabilities.

The United States and the European Union treat Ukraine similarly. For example, the US Department of Defense has confirmed that it intends to continue providing military support to Ukraine, even though it has its own problems because of the epidemic. And the EU has given Ukraine 190 million Euros from the European funds to fight the coronavirus infection. Besides, Ukraine is in talks with the International Monetary Fund regarding a new loan program. In total, Ukraine expects to receive about 10 billion US dollars from the IMF and other lenders.

With the help of this and its own potential, Ukraine can “stay afloat” even under the worst scenario of the further spread of the epidemic. Thus, the recovery of the positive dynamics of the Ukrainian economy at about 3 % is expected next year.

Ukraine will even be able to repulse Russia’s new aggression if the RF tries to take advantage of our country’s problems to “finally resolve the Ukrainian issue”.

And so we will pay tribute to our fighters in the Donbas, who defend our Motherland from an external enemy, while we are counter-acting the epidemic inside the country. The main point is that they, and with them Ukraine itself, should not be betrayed by our inner enemies.