Post-pandemic future 'will be globalisation with localisation'

London

A GROUP of 165 current and former global leaders, including Singapore's former foreign minister George Yeo, recently signed off on an open letter to the Group of 20 (G20) leaders.

Among other things, they are calling for the setting up of a task force and an immediate global pledging conference to approve and coordinate a multi-billion-dollar fund to fight the coronavirus pandemic.

Some of the signatories include former UN secretary-general Ban Ki-moon, former South Africa president Frederik Willem de Klerk and former British prime minister Gordon Brown.

Singapore is a regular participant in the G20 process and is usually invited to summit meetings and other collateral processes as a member of the Global Governance Group. BT Weekend spoke to Mr Yeo via e-mail and this is an edited transcript of the interview.

Neil Behrmann (NB): The letter indicates that the signatories are dissatisfied and alarmed by the tardy unspecific response of the G20 so far. Do you think the differences between the US and China have caused the delay?

A NEWSLETTER FOR YOU

Friday, 8.30 am

SGSME

Get updates on Singapore's SME community, along with profiles, news and tips.

Sign Up

Sign Up

George Yeo (GY): Bad US-China relations contributed to the unwillingness or inability of the US to read the signs coming out of China.

When the epidemic hit China, the US offered aid but none was delivered. When US leaders started putting the blame on China for the epidemic, China countered with allegations of its own.

The differences between the US and China have certainly made it more difficult to mount a global campaign against Covid-19. The stark reality is that no one is safe until everyone is safe.

The agency with the mandate to support this global effort is the World Health Organization (WHO) which has done a good job responding to the pandemic and alerting the world to it.

WHO's support of China's measures has been unfairly criticised in the West especially in the US. Partly for domestic political reasons, US President Donald Trump has decided to put a large part of the blame squarely on WHO saying that it has been too China-centric.

NB: Besides Mr Trump and Chinese President Xi Jinping, which G20 leaders have been slow in generating global action?

GY: Mr Xi has not been slow off the mark at all. At the recent G20 video summit, he asked for global cooperation and joint action.

China is more than happy to share its own painful experience with the rest of the world. China knows that for as long as the rest of the world is affected by the pandemic, it will always be vulnerable until a good vaccine is found.

Mr Trump has never been a fan of multilateralism. The US should play a leading role and has the scientific capability, and now also the experience, to do so.

NB: Do you think Saudi Arabia, as this year's G20 chair, is carrying out its role effectively?

GY: Saudi Arabia is trying to build a political consensus. The purpose of the letter is to give support to Saudi Arabia's effort. Europe can play a major role in this. If China pushes, the Western world will reject it. Europe is in the best position to pull the US and China together and create a G20 political consensus.

NB: The letter suggests a relatively small sum of US$43 billion to fund vaccine research and support developing nations' health systems. Surely urgent finance should have been agreed on at least a month ago?

GY: It will take time to build a political consensus. The amounts suggested are indicative. There was no way a global consensus could have been reached last month. The purpose of the letter is not to criticise but to be helpful.

NB: The letter proposes US$150 billion for emerging market health, social safety nets, and other urgent help. Is this amount enough to cover requirements of desperate communities in Africa, the subcontinent, refugee camps and others?

GY: It is a start. Without proper studies, we don't know how much will be eventually needed. But it will not be a small amount.

NB: The letter proposes "a global pledging conference supported by a G20 executive taskforce. Who should run it? Do you agree that billionaires, other ultra-rich individuals and corporations should also pledge support?

GY: The taskforce chair should be Saudi Arabia. This is established diplomatic practice. I see the main contributors at the pledging conference to be countries. If others are willing to contribute, that will be welcome.

NB: The letter suggests that the IMF provide an additional US$500-600 billion in special drawing rights. The US is the biggest contributor to the institution. There is friction between Mr Trump and the US Congress. Do you think they would give the go-ahead to the IMF?

GY: The economic consequences of the pandemic will last for years. The IMF's role is critical. Reviving the global economy is in everyone's interest, including the US. If there is general agreement between the US and EU, China and other countries will go along. This is an issue not just for the current US administration but the next one as well.

NB: The G7 has agreed to a one-year debt moratorium for the most stricken nations. Do you think the G20 should go further, such as debt forgiveness?

GY: Absolutely. For poor countries, the impact of the pandemic is cataclysmic. The developed countries have a moral responsibility to help. The help has to be thoughtfully dispensed so that it does not create future moral hazards.

Helping poor countries is also in the self-interest of developed countries. Failed states mean more refugees. Also, failed states will be festering grounds for Covid-19 and other pathogens.

NB: This economic setback is the result of a global health crisis. Both demand and supply have been adversely affected. Logistics becomes exceedingly important. What are the best measures to ease supplies?

GY: The immediate need is to master the pandemic, meaning bringing down the incidence through social distancing, then quick diagnosis, treatment, quarantine and relentless contact tracing until good vaccines are developed.

Once the Covid-19 problem is manageable, controls can be gradually relaxed to revive economic activities. This has to be done step by step, and carefully, essential industries first in some order of priority.

NB: What is your view about China's economic prospects?

GY: Despite severe contraction of China's economy in the first quarter, the current growth momentum is significant. There are anecdotal reports that capital goods factories, luxury real estate, fashion products and cosmetics are all recovering smartly.

China will be a key engine leading the world out of global recession. It will take much longer for Europe and the US to recover.

NB: Post-pandemic, do you think that protectionism will increase and will the pandemic mark a decline in globalisation?

GY: It will change the nature of globalisation. There will be more localisation as countries try to reduce their future vulnerability not only to pandemics but also to other external shocks. Unfettered globalisation has passed its apogee. The future will be globalisation with localisation.

NB: Depending on when a vaccine is found, how soon do you think the global economy will recover?

GY: The economic and political consequences of the pandemic may be considerably worse than the pandemic itself. Under its hammer blows, weak structures are collapsing.

Strong structures - national, corporate, social - will be built and become more influential. It has been over 10 years since the global financial crisis.

It is entirely possible that the pandemic will cause the world to go into another deep recession. As with all crisis, there will be winners and losers. The league tables will look quite different when the global economy recovers. I think China will be a major winner this round.