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The Financial Express

Asia: Is the magic over?  

Imtiaz A. Hussain   | Published: March 09, 2020 20:30:32 | Updated: March 09, 2020 21:26:10


Asia: Is the magic over?   

The coronavirus outbreak exposed not only Asia's soft economic underbelly, but also its huge physical frailties in the event of an epidemic/pandemic: it does not have nearly enough medical infrastructures permitting large-scale detection, containment, and remedy for populations too widely divided by income and social status. Give or take the socio-economically advanced China, Japan, South Korea, and Taiwan, almost all other countries could potentially be severely damaged before any effective cure arrives. With the World Bank allocating $12 billion and the International Monetary Fund (IMF) $50 billion, we must neither be blinded about the depths the disease could still reach, nor the length of the recovery. The disease is Asia's wake-up call to seriously institutionalise contingency strategies on every possible front.

The continent seems to be independently and ineluctably reincarnating its own, quintessentially local malaise all over again: chasms, splinters, and vicissitudes politically. It is not just the COVID-19 outbreak driving a wedge within China between the government and civil society, but also growing disenchantment across South Korea, Japan's economy still resuscitating, and India's draconian Kashmiri occupation spilling into more widespread sectarian violence and genocidal tendencies. That Japan and South Korea plunged into loggerheads shows how old wounds can be painfully reopened, suggesting how, if Hindutva was not already in full Indian swing, propagating neighbours to be COVID-19 carriers could serve as a weapon.

Spillovers of past tensions/conflicts flared up elsewhere too. Syria, the country with the highest economic growth-rate last year, leads the list with the Idlib crisis, fetching a Turkish invasion and facilitating Syrian migration to Greece and other European countries. Iran's 40-year itch with the United States remains as simmering as ever, while Indonesia's sinking capital, Jakarta, both worsened and prompted the government to begin rebuilding a replacement in Kalimantan (Borneo). Whereas Myanmar ignores the ICJ (International Court of Justice) ruling to redress its Rohingya repression, Australia's bushfires left a devastating trail of both underground water-depletion and a dimmed treasury. With huge Chinese down-payments in both these countries (former for project-money, latter for imports, tourists, students, in short, for everything needed Down-under), neither country can escape the sprawling Chinese network.

Economic COVID-19 spillovers also began to take their toll. For example, with air-flights drastically reduced, petroleum sales plunged, with prices also plummeting. From an average of $68 for a barrel at the start of the year, the price has plummeted to below $50 (currently $48). Stalled exports, diminished income when the money is needed the most, and differences over production cuts haunt the group. While Russia profits from all these, the country benefiting the most, inevitably to the chagrin of a helpless Iran, is the United States. Shifting from being the world's largest oil importer to becoming its largest exporter on the strength of its shale output, any US income bonanza in the making (no doubt, with deepening environmental costs), would reinforce the tariff proclivity and rock the presidential election campaign.

If political stalemate eases in Israel and Benjamin Netanyahu returns to power, US footprints in the Middle East could stir not just Iran, but also Iraq, and eventually Russia, by virtue of its Syrian stakes. Like the Iran-US feud, other stalled bursting-points may easily, recklessly, even inadvertently, ignite. How long this status quo lasts may catalyse less than Saudi Arabia's adventurous regional policy-approach, a posturing streamlining Israel's, but raising wary eyes in both Ankara and Tehran. Somehow that part of the world cannot but remain a power-keg in one way or another, taunted by the multiplicity of external actors and interests.

What is troublesome and, indeed, destabilising, is when stable countries head south. Mahathir's resignation, for example, plunges Malaysia into the disorder his very return from retirement was supposed to have resolved. At 92, he handled his latest return to power deftly, except perhaps releasing 72-year-old Anwar Ibrahim from prison. Herein lies a lesson other Asian countries can learn from: once political incarceration becomes a tool, the very long-term consequences automatically look precarious, ravishing globally evolving institutionalised democracy at its very guts.

Democracy stands to become the biggest loser across Asia, which is very consistent with its global fate at this juncture. Imran Khan's populism is holding the water at bay in Pakistan, which the shotgun Taliban-US agreement of last week replicates in Afghanistan, while Myanmar's imminently forthcoming election also camouflages authoritarian rule in the name of democracy. Although Taiwan's January 2020 election mobilised fierce nationalism in the country under Tsai Ing-wen, obviously in outright defiance of China, how China slowly responds represents a rendezvous-with-destiny moment we have all been waiting for, for too long, given China's rapid global economic ascendance. A similar fate overhangs Thailand, following the 2014 coup and irregularities in the May 2019 election.

We cannot but return to the kingpin COVID-19 countries. China's incidences and fatalities may be tapering off, but chances of its global value-chain, BRI (Belt Road Initiative) outlays to so many countries, AIIB (Asian Infrastructure Investment Bank) loans for many other projects, and so forth, cannot recover nearly as visibly. At stake is trust and apprehension: Chinese advisors and builders may be tepidly welcomed in borrowing countries following their New Year holidays back home in China, given the outbreaks, exacerbating bilateral relations; and since the Chinese 'leg' of the global value-chain still largely produces under capacity, global hiccups will stretch far beyond Asia. Within Asia, Cambodia, Malaysia, Pakistan, Sri Lanka, and Vietnam have much to be worried about, but perhaps with too little leeway to safeguard their China-based bilateral relations. Whether this atmosphere promotes the search for new or renewed trading partners, even within Asia, may be the key emergent questions.

Iran's New Year (Nowruz) may turn out to be second most costly within Asia, after China's. It is being squeezed in on too many sides to not fall prey to some aspiring great-power, like China or Russia. In addition to the United States, Saudi Arabia, and Israel, Pakistan has had to fortify barriers against COVID-19; petroleum prices have shrunk, and new threat potentials have emerged in Afghanistan, where neither the Taliban nor the United States poses threats. With the holy pilgrimage approaching, one must keep a wary eye on how Saudi Arabia handles it.

Japan remains more vulnerable where it has always been for a generation, a stone's throw from deep-rooted recession, only this time with hopes fast shrinking. With a recession just being announced, whether the Olympics will be held, and if it is, will the turnout of tourists be enough to pull Japan out of deepening water may be questions increasingly drawing 'nay' answers.

All in all, Asia faces an approaching economic storm. How much it must scratch the surface of rather impressive economic performances over the past decade or so, or the degree to which it might thicken remains a million-dollar question. That the rest of the world has become so dependent on Asian trade, investment, and tourists make any sneeze in Asia inflicting a potential world-wide flu. This is not to say COVID-19 will not have compelling impacts outside Asia, but that is a story waiting to be written.

Dr. Imtiaz A. Hussain is Dean (Acting), School of Liberal Arts and Social Sciences (SLASS) and Head, Global Studies & Governance Program Independent University, Bangladesh

imtiaz.hussain@iub.edu.bd

 

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