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The Financial Express

Osmotic Covid-19 impact in Europe and its neighbouring region


Osmotic Covid-19 impact in Europe and its neighbouring region

The number of deaths around the world has been increasing at a very fast pace. It may be recalled that WHO (World Health Organisation) had mentioned a few days ago that it took nearly two and half months to reach the first 100,000 confirmed cases worldwide, but only 12 days to reach the next 100,000. This pace has now grown faster. We have seen that it is now taking less than 3 (three) days to move into the next 100,000.

Statistics available on  April 01 from John Hopkins University indicated the grim news that more than 8, 28,305 had become infected and that the number of death round the world had reached 40,735. Italy, followed by Spain had both overtaken the number of fatalities in China. In addition, in Europe, the pandemic had also created a terrible scenario in France, Germany, Belgium, Netherlands and also in the United Kingdom (UK). The state of affairs in the UK, in a short space of time had deteriorated with the virus infection affecting not only Prince Charles but also Prime Minister Boris Johnson. In addition, the world has watched with concern the spiralling effects of the virus affecting the United States and Iran.

We have also seen how this virus has been affecting not only sub-regions but also creating chaos within regions. This has led to South Asia undertaking a regional engagement to contain the impact of Covid-19 within this region.

It is this joint effort undertaken in the SAARC (South Asian Association for Regional Cooperation)  region that has led me to focus on an adjoining region of EU (European Union).

In Europe, within the EU and also in the contiguous countries, attention is presently being focused on a wider parameter. In more ways than one efforts are underway to find least common denominators that would not only facilitate ascertaining the different elements of the unfolding challenge but also make it possible to find answers.

All the three South Caucasus countries Armenia, Azerbaijan and Georgia - and also adjoining Eastern European countries - appear to be dealing with the ongoing Covid-19 crisis in their own as best as they can. However, it is being underlined that they need international medical and economic assistance. It is being stressed that the EU should have a plan ready for such neighbours.

Analysts are observing that while the EU is grappling with the impact of the crisis on its member states, it is important that it should also quickly develop a strategy of how to extend its solidarity to the neighbouring countries with which it has close connections and whose stability and prosperity directly and indirectly can impact the EU.

SOUTH CAUCASUS: In the South Caucasus, the first cases of the virus appeared in late February, shortly after the outbreak in Iran. These were soon multiplied, however, by a new wave of infections from people who had recently travelled to some of the most affected areas in Europe, particularly Italy. Armenia has registered the highest number of cases so far, followed by Azerbaijan and Georgia. Having followed the dramatic rise of Covid-19 in Italy and Spain, these three countries have been trying to adopt measures for coping with a possible dramatic increase in the number of infections. Both Armenia and Georgia have been trying to create the necessary health infrastructure in this regard. However, they are facing severe financial difficulties.

Geo-strategists have observed that the pandemic carries a range of other worrisome implications for the region. It has affected the South Caucasus at a time when the governments of the three countries are dealing with a range of political, geopolitical and economic challenges. They feel that this crisis may severely exacerbate situation. It is perhaps this realisation that has forced the three countries to respond to the crisis decisively and with coordinated mechanisms, to cut through red tape and political fiefdoms.

 In Armenia, the country's medical services have been frantically trying to isolate the known cases. Armenia was the first of the three countries to declare a state of emergency, which carries implications for domestic politics. Armenians were scheduled to vote on a controversial constitutional referendum on April 05. The state of emergency has not only put it on hold but has also thrown a wet blanket on the opposition's criticisms, since all public gatherings are suspended. The Armenian economy was just starting to recover from a period of stagnation. The pandemic has halted that and may yet create the sort of long-term damage that Armenia can ill afford.

In Azerbaijan, the coronavirus crisis has followed the collapse of oil prices. Under normal circumstances, the country would have been able to sustain its economy for one, probably even two years in the case of an oil price slump of the current magnitude. However, with Covid-19 creating havoc within the world economy, that cushion has now become probably thinner.

It may also be noted that crucial parliamentary elections are scheduled to take place in Georgia in October, and prior to the Covid-19 outbreak, the election campaign had all but started. Politics, however, has been put on hold as the country braces itself for a hike in the number of cases. On March 21, Georgia declared a month-long state of emergency. The following day, following an outbreak of the virus, the government sealed off Marneuli and Bolnisi, two districts densely populated by Azerbaijani-speaking Georgians, establishing army roadblocks around the area. The government has done so being acutely aware of the sensitivities involved in dealing with the country's minorities.

However, the economy, which has been the Achilles heel of all Georgian governments since independence, has again become the biggest concern. Tourism was fast becoming a big earner in Georgia over the last decade but took a hit last year because of problems with Russia. This has now hit rock-bottom this year. If the Covid-19 problem persists, Georgia may have to divert efforts to agriculture, both as a source of food for domestic consumption and also to boost exports. Prime Minister Gakharia enjoys strong support. Nevertheless, it is unclear how the evolving dynamics with its socio-economic impact will translate in the coming October elections.

So far, all three countries appear to be dealing with the ongoing problems on their own, using some international mechanisms for additional support. They are trying their best to secure WHO support in their efforts to contain Covid-19. This will however not be enough. They will require international assistance for both the medical and economic dimensions of the crisis sooner or later.

The EU needs to prepare a plan in this regard. The South Caucasus is a neighbouring region, Georgia is an Associated Country, and the other two are Eastern Partnership (EaP) countries. The EU is the first trading partner for Georgia and Azerbaijan and the second biggest for Armenia. While the EU is facing very serious challenges at home, ignoring its neighbourhood would have serious implications further down the line..

Guy Verhofstadt, former Belgian Prime Minister, presently an European MP, has reiterated the need for the EU not only to carefully formulate its future health agenda for EU members but also the adjoining region. He has suggested that the EU should prepare for the dramatic economic fallout of Covid-19, which will be huge. He has observed that the EU and the contiguous areas will enter a deep recession.  He has suggested that the EU needs to ensure that the economic downturn is as short as possible and followed by an economic revival - avoiding the 'U' and hoping for a 'V', as economists say.

One hopes that the European Central Bank (ECB) will understand this. Verhofstadt has justifiably pointed out that- "a crisis is not always negative. It sometimes contains opportunities, too. One of these opportunities is the launch of a Euro Safe Asset as a new instrument for investment. It will provide a low-risk opportunity to institutional investors worldwide to pump new money into Europe's real economy and recovery". [April 01, 2020, 1:23 am]

 

Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.

muhammadzamir0@gmail.com

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