Towards the post-COVID world: Hopeful, but cautious reopening in the US, Europe, China, India, Australia and New Zealand

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CWA # 278

The World this Week

Towards the post-COVID world: Hopeful, but cautious reopening in the US, Europe, China, India, Australia and New Zealand

GP Team
2 May 2020

The World This Week # 65, 02 May 2020, Vol 2 No 18

Shreya Upadhyay, Sourina Bej, Harini Madhusudan, Aarthi Srinivasan, Alok Kumar Gupta and Rashmi Ramesh

Trump's is Opening up America with an 'America First Again' push
What happened?
In mid-April, United States President Donald Trump rolled out a plan to reopen the country titled 'Opening up America Again' that focused on ramping up testing nationwide and opening the country in a phased manner. On 2 May, at least 31 states have been working on allowing businesses, restaurants, construction, and manufacturing to open but with strict social distancing measures.

What is the background?
Six weeks back, stay at home orders were announced in the country amid the pandemic panic that has caused more than a million cases and 65,000 deaths. Hundreds of counties and all 50 states have confirmed Coronavirus cases are still on a rise. Since these orders were passed, there have been clashes across the country, at times divided into partisan lines.

While the Democrat states have tended to be more proactive, declaring emergencies, closing schools, and non-essential businesses, and imposing limits on bars and restaurants, several Republican governors have downplayed the crisis. There has also been a raft of lawsuits nationwide from businesses.

What does it mean?
Due to the lockdown, the US economy has been brought to a standstill and has cost 26 million jobs. With millions of Americans out of work and restrictions on travel, pressure has been building in several parts to reopen the society. However, opening America is not only a political decision, but Corporate America will have a large say on this.

Many feel that opening the country at this juncture is unrealistic considering that the virus' toll remained devastating. Big business might not be in a hurry to open doors in a post-Covid world. The nature of the work-life is changing with many looking at remote working as an option in the future. With safety being the topmost priority, the reopening process is bound to be slow and gradual. Community activities of subway travel and crowding into bars will take months if not years to get back like before.

The partial opening of the economy that is so interlocked will not work even if one cog in the supply chain is missing. There is also a public health threat. Another wave of the virus will have dire consequences for both safety and economy. Therefore, it is important to build up health-care capacity before plunging into normalcy. In the absence of this, there is little evidence if the public will be ready for the reopening, despite scattered protests in the past month.

Most surveys have shown little appetite for returning to normalcy. Moreover, the government's role will not stop announcing new policies. The businesses, the states, and individuals are going to require the help of the federal government to deal with reduced sales, tax revenues, and unemployment. The administration needs to plan, prepare, assess, and communicate the next steps transparently.

Europe shows the way, but with a warning
What happened?
In a week, a host of European countries started easing their coronavirus lockdown and moving towards reopening their economies. The region is now set to look beyond the pandemic. Germany will be easing out of the lockdown by 3 May but with a caution against carefree travel during the summer holidays ahead. From 27 April the country has allowed bikes shops and bookstores to reopen. Italy which has seen 27,000 deaths, more than any country in Europe, will ease restriction from 4 May.

France along with Spain are going to gradually exit in phases from their strict coronavirus lockdowns, with restrictions to be loosened progressively and varying from region to region. Both France and Spain had the harshest lockdown measure, and early this week, Spain has allowed children of 14-years-old to go outside once a day for one year. The country is likely to open hotels from the second week of May. In Europe, as Boris Johnson returns to work after recovering from the virus, all is not well for the UK. The UK has passed the peak but is not yet ready to lift the lockdown and will lay out the roadmap only next week.

What is the background?
Three issues contributed to the easing of the lockdown in Europe. First, the easing of the restrictions followed after most of the countries registered a low death rate, but the reproduction number has not slowed down yet. This indicates that the average infection rate of the people has not reduced. Spain which recorded more than 2,30,000 cases and 24,000 deaths had registered only 300 deaths in a day and no spike in cases since 26 April.

Second, public discontent over the continued lockdown is increasing among many countries. But having slowed the virus's spread, many people believe its dangers have been passed, and the country should get back to work to take stock of the economic costs from the lockdown. Ignoring the restrictions on gathering, Berliners protested against the lockdown, which is seen as a violation of individual freedoms. Last, the lockdown follows another significant event when the European Union declared a recovery fund that would ensure fiscal stimuli into the cash-starved European economy.

What does it mean?
The reopening of Europe means the region is going to adapt to a 'new social normal,' the opening of the market will bring out the losses distinctly, and the resilience of the polity will once again be tested with the economic challenges.

First, ban on large gatherings, wearing of face masks and work from home will transform the communitarian and group interactions drastically with an extent that virtual communities will be in vogue. In addition, mundane habits like eating in restaurants, reading books, watching movies will shift to digital platforms and e-commerce might dictate the chain of market economies more in Europe.

Second, the pandemic has increased the rate of unemployment in the service sector as a large section of people are working from home. Tourism that is the core of the European economy apart from manufacturing has been severely affected with Greece staring at bankruptcy. This is likely to bring back memories from the debt crisis and austerity measures that was put in place in Greece. For the countries to normalize tourism, Europe might be debating on tourist corridors with a regulated movement of people.

Last, the pandemic has also tested the resilience of the political structure, and the reopening will bring out the distinct fault lines. While the cooperative federalism fought the crisis better, the centralized polity in France faced domestic criticism of mishandling the crisis with faulty decision making by President Macron. Even though Germany's federal response has been hailed, it is also setting a dangerous precedent of rushing out of the lockdown too early.

Internal and external messages from China, with a decision to hold 'Two Sessions', and ease international travel
What happened?
China announced that it would hold its annual 'Two Sessions' meeting on 21 and 23 May. The announcement comes after the easing of restrictions in Wuhan and also a dip in the new cases.

Simultaneously, China eased its border restrictions and announced on 1 May a revival of its international travel for the business groups. South Korea became the only country to respond to China's announcements. The passengers flying between South Korea and China will be under a 48 hours observation instead of the mandatory 14-day rule after travel. The travel will now be fast-tracked with a swift immigration process.

What is the background?
China had been on lockdown since late-January, and there had been strong restrictions on movement and large gatherings. Beijing, Tianjin and Hebei announced recently that they would lower the emergency from the highest to the second level. It has also begun to take measures to ease the movement of people within the country. In this context, the announcement to hold the Two Sessions meeting and to allow essential business travel was made.

In February, China announced that the Two Sessions meeting that was scheduled in March had been cancelled. The annual meeting is significant because thousands of deputies and representatives from the country gather in Beijing to be a part of the National People's Congress and the Chinese People's political consultative conference where essential policy announcements are made by the leadership.

With the fall in numbers of cases across China and early attempts towards restarting the economic activities, China began approaching a number of countries regarding the easing of borders. South Korea became the first country to respond to this, and the South Korean visits would be to 10 cities declared safe in China. China looked to ease border restrictions with Hong Kong but was met with strong opposition from the protesters. Easing border restrictions would help facilitate essential travel and ensure the revival of businesses. The movement will be allowed for those in businesses, logistics, industrial production, and technical services from 1 May.

What does it mean?
It is difficult to suggest that China is rushing towards normalcy. By holding the 'Two Sessions' meeting, China would like to show the world that it has the virus situation under control. At the same time, Beijing will be able to address the essential post-pandemic socio-economic and political requirements and policies. The need to ease border controls falls in line with the same thought, as the numbers fall, it is imperative to ensure that the economy does not collapse.

The need to encourage business travels is seen as an attempt to get the businesses on track.

Australia and New Zealand restarts the border, creating a 'Travel Bubble'
What happened?
Australia and New Zealand have efficiently contained the spread of the Coronavirus. An extensive testing process and stringent measures have productively brought down the number of active cases and have motivated the respective governments to relax the restrictions on its citizens.

Since 27 April, New Zealand has moved from lockdown "Level 4" to "Level 3" facilitating small businesses and schools to run on a limited capacity. Similarly, Australia has relaxed restriction and permitted the residents to visit their relatives and friends. On 1 May, the Australian Prime Minister said that there would be further considerations to ease the lockdown measures. Both countries have issued strict instructions to the public to maintain social distancing and hygiene. New Zealand might open its borders to Australian citizens, creating a travel bubble between both countries, once the virus is contained.

What is the background?
Both Australia and New Zealand had closed its borders and ports on 19 March. The returning citizens and residents were required to self-isolate for a period of two weeks. In Australia, only the supermarkets, clothing stores, chemists and beauty salons were allowed to remain open while cafes and restaurants were restricted to take-away only. Whereas in New Zealand, a four-level alert system was introduced on 21 March to manage the outbreak.

The alert level was initially set at "Level 2", but was subsequently raised to "Level 3" on 23 March. The alert level was then moved to Level 4" on 25 March, putting the country into a nationwide lockdown.

What does it mean?
First, the reopening of the economy is vital and necessary, since the world is not only threatened by the virus but also a worldwide recession. Both the countries cannot afford a spike in the COVID-19 cases as it will impact the economies of both countries to the extent of a slower growth rate.

Second, the pandemic could only be battled if the citizens ensure social distancing and self-isolation in adverse cases. The rate at which the virus has been spreading from the existing cases is relatively high, and it is prudent to remain cautious.

Third, Australia has been successful in containing the virus by limiting the restriction to social gatherings and hence the economy is functioning better. New Zealand had imposed a complete lockdown; therefore, it is evident that it might take time to recover its trade. Consequently, Australia's economy may perform much better than that of New Zealand. However, both countries will recover well by 2021. An inward-looking strategy may be appropriate in boosting consumer demand, which can sustain the economy until the pandemic is contained in the rest of the world.

India extends lockdown, but with a graded easing of restrictions
What happened?
India extended the nationwide lockdown by 14 days - up to 17 May under the Disaster Management Act 2005. The official notification came on 1 May.
The "Lockdown-3" however, has come with some relaxation based on the total number of active cases, doubling rate of confirmed cases, the extent of testing, and surveillance feedback from the districts till date.

The government have divided the districts into three zones at the national level: Red (Hotspots), Orange and Green. Red zones will face intensified surveillance protocols, contact tracing and full coverage of Aarogya Setu App. Containment zones within hotspots will undergo house-to-house surveillance, quarantining of affected, and clinical management to ensure strict perimeter.

Districts that either have no confirmed cases till date or in the last 21 days are in the Green zones. Orange zones are neither in Red nor in Green zones. These classifications are, however, 'dynamic' and would be updated weekly. Blanket bans on any congregation and reopening of educational institutions will continue in all the zones.

What is the background?
The 54-days lockdown, beginning 25 March, was aimed to contain the spread of COVID-19 infections. Out of 733 districts, 170 were hotspots and 209 were designated as potential hotspots by 15 April. Relaxation was based on improvement; so far, there are 130 districts in Red zones, 284 in Orange, and 319 in Green zones.

Top priority was to contain the spread, which stands achieved even though there has been a surge in confirmed positive cases in the country. A delicate balance between the health and economic imperatives has become sine quo non in order to avoid bigger disaster in the making in the next few weeks.

Loss of jobs, curtailment of salaries, consequent loss of purchasing power, and lessening of demands would lead to a vicious cycle battering the economy. Loss of economic activity has impacted India's GDP growth to the extent of 98 billion dollars in the first 21 days lockdown period alone.

Poverty has deepened further giving an imperative to reopen the economy of the country.

What does it mean?
The decision came owing to significant gains towards arresting the virus-spread to Stage-3 - Community Infection Stage. There is no confirmed curable medicine, and the vaccine is still at the trial stage. Accordingly, India had no choice but to extend the lockdown and restrain movement to and from the infected districts.

The outbreak of the pandemic coupled with the lockdown, has led to severe long-term economic disruptions, the brunt of which will have to be borne further. Millions of migrant workers deprived of their daily income who are stranded across India shall have some respite. Ninety per cent of India's workforce, which is in the informal sector, with no minimum wages and social security, will be facilitated.

The gradual easing of economic activities has become essential. Within different districts, there could have been red, green and orange areas. Sealing of these zones, rather than zoning the entire district could ensure restarting of the economic activities.

Also, in the news

New trouble in Yemen, as southern separatists declare self-rule
The Southern Transitional Council (STC) declared a state of emergency and self-rule in the interim capital, Aden and other southern provinces. With this, the STC ended the agreement with the Saudi-led coalition for power-sharing with the internationally recognized Yemeni government. The major concern is that STC is supported by the UAE, one of the members of the coalition, and it will now open a new front in the war-torn country.

Government rejects the ceasefire called by the Libyan National Army
The Libyan Government of National Accord (GNA) rejected the unilateral ceasefire declared by the Libyan National Army troops headed by General Khalifa Haftar. The GNA accused the LNA of violating the terms of truce earlier and stated that it does not trust its rival. The LNA announced a ceasefire in the wake of Ramadan and suggestions by "friendly countries".

Pro-Democracy protests revive in Hong Kong
Post COVID-19, the pro-democracy protests in Hong Kong have begun and is set to rise. On Friday, there were clashes between protestors and the riot police, one of the first major incidents after the pandemic showed signs of abating. About 100 protestors in a shopping mall were dispersed by the police with the help of pepper spray.

COVID-19 pushes millions into the poverty trap: World Bank
The Coronavirus might prove disastrous for the world trying to eradicate poverty at a large scale. According to the World Bank, the developing countries will be among the most affected, even though the virus itself does not discriminate. Experts say that, for the first time since 1998, global poverty will increase, an unfortunate reversal of the efforts of the countries in combating poverty.

Germany bans Hezbollah and conducts raids to find suspects on its soil
Germany on 30 April banned Hezbollah on its soil, designating the group a "terrorist" organization. Following the announcement, police conducted raids in several mosque associations in the western states of North Rhine-Westphalia, Bremen and Berlin which it believes are close to Hezbollah. The security officials believe that as many as 1,050 people in Germany are part of Hezbollah's "extremist wing" even though Hezbollah does not acknowledge the existence of separate wings.

About the Authors
Dr Shreya Upadhyay is a Nehru-Fulbright doctoral scholar. She is a Principal Analyst of Geopolitics at the India Bound and teaches at Symbiosis University, Pune. Sourina Bej is a Research Associate at the NIAS. Harini Madhusudan and Rashmi Ramesh are PhD scholars under the Science Diplomacy Programme, School of Conflict and Security Studies, NIAS. Aarathi Srinivasan is an intern at the School of Conflict and Security Studies, NIAS. Dr Alok Kumar Gupta is an Associate Professor at the Central University of South Bihar

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