Deniz Renkveren, .tr Magazine
The COVID-19 pandemic, one of the toughest exams the world has recently been going through, forces people to question all global systems. Prof. Ahmet Sedat Aybar states that there will be a quest for clearer answers to problems inherited from the past in numerous areas ranging from racism to terrorism and climate change to unemployment. “The impact of the pandemic is more severe in developing countries which disable their social defense networks as part of liberalization and deregulation. The burden of economic recession will be much heavier for poor countries.”
The COVID-19 pandemic is an unprecedented outbreak at a scale that the world has not witnessed for generations. When we consider the global economic and political effects of the pandemic, it is possible to conclude that this is the most cosmopolitan pandemic ever seen in the known world history.
This pandemic required individual countries to review their institutional structures, particularly their healthcare systems. The COVID-19 pandemic also brought up the debate on the priorities to consider in the relationship between economy and management. Approaches that prioritized saving lives were given weight due to the pandemic while effective management practices to be delivered on the basis of economic variables were put on the back burner. Some countries, including those with very strong economies, have faced difficulties in many areas, specifically in the healthcare sector. The crisis caused by the pandemic led the global economy into a vortex of the severe recession. Growth forecasts for the global economy turned negative. The sectors that suffered the greatest blow from this pandemic were the automotive, airline transport, energy and basic material industries, and the services industry. In terms of international relations, question marks arose on the course of the global conflicts between superpowers such as the USA and China as well as the future of the EU, which failed to display a good example of solidarity during the crisis. Tensions decreased in conflict regions following the fall in oil prices. There is anxiety as to what the future of existing coalitions will be.
Prof. Ahmet Sedat Aybar, Head of the Department of Economics and Finance at Istanbul Aydın University, says that, in this new era, the world will begin to question many of the problems that it has inherited from the past. Prof. Aybar has stated in our interview that clearer answers will be sought to ongoing problems such as racism, terrorism, security, unfair distribution of income, unemployment, threats to job security, global warming, climate change, desertification, and environmental pollution. During the interview, Aybar has shared his projections on the global economy as well as his comments on the future of international relations and the policies Turkey has recently pursued as a regional power which not only successfully managed the crisis during the COVID-19 pandemic but also extended a helping hand to countries in dire straits.
What will be the major problems in the post-coronavirus times? What will be the negative effects of the crisis?
The first economic impact of the pandemic was a demand shock. The gradual elimination of the pandemic thanks to healthcare efforts will require the production chains to be reactivated. Some countries started to reinvigorate their economies on the grounds that they had not much power left to do more in healthcare. However, reactivating economies that have been hit by the pandemic is an effort exposed to real challenges. The downward trend in commodity and oil prices will particularly be the most important challenge in mobilizing production chains. The reason is it is very difficult to re-commission the paused and idle production line before the global division of labor is redefined. The reinvigoration of the supply side must be demand-pulled. In an environment where the economic structures of different countries are being reconstructed, it is uncertain whether past relations can be continued in the new era and what the demand status will be. This will bring about a redefinition of the global resource allocation and the division of labor. To this end, countries that have been able to protect the demand side from too much damage, as well as countries that have paid attention to supporting wages, consumption and investments, will enjoy greater advantages after the pandemic.
GLOBAL POVERTY MAY INCREASE BY HALF
Economic difficulties have arisen throughout the world during the COVID-19 pandemic. Considering the previous economic problems, what kind of problems do you expect in the post-coronavirus period?
In developing countries where the effects of the pandemic are severe, we see that they have disabled social defense networks as part of liberalization and deregulation. The loss of capacity caused by the deactivation of the healthcare system through privatization efforts leads to economic decline, and this is one of the most important factors that will determine future changes in the hierarchy of states.
Statements by the World Trade Organization (WTO) and the International Monetary Fund (IMF) as well as other projections show that the global economic crisis looming on the horizon will be deeper than the past crises in the 20th century. According to the WTO estimates, global trade may shrink by 32 percent. The IMF points out to a global economic recession of about 1% and expects a possible increase in unemployment to an average of 24%. The burden of economic recession will be much heavier for poor countries.
A global recession of up to 35% is expected due to the pandemic. The number of businesses closed around the world due to the crisis is quite high. The IMF has declared that it has reserved USD 1 trillion to allocate as emergency aid and has since received applications from almost 90 countries. The total incentive packages announced by governments on a global scale has exceeded USD 8 trillion. Three-quarters of over 3 billion workers around the world have no social security. Issues such as unemployment, poverty, lack of job security, and migrant workers will cause serious problems due to the lack of social security networks. The pandemic will not affect rich and poor countries in the same way. For instance, in Africa, we see that the decline in commodity prices reduced the income of the African continent. Although the African continent has been the region that is least affected by the pandemic, it has emerged as the geography that was most adversely affected by the crisis from an economic point of view. Due to the pandemic, global poverty is expected to increase by half. Considering all these from the viewpoint that supply chains will be reinvigorated on a demand-pull basis, it is clear that poor countries where social security networks are destroyed will be delayed to join the global competition and constitute the losing side.
Turkey’s healthcare system set an example to the whole world during the fight with COVID-19. Countries are questioning their national healthcare systems because of the coronavirus pandemic. Do you foresee any changes in healthcare systems worldwide after this period?
The coordination of global healthcare systems led by the World Health Organization has failed due to the different practices pursued by strong states in accordance with their unique conditions in their fight against the pandemic. Therefore, it is inevitable for countries to initiate a mutually harmonious, transparent and participatory regulatory process in the global healthcare system after the pandemic. To that end, Turkey employed its own system and own algorithms and adopted practices unlike the existing propositions to face the pandemic. Backed by social warnings, the healthcare system attained successful results thanks to the contract-tracing method. The advantages brought along by the fact that the Turkish healthcare system is constructed around a social welfare state became even more visible. Countries that have privatized their healthcare systems, thus bringing their systems out of the welfare state design, such as Italy, Spain, France and the UK suffered heavy casualties. In a similar vein, the number of cases and deaths in the USA, which has a fully-private healthcare system, set an important example. A number of countries that have entrusted their healthcare systems mostly to the public service achieved successful results in the fight against the pandemic. However, the pandemic period cannot be understood only through the health-centered struggle. In addition, starting the production of products such as masks, ventilators and protective clothing and the flexible use of the existing capacity separated Turkey from other countries. Successful cases such as Turkey have started to be under spotlight in the fight against the pandemic. Turkey has provided more than 55 countries with aid and medical supplies. In the future, it can be expected that the issue of health will undergo a transformation in a way that healthcare services will be delivered to everyone.
THE WORLD WILL NEVER BE THE SAME AGAIN
Can we say that COVID-19 will start a new era? If so, in what contexts?
After COVID-19, the world will definitely never be the same again. The habitual workflows will change after the pandemic. Just like digital education systems, events such as meetings, seminars, and conferences that cause losses of time and work in the daily workflow due to travel and venue requirements as well as organizational difficulties will be transferred onto digital platforms and systems. Consumption habits that make their way into our lives thanks to a production structure employing digital technology, artificial intelligence, and robotics will activate an environmentally-friendly chain. Business and creativity processes that employ technology and communication ties more commonly will radically change our daily lives.
THE CRISIS HIT COUNTRIES WITH POOR CAPACITIES IN THEIR NATIONAL HEALTHCARE SYSTEMS
How have national economies been affected by the coronavirus pandemic? What changes do you think will be experienced?
Developed and developing countries have been affected differently by the coronavirus pandemic. Countries with poor capacities in their national healthcare systems have particularly been hit harder by the crisis. Countries in the African continent, where casualties due to the coronavirus pandemic were lower, were negatively impacted by the declining demand for the products they exported. Particularly the European Union (EU) member states quickly realized that they were lonely in the fight against the pandemic and that they had to “pull themselves up by their own bootstraps”. Further collaborations that could be developed over the financial structure could not be realized. Attempts to support countries which have suffered a negative blow so that they could stand up again remained void. The EU now faces the obligation to review and update its solidarity processes after the pandemic. In addition, it is clear that the competition between the USA and China will continue in the upcoming period. Once the recession in the global economy is reversed, individual countries will take their place in the world of the future in parallel with their capacities, human capital, educational levels, and their creative and entrepreneurial spirits. Countries ready for this will rank higher in the global hierarchy.
Which sectors have suffered the most due to the crisis?
Initially, tourism, shipping, transportation, and service sectors were negatively affected. In addition, the automotive sector as well as sectors manufacturing consumer goods were among the sectors that were adversely affected due to declining production. Due to disruptions in transportation systems, e-commerce and other service sectors were also negatively affected.
You previously said that every country took its own economic measures and thus caused neoliberalism, that is, the free market economy to lose credibility. What changes will take place after this loss of confidence in neoliberalism? What impact will these changes make on Turkey?
The power elites who are the winners of the neoliberal era will continue their attempts to ensure states protect them in order to retain their earnings in the post-pandemic period. The lack of alternative world designs makes the neoliberal model indispensable. On the other hand, the collection of wealth in the hands of a few people paves the way for authoritarianism and democratic processes to be disabled, in contrast with the neoliberal claim. The main focus of economic competition is increasingly shifting to digital technologies, 5G networks, robotics, and environmentally-friendly green production. In a sense, Turkey is lucky from this perspective. This is mostly due to the digital breakthrough in the defense industry. Positive reflections of the overflow effects will emerge sooner or later. Furthermore, under the given circumstances, the steep decline in oil prices gives Turkey, a country that has chronic energy dependence, the opportunity to engage in key initiatives. These defense initiatives enable Turkey to resist the challenges it faces in its own region.
CHINA’S GLOBAL POSITION UNDER THREAT
How will China’s position as a rising global power be affected when the economic competition between the USA and China, particularly the trade wars listed on the agenda for a while, as well as the conditions brought by the post-coronavirus period are considered? What will be the fate of large-scale projects initiated by China such as the Belt and Road Initiative?
It is rather useful to approach the Chinese issue cautiously. There are areas in which China is very strong, as well as areas in which it is not so strong. Its breakthroughs in technology and 5G technology, coupled with its production structure enabling export surplus and its social solidarity networks, are China’s strengths. However, China is still a developing country. A large part of its population still lives in the countryside. Furthermore, it is the country with the highest household indebtedness levels in the world. It turned out during the trade war period that China did not have sufficient economic power to establish a world order. It has become clear during the pandemic that, as a country that has long depended on cheap labor as economic leverage, China’s economic basis will not be able to withstand restrictions for a long time. It is clear that a high debt burden, competitiveness through labor-intensive techniques, and conflicts with the USA have the potential to evolve into a threat to China’s global position. In this context, it may be possible for the Belt and Road Initiative to continue in another way. Chinese leaders cannot ignore the threat posed by an atmosphere in which new technologies are employed, real wages are suppressed for competition purposes, and social unrest thus increases.
THE EU QUESTIONS ITS OWN EXISTENCE
The European Union (EU) failed to act in solidarity during this crisis. What awaits the EU after the coronavirus pandemic?
The EU was hit by the pandemic at a time when it had already been in a very difficult position. Increasing racism towards the growing migrant population, privatizations, rising unemployment, neoliberal austerity measures, and endless street demonstrations have shelved the EU’s initial model for sharing and promoting welfare. First of all, cases such as the Brexit, the yellow vests protests in France, the burning of the EU flag in Italy and France, the closing of German-French borders after the start of the pandemic and the EU indifference to the Italian and Spanish experience during the COVID-19 pandemic further fueled the questioning of EU’s tendencies. The rapid spread of the outbreak in Italy and Spain has required the EU member states to rely on their nation-state capacities to combat the outbreak. Developments that started with the elimination of social safety networks, particularly regarding public services such as healthcare and education, revealed that the EU’s existing setup could not survive after the pandemic. Medical aid from non-EU countries such as Turkey, Russia, and China led to the questioning of the EU’s image as well as the notions of common identity, common history, and common welfare particularly in Serbia and in Italy and Spain. Non-EU aid also damaged the European hubris, which failed when faced with a crisis.
THE USA WILL MAINTAIN IMPORTANCE IN GLOBAL GEOPOLITICS
It is speculated that the US may lose its position as a global superpower after the pandemic. What do you think the US position will be on the global level in the post-coronavirus period?
The Trump administration suffered a serious blow during the pandemic. The economic measures are taken by the administration against the pandemic mainly focused on ensuring cash expansion through efficient use of monetary policy instruments. The global recession and the pace of the outbreak made it easier for President Trump’s administration to exert its own political agenda. Restrictive policies were implemented towards migrants when flights were cancelled. Led by the Federal Reserve (FED), the USA continued an economic struggle over financial markets. Unemployment rose rapidly, exceeding 30 million. The US allocated 10% of its gross national product (GNP) to the fight against COVID-19. It turned out that, unlike China, the American economy and healthcare organization would not allow a full lockdown model, so that casualties could be high. President Trump said that the number of death cases could rise to one hundred thousand once the restrictions were removed. The US began to focus more on tension in its relations with China, held China responsible for the pandemic, and spoke of planned attempts to make China pay for the economic losses it incurred. The US pursues plans to emerge stronger from the COVID-19 pandemic, just like it did after the World War II. It plans to do this by investing in profitable areas with the idle capital it will acquire through monetary expansion in production. The US will, therefore, be an active participant in the post-pandemic global geopolitical conflicts.
CONFLICTS WILL DECREASE, NEW ALLIANCES WILL BE SOUGHT
Oil prices have considerably dropped during this period. How will this affect the international equations, particularly the one in conflict zones in the Middle East? What effect will oil price policies have on alliances?
The decline in the prices of raw materials and oil adversely affects oil-producing countries such as Iran and Venezuela. The economies of these countries have already been hit by international sanctions. Furthermore, the decline in oil prices reduced conflicts in the crisis regions. These conflicts now continue at a low intensity. For example, a ceasefire decision was made in Yemen, albeit temporarily. The efficiency of oil-rich countries which are party to the conflicts in the region extending from Yemen to the Eastern Mediterranean is decreasing. However, these countries are not yet disabled. As seen in the example of the Libyan conflict, rebels backed by the United Arab Emirates (UAE) and Saudi Arabia can become even more vicious. The price competition between Russia and Saudi Arabia has drastically reduced oil revenues. Furthermore, the USA, which has become the largest oil and shale gas producer in the world, stopped its production due to falling prices. Already indebted, oil production companies started to go bankrupt one after another.
The dynamics for the dissolution of coalitions in conflict zones such as Syria, Libya, and Yemen are also triggered. To this end, we can witness the start of searches for new alliances. The alliance Israel has established on the Egypt-Saudi Arabia axis has the potential to unravel. For us, it is important to defend the borders of the Blue Homeland and protect the maritime jurisdiction. In the post-coronavirus period, the world will turn to use renewable energy rather than fossil-based energy. This process will at least yield serious economic returns. It turned out that alliances based on cost-benefit calculations are unsustainable at a time when oil companies will be gradually disabled and doubts about the oil-based civilization have increased.
TURKEY’S TRUMP CARDS GROWING STRONGER WITH CROSS-BORDER OPERATIONS
Looking back on our recent past, it is possible to say that Turkey’s foreign policy moves were accurate. Its diplomatic initiatives during the Qatar crisis and in the wake of the US announcement on the recognition of Jerusalem as the capital of Israel, its policy on Somalia and Djibouti, which controlled access from the Indian Ocean to the Red Sea, and its initiative to define an exclusive economic zone through the Blue Homeland map were all efforts that strengthened Turkey’s hand. Moreover, operations actively employing hard power such as the Euphrates Shield, Olive Branch, Peace Spring and Claw, which aimed to ensure not only external security but also internal security by keeping acts of terrorism out of borders, strengthened Turkey’s trump cards for the pragmatic positions the country would assume in the puzzle of post-pandemic regional and global alliances. In particular, domestic and national production of unmanned aerial vehicles and digital technologies used in Operation Spring Shield was a development serving as positive external leverage for promoting creativity in Turkey in addition to their use for defense purposes.