At the time of writing on February 25th we already know quite a lot about the Covid19 and, at the same time, many uncertainties remain. Limiting oneself to official and authoritative scientific sources, we have already learned that the virus attacks almost exclusively adults; that it is fatal mainly in the case of older people and/or if they suffer additional pathologies (smoking, cancers, diabetes, hypertension…) and is otherwise less dangerous than the annual flew epidemic with a low rate of fatalities.
Among still unknown factors remain the seasonality of the virus (will it disappear in spring?), the delay for providing a vaccine (10-18 months?) or the length of the incubation period (14-27 days?). Fundamental is the correctness of the data received in particular from China which – obviously incomplete at the start of the epidemic – remains subject to caution concerning the stabilization – viz. the regression – of the illness, whose accuracy conditions the forecasting of its evolution.
In the main, government and sanitary authorities seem to be applying sensibly the “principle of precaution”, aiming essentially at information, prevention and preparation in the event of the extension of the epidemic, and taking particular care not to spread panic whose effects, as we will explain below, could have far wider disastrous consequences than the illness itself.
The secondary effects of the crisis are becoming more apparent with every passing day: They affect in particular the economy through the following channels:
a) The growth forecasts are being revised downwards in a context of an already weak environment, increasing the likelihood of a recession.
b) The financial markets where stocks are falling and government bonds are benefitting from a flight to safety.
c) Falling commodity prices among which – to the contrary – the rise of gold confirms the trend.
But the consequences also extend to a limitation of the freedom of movement:
a) Of people currently within specific limited geographical zones which are susceptible to be extended as the epidemic spreads as well as cautionary advice impacting travel and tourism.
b) Of goods, mainly those originating in China but now also from Northern Italy, the shortage of which can impact the supply chains which depend on them and restrict trade.
What lessons should the EU be drawing from these developments?
Let us first point out that the EU, being over 70 years old, is part of the “population at risk” all the more that it suffers from numerous pathologies such as “immobility” caused by the potentially deadly virus of “national sovereignty”, the fragility and challenges to its democratic values, social unrest encouraged by a perception of growing inequalities and injustices, not to mention the recent severe amputation it suffered, leaving the cicatrix on both the body and the severed limb (supposedly capable of self-regeneration) to initiate the necessary healing process.
Within such a context, the EU finds itself weakened and one can already observe how some extremist parties have seized on Convid19 to underpin their national-populist programs by clamouring for the (ineffective) closure of borders (where a sanitary control would possibly become appropriate, if the epidemic were to spread) whose main real purpose is to fight immigration.
A second theme that is spreading like wildfire, is to put into question the phenomena of globalization, a controversy that appears logically as a consequence of anticipated coronavirus-related shortages which demonstrate the (excessive?) dependence of our economies on the free flow of goods internationally. This question must undoubtedly be the subject of a careful revaluation because it would be unconscionable not to address the obvious vulnerabilities demonstrated by the coronavirus. It is also an opportunity to reassess the excessive interdependence of financial markets or at least their governance, which have become extremely vulnerable to the excesses of participants, either that they are able to escape the regulatory framework or that they exercise a dictatorial dominance through their national currency.
Furthermore, covid19 might turn out to be the (unexpected) trigger of the next financial crisis. The speed of reaction of Central Banks who have indicated willingness to act by providing additional support – if needed – only increases the vulnerability of the financial system whose return in due course to a more stable equilibrium becomes more problematic by the day if a crisis is to be avoided.
The answer to these challenges cannot be a step backwards, throwing out the “neutral” irreversible technological progress which has brought to light new fragilities such as the abuses of social networks, the danger of cyber warfare or the contagion of health hazards or economic chocks, etc. On the contrary, the manifest interdependence in the field of climate change demonstrates the need for a new form of governance in order to control globalization so as to avoid conflicts and ultimately the destruction of the planet. This objective includes all the other areas of globalization and can only be addressed progressively.
In the meantime, deepening the EU constitutes a necessary step in the right direction. It is therefor crucial – taking advantage of the covid19 crisis – to mobilize public opinion against the destructive narrative of the populists and make their concerns the most compelling reason for accelerating the reform of the EU.
Without such a wake-up call, the coronavirus risks making 450 million victims which will be confronted with a world crisis of unprecedented magnitude!