The Global Effects of the COVID-19 Pandemic— Selected Analyses by the Antall József Knowledge Centr by Antall József Tudásközpont

ANTALL JÓZSEF RESEARCH CENTRE

THE GLOBAL EFFECTS OF THE COVID-19 PANDEMIC— SELECTED ANALYSES BY THE ANTALL JÓZSEF KNOWLEDGE CENTRE RESEARCH TEAM ALESSANDRO D’ONOFRIO—TAMÁS KOZMA—ÁDÁM ÉVA— BENCE KOCSEV—BIANKA RESTÁS—PÉTER STEPPER— ZSOMBOR PÁL SZABOLCS—PÉTER DOBROWIECKI— ZSOLT CSEPREGI—DALMA BODOLAY—VIKTÓRIA ANNA PAPP

2 Czuczor Street, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en

ANTALL JÓZSEF RESEARCH CENTRE

AJRC-Analyses Series of the Antall József Knowledge Centre

Publisher-in-Chief: Péter Antall Managing editor: Péter Dobrowiecki Editorial office: Antall József Knowledge Centre H-1093 Budapest, Czuczor street 2

Contact: H-1093 Budapest, Czuczor street 2 Phone: +36 20 310-87-76 E-mail: ajtk@ajtk.hu Web: ajtk.hu/en

© Alessandro D’Onofrio, Tamás Kozma, Ádám Éva, Bence Kocsev, Bianka Restás, Péter Stepper, Zsombor Pál Szabolcs, Péter Dobrowiecki, Zsolt Csepregi, Dalma Bodolay, Viktória Anna Papp, 2020 © Antall József Knowledge Centre, 2020 ISSN 2416-1705

2 Czuczor Street, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en

THE GLOBAL EFFECTS OF THE COVID-19 PANDEMIC— SELECTED ANALYSES BY THE ANTALL JÓZSEF KNOWLEDGE CENTRE RESEARCH TEAM ALESSANDRO D’ONOFRIO—TAMÁS KOZMA—ÁDÁM ÉVA—BENCE KOCSEV— BIANKA RESTÁS—PÉTER STEPPER—ZSOMBOR PÁL SZABOLCS—PÉTER DOBROWIECKI—ZSOLT CSEPREGI—DALMA BODOLAY—VIKTÓRIA ANNA PAPP

HOW TO RESTART THE TOURISM INDUSTRY FOLLOWING THE PANDEMIC ALESSANDRO D’ONOFRIO1

Tourism is an important driver of development, which embraces not only a significant segment of the economy in many countries, but also represents maybe the most encouraging aspect of globalization—and the one that is less condemned by its most fervent critics—, while it is also an essential factor in enhancing the well-being and personal enrichment of the people. In fact, travelling is widely acknowledged to have a positive transformative potential on people and to be strongly beneficial for the health of the individuals. To quote the World Health Organization (WHO), “health is not the mere absence of diseases but is a state of complete physical, mental and social well-being,” and in this sense it is not wrong to assume that tourism can be considered utterly healthy.2 Unfortunately, as many countries have introduced travel restrictions to contain the spread of the COVID-19 virus, tourism has come to a complete standstill worldwide. The economic loss derived from the crisis of a sector, which represented about 10% of the global GDP in 2019, is expected to be catastrophic.3 According to the World Tourism Organization (UNWTO), the impact of COVID-19 on tourism can be estimated to reach a loss between 58% and 78% in the total number of arrivals (a perspective that might be even reconsidered by the organization in more negative terms) in 2020.4 This translates into an economic loss of USD 910 to 1,170 billion (EUR 800 to 1,128 billion)

Text submitted on 22 July 2020.

Preamble of the World Health Organization Constitution. WHO. <https://www.who.int/about/who-we-are/ constitution > Accessed: 10 June 2020. 2

WTTC: Economic Impact Reports. World Travel and Tourism Council (WTTC). <https://wttc.org/Research/ Economic-Impact > Accessed: 10 June 2020. 3

4 UNWTO: Impact Assessment of the Covid-19 Outbreak on International Tourism. UNWTO. 27 May 2020. <https://www.unwto.org/impact-assessment-of-the-covid-19-outbreak-on-international-tourism > Accessed: 10 June 2020.

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in international tourism revenues. As a comparison, the economic damage of the global economic crisis in 2009 was around 4% in international tourist arrivals and a 6% decrease of international tourism revenues.5 Moreover, the pandemic is putting 100 million tourismrelated jobs at immediate risk with 13 million of those only in Europe.6 This situation will presumably last for several months and the sector will most likely need an extensive time period to fully recover. In 2018, Europe was the favoured destination for more than a half of all tourists worldwide, as highlighted by the annual report of the European Travel Commission.7 For this reason, the “Old Continent” is expected to pay the highest price for this crisis. However, the impact of the lockdown on tourism will not affect all the EU countries in the same way. Italy, Spain, and France are the countries with the largest presence of tourists in the EU while, according to Eurostat, these three countries together account for a half of the total nights spent in the EU by non-residents.8 Furthermore, these countries, together with Germany, are all leaders in the EU when it comes to the number of enterprises in the tourism industry, and are home to more than half (56%) of the EU's tourism-reliant businesses.9 Unfortunately, these countries are also the most affected by the coronavirus pandemic, meaning that the negative effects of the crisis will have strong repercussions not only for their domestic economies, but for the economy of the Union as well. But while the countries listed before have many other important sources of income next to tourism, other member states have more vulnerable economic frameworks and more dependent on this sector. For example, in Croatia the revenues generated from international tourism represent more than 25% of the country’s GDP. Across Europe other countries are in a similar situation like Malta, where tourism reaches 15.8% of GDP, in Portugal 16.5%, and in Spain 14.3%.10 The Hungarian government, clearly motivated by the progresses of the national tourism industry, pledged to increase its value from 10% to 16% of the country’s GDP by 2022. While similar expectations can be found across the other CEE

UNWTO: Economic Crisis, International Tourism Decline and its Impact on the Poor. UNWTO. 28 May 2013. <https://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---sector/documents/publication/wcms_214576.pdf > Accessed: 11 June 2020. 5

WTTC: WTTC now estimates over 100 million jobs losses in the Travel & Tourism sector and alerts G20 countries to the scale of the crisis. World Travel and Tourism Council (WTTC). 24 April 2020. <https://wttc.org/ News-Article/WTTC-now-estimates-over-100-million-jobs-losses-in-the-Travel-&-Tourism-sector-and-alertsG20-countries-to-the-scale-of-the-crisis > Accessed: 10 June 2020. 6

European Travel Commission: Annual Report 2018. ETC. June 2018. <https://etc-corporate.org/ uploads/2019/06/ETC-Annual-Report-2018_-web-version-with-links.pdf > Accessed: 11 June 2020.

8 Eurostat: Tourism Statistics. Eurostat. January 2020. <https://ec.europa.eu/eurostat/statistics-explained/ index.php?title=Tourism_statistics > Accessed: 10 June 2020.

Eurostat: Tourism vital to employment in several Member States. Eurostat. 15 April 2020. <https://ec.europa. eu/eurostat/web/products-eurostat-news/-/DDN-20200415-1?inheritRedirect=true&fbclid=IwAR13xeCHvrpmy W8vhgTdSD_nif9F2es7yy2xAskyQNi5Vey_4E1QHWWfd1k > Accessed: 10 June 2020. 9

WTTC: Economic Impact Reports. World Travel and Tourism Council (WTTC). 2019 <https://wttc.org/ Research/Economic-Impact > Accessed: 11 June 2020.

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member states.11 The relative importance of tourism in these countries helps also to explain their diverse approaches when it comes to reopening their external borders. For instance, in Greece, where the tourism industry accounts for 20.8% of the whole economy, the government was the first in the EU to announce the lifting of travel bans—with some limitations—to tourists from other EU countries already at the end of May.12 A special case is Italy, the third economy in the EU and one of the most-hit EU countries by the pandemic—at least in absolute numbers. As the fifth most popular tourist destination worldwide, Italy was expected to receive 65 million arrivals in 2020, but the lockdown measures had heavy repercussions on the sector and may put in danger 60 years of uninterrupted growth.13 Tourism in Italy accounts for about 13% of GDP, generating more than EUR 232 billion and representing one of the main drivers of the country’s economy—4.2 million Italians are employed in the tourism industry14—, society and culture, thus the decision to open its borders to all EU and EFTA member states already from the 3 June is comprehensible.15 As known, tourism between European countries is highly integrated, and EU citizens are constantly travelling through and spending their free time in other member states. In this sense Italy might be again paradigmatic and it is interesting to observe the composition of tourist flows reaching to the Mediterranean country. In the last decade, inbound tourism saw a record growth rate of +34% in 2008, with foreigners reaching the “Bel Paese” representing more than half of total attendances in Italian touristic facilities since 2017.16 Going into more detail, Italy largely depends on European tourists, who represent 79% of all foreigners arriving in the country. On the top of the list are unsurprisingly Germans with almost 59 million nights spent in Italy (27% of the total), followed by tourists coming from the United States (14.5 million), France (14.2 million), and the United Kingdom (14 million). Chinese, for whom overseas tourism is a relatively new leisure activity, are eleventh with

11 Corentin Léotard: Budapest promises to welcome tourists after COVID-19 pandemic. Euractiv. 13 May 2020. <https://www.euractiv.com/section/economy-jobs/news/budapest-promises-to-welcome-tourists-after-covid19-pandemic/ > Accessed: 11 June 2020.

Hellenic Republic Ministry of Foreign Affairs: Greece welcomes the world. MFA Statement. 30 May 2020. <https://www.mfa.gr/en/current-affairs/statements-speeches/greece-welcomes-the-world.html > Accessed: 10 June 2020. 12

Assoturismo: Assoturismo-CST, nel 2020 si perderanno oltre 260 milioni di presenze turistiche (-60%). Ripresa solo nel 2021, forse Interventi inconsistenti per le imprese turistiche. Cancellato più di mezzo secolo di turismo. Assoturismo. 19 March 2020. <http://www.assoturismo.it/assoturismo-cst-nel-2020-si-perderannooltre-260-milioni-di-presenze-turistiche-60-ripresa-solo-nel-2021-forse.html > Accessed: 10 June 2020.

Open: Turismo e Occupazione, l’Italia é prima in Europa con 4,2 milion di posti di lavoro. Open. 7 January 2020. <https://www.open.online/2020/01/07/turismo-e-occupazione-litalia-e-prima-in-europa-con-42-milioni-di-posti-dilavoro/ > Accessed: 10 June 2020. 14

Banca d’Italia: Questioni di Economia e Finanza. Turismo in Italia: numeri e potenziale di sviluppo. Banca d’Italia. Occasional Papers, n.505. July 2019. <https://www.bancaditalia.it/pubblicazioni/qef/2019-0505/ QEF_505_19.pdf > Accessed: 11 June 2020. 15

Banca d’Italia: Indagine sul Turismo Internazionale. Banca d’Italia. Statistiche. 11 June 2018. <https:// www.bancaditalia.it/pubblicazioni/indagine-turismo-internazionale/2018-indagine-turismo-internazionale/ statistiche_ITI_11062018.pdf > Accessed: 10 June 2020.

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5.3 million nights spent on the peninsula.17 Altogether, the total proceeds generated from the foreign inflows amounted to approximately EUR 45 billion in 2019, of which more than half (54%) is attributable to the great ability of the northern regions of Italy—those currently most affected by the virus—in attracting visitors.18 Seasonality is very important when we talk about tourism—since the industry is very much characterized by peak periods—and delaying the lift of travel bans might irremediably weaken some countries’ yearly touristic offer. As for the Italian market, the “high season” begins with the closure of schools in June, but already in May many tourists from abroad— mostly from Germany—start arriving to the country. However, each country of origin has its own specific seasonality due to geographical and socio-economic reasons. For example, France and the Netherlands show similar habits as Italy, and therefore their touristic activities are concentrated in the summer months. For this reason, in the current situation it seems clear that the first semester’s touristic flow might be totally lost, which is why many doubts remains whether some businesses across the EU will ever be able to reopen their facilities in summer. However, the losses of the tourism industry should not be carelessly measured limited to some receptive structures, beach or mountain resorts, unfortunate touristic guides and cheap souvenir shops. In fact, let us not forget that tourism is a transversal sector, and a crisis of this magnitude hitting this industry could have a knock-on effect on other related businesses, such as restaurants, small shops, the real estate market, transport, etc. According to Luca Patané, president of Italian Confturismo, for every 100 euros spent in tourism in Italy, 86 euros are generated in other sectors (over one-third of it goes to the hospitality sector, 13 euros to the catering sector, 12 to trade and retail, 7 to domestic air transport, approximately 6 to other means of transport, 4 to intermediation, and over 3 to cultural, sports, and recreational services).19 This is why, it cannot be ignored that by the end of the year—depending on the effectiveness of the single governments’ post-lockdown strategy—the negative effects on the economy could be even larger than experts are calculating. All of the above leads us to the issue of “rescue”. What are the EU governments and the other institutions—either national or international—actually doing to cope with the incredible losses generated by the crisis of the touristic economy? Since it became clear that the spread of the virus could not be contained without introducing draconian measures, travel and tourism businesses—already forced to deal with a considerable number of cancellations—started calling out for government assistance to help alleviate the burdens of millions of SMEs, which depend on, or are strictly integrated into the industry. As a matter of fact, in order to resist the enormous shock of this pandemic, some governments allocated considerable amount of cash flows and

Eurostat: EU residents made 1.75 million trips to China in 2018. Eurostat. 3 April 2020. <https://ec.europa. eu/eurostat/web/products-eurostat-news/-/EDN-20200203-1 > Accessed: 10 June 2020.

Istat: Movimento Turistico in Italia. 2018. Istituto Nazionale di Statistica. Report. 27 November 2019. <https://www.istat.it/it/files//2019/11/Movimento-turistico-in-Italia-2018.pdf > Accessed: 11 Junel 2020. 18

19 QuiFinanza: Confturismo-Confcommercio: “Dopo la crisi ripartire dal turismo”. QuiFinanza. 31 March 2020. <https://quifinanza.it/finanza/confturismo-confcommercio-dopo-la-crisi-ripartire-dal-turismo/367373/ > Accessed: 11 June 2020.

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introduced extensive tax reliefs programmes. The primary purpose of these measures was to protect businesses and save jobs even if they are expected to have only a short term positive effect. Even if more audacious measures were to be adopted, the most critical factor remains to be the unknown future. According to many observers it will take at least one year for the tourism industry to get back to where it was before the crisis. A scary prediction for all the small businesses and establishments which depend on tourism for their survival.20 However, the recovery of tourism does not only depend on domestic developments, but also on the spread of the pandemic all over the world. Assuming that, in the best-case scenario, all travel restrictions will be lifted and tourists are allowed to travel across the world before the end of the year, the concept of “engaging in tourism” could have a completely new look. The question many are now asking is whether the tourism sector will ever be the same again. In fact, the virus might not disappear very soon, and so the social distancing measures will persist, meaning that the transportation and vacation plans will also have to adapt to this new reality. Aviation carriers, trains and other transports are already planning to reduce the available seats in order to maintain travellers at safe distance, and many hotels, B&Bs, but also beaches will reduce their overall capacities. These limitations will potentially cause either an increase in overall prices, making travel a hardship for people who already suffered from the economic consequences of the pandemic, or leading them towards simpler, less costly choices close to home.21 These new scenarios were object of discussion in Brussels, where in April, Commissioner for Internal Market Thierry Breton, urged by the European Parliament, pledged to commit the EU to the “reform and reinvention” of the tourism sector. Thierry Breton mentioned figures indicating that the tourism economy is likely to collapse and will be among the lasts to recover, as the 27-nation bloc is facing perhaps the toughest challenge since World War II. The losses at a European level could reach at least 50% in terms of annual income for hotels and restaurants, while it could rise to 70% for tour operators and travel agencies, and even more for cruise and airline companies. After an initial hesitation in responding to the crisis—mostly due to the inability of the member states to find a shared strategy— Brussels has then intervened with several financial measures. On 13 May the European Commission published the guidelines to help Member States gradually lift travel restrictions and to help the EU tourism sector recover from the pandemic. The Commission aims to support the European tourism sector and guarantee liquidity for tourism businesses. In particular, Brussels’ measures range from a flexible application of the Stability Pact, to greater freedom of manoeuvre for member states in the context of regulation for state aids and bailouts which allow governments to introduce guarantee and liquidity schemes to support companies in the transport and travel sector and to guarantee that claims for

ANSA: Coronavirus, turismo balneare: “Rischiamo una quarantena lunga 2 anni”. ANSA. 18 April 2020. <https://www.ansa.it/sito/videogallery/italia/2020/04/18/coronavirus-turismo-balneare-rischiamo-unaquarantena-lunga-2-anni_7f231690-d502-491d-892f-58ce1cd7f853.html > Accessed: 11 June 2020. 20

New Europe: COVID-19 kills free competition in tourism. New Europe. 21 April 2020. <https://www. neweurope.eu/article/covid-19-kills-free-competition-in-tourism/ > Accessed: 11 June 2020. 21

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reimbursement are met.22 Moreover, the EU is set to offer massive aid operations and provide immediate liquidity to businesses affected by the crisis through the Coronavirus Response Instrument Initiative, under shared management with member states. In addition, EUR 8 billion in funding for 100,000 small businesses affected by the crisis were made available with the European Investment Fund. The important solidarity measures launched include the SURE program aimed at covering the costs of national part-time work programs and similar measures that allow companies to safeguard jobs while the ECB is continuing to inject a huge amount of liquidity into the market.23 However, Breton also insisted that the industry should use this crisis as a turning point. In fact, in the last decades, complaints have been increasing about over-tourism, which suffocates cities all across the continent while all the pollution from flying and cruise ship movements soil the reputation of tourism. For this end, Ursula von der Leyen commissioned Breton to hold—most probably between September and October—a special European tourism summit to deal with the fallout of the pandemic and to build a roadmap for the future towards a sustainable, innovative and resilient European tourism ecosystem: the European Agenda for tourism 2050.24

WHAT TO DO? The COVID-19 pandemic could be the swan song of mass tourism as we know it, accelerating a transformative process that had already been underway for some time. In fact, even before the coronavirus, mass tourism has been questioned for its sustainability. Just consider that recently mass tourism became such a widespread phenomenon that in many cities—for example Venice or Florence—it was considered a problem. The present situation, even if dramatic, could present an opportunity for tourism operators and for European countries to review the touristic supply in order to guarantee safety standards, but also to create an environment for a long-term redevelopment and repositioning of the proposal. Addressing the crisis, therefore, by investing in the quality of the structures and services, will be decisive regarding the sustainability of the offer, and the enhancement of the cultural and environmental heritage. It is therefore right to assume that some elements will be crucial in creating the conditions for the successive “recovering phase.” The COVID-19, and its spread at the global level, proves the causal link between environment and public health in a globalised economy. This is, of course, a crucial element that has to be taken into consideration when the EU member states will move on to promote a new sustainable form of tourism, where quality of life and public health is looked after alongside the preservation of the natural environment of the host destinations. For this reason, health will be the central

European Commission: Tourism and transport: Commission's guidance on how to safely resume travel and reboot Europe's tourism in 2020 and beyond. European Commission. 13 May 2020. <https://ec.europa.eu/ commission/presscorner/detail/en/IP_20_854 > Accessed: 11 June 2020. 22

ISPI Osservatorio Geoeconomia: Coronavirus e Turismo: ripartenza in ordine sparso. ISPI. 5 June 2020. <https://www.ispionline.it/it/pubblicazione/coronavirus-e-turismo-ripartenza-ordine-sparso-26414?fbclid=IwA R2cB27g35FVUBLFbG2YyAkacwpcrZrJmPoPFwui96g09SBPuo2RpkjdyjY > Accessed: 10 June 2020. 23

24 European Commission: Speech by Commissioner Breton on “A Marshall Plan for European Tourism.” European Commission. 21 April 2020. <https://ec.europa.eu/commission/commissioners/2019-2024/breton/ announcements/speech-commissioner-breton-marshall-plan-european-tourism_en > Accessed: 10 June.

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element of the post-COVID tourism revolution and this means that it will be easier to start again for those territories that are perceived clean, efficient, and do not present any risk of contagion, as well as for those structures that will be ready to respond to emergencies or new possible outbreaks of the virus. In this sense, investing in healthcare, urban regeneration (both at the public and private level), environmental monitoring, and remediation could prove to be very important assets. A general rethinking of urban infrastructure, starting from the airports, will be also necessary. Screening tools, protection and sanitation devices must be provided to make visitors feel at ease, in addition to the safety distance that must be guaranteed to minimize the risk of infection. Alternative and sustainable mobility will be a strong point: walking or cycling is highly recommended in light of the coronavirus because it makes it easier to follow social distancing and helps to keep the cardiovascular system and the lungs healthy, preventing diseases and protecting the body from infections.25 Also digital devices and innovation will play an even more decisive role in the future of tourism. In fact, in the absence or in response to the limitation of direct contacts, these tools will be even more relevant in the process of inspiration, reservation and search for information; but also for an original, reassuring, emotional communication that countries will have to engage in if they want to attract new potential tourists. Competition will become fierce, and tourists even more demanding, since in addition to the attractions and services, they will look for more information about safety and health features.26 Unfortunately, tourism in the upcoming months will be also “poorer,” due to the general economic crisis, and perhaps the season will be even shorter, given that many companies that do not provide smart-working facilities asked their employees to use vacation days during the lockdown. Engaging in tourism will be seen from a different perspective and traveling responsibly, that is avoiding crowded situations, taking care of personal hygiene, respecting residential areas, will be perceived as a chief component. An affirmation of the socalled “staycation” is under way, a form of travel mainly directed in the short-medium range or in the close vicinity with an eye for “undertourism”—which will necessarily contrast with “overtourism”—that is a kind of tourism that will favour the lesser-known and lesser-crowded locations, open air activities and slow rural tourism. Also, the concept of seasonality will be questioned since the recovery is likely to happen during the “low seasons.”27 However, it will be of uttermost importance to intervene, to preserve the “soul” of the cities and of the many touristic sites hit by the pandemic. Independent shops, local handicraft, cultural activities, small restaurants, and agritourisms are at risk of being swept away by the crisis and by stringent post-pandemic regulations. Therefore, it is in

25 Holger Haubold: The Cycling Economy and Coronavirus: Weathering the Crisis, Preparing for Sustainable Recovery. ECF. 20 April 2020. <https://ecf.com/news-and-events/news/cycling-economy-and-coronavirusweathering-crisis-preparing-sustainable > Accessed: 11 June 2020.

Tobia Zevi: Turismo: competitività più feroce tra città, che fare? ISPI. Publication. 3 April 2020. <https://www. ispionline.it/it/pubblicazione/turismo-competitivita-piu-feroce-tra-citta-che-fare-25642 > Accessed: 10 June 2020.

27 Centro Studi Touring Club Italiano: Coronavirus: quali le conseguenze per il turismo in Italia? Touring Club Italiano. 6 April 2020. <https://www.touringclub.it/notizie-di-viaggio/coronavirus-quali-le-conseguenze-per-ilturismo-in-italia > Accessed: 10 June 2020.

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the interest of public administrations to ensure that these activities, which represent the national cultural heritage, are not going to be lost to leave room to a standardization of the touristic offer. For this reason, it is necessary to guarantee funds for the facilities that will remain closed in the coming months, in order to enable them to modernize, grow, innovate, and possibly re-enter the market in the next year. It would be a preferable solution instead of a definitive closure, which would entail loss of wealth and jobs, a scenario that European countries must absolutely avoid, without forgetting that a reopening without guarantees would aggravate the already precarious conditions of the martyrized tourism sector.

TURKEY’S TOURISM SECTOR IN LIGHT OF THE NOVEL CORONAVIRUS PANDEMIC28 TAMÁS KOZMA

Measures taken to curb the novel coronavirus pandemic, such as entry restrictions, the introduction of curfews, border closures, as well as the suspension of domestic and international air travel have resulted in unprecedented setback for the tourism industry worldwide. It is particularly important to assess the current situation of those countries attracting the most visitors. In 2018, Turkey ranked sixth in the world in terms of receiving the most visitors from abroad, 29 while in Europe it ranked fourth.30 In the same year Turkey earned the fourteenth largest tourism revenue in the world.31 It should be noted that a decade and a half earlier, Turkey was in an even more prominent position in terms of tourism revenue: between 2004-2005, the country ranked eighth in the world.32 In Turkey, the first case of the novel coronavirus pandemic was identified on 10 March, while the first fatality was announced on 17 March 2020. As of the writing of this article, 191,657 cases have been identified and 5,025 person has deceased as the result of the virus.33 The course of the pandemic is characterized by the fact that while the number of deaths increased by 1,740 in the two weeks between 15 April and 1 May 2020, only 262 people

Text submitted on 20 July 2020.

T.C. Kültür ve Turizm Bakanliği. Yatırım ve İşletmeler Genel Müdürlüğü: Turizm İstatistikleri 2019 Ocak-ŞubatMart (I. Çeyrek). 2019. 22. <https://yigm.ktb.gov.tr/Eklenti/63642,turizm-istatistikleri-2019-iceyrekpdf.pdf?0 > Accessed: 24 June 2020. 29

T.C. Kültür ve Turizm Bakanliği. Yatırım ve İşletmeler Genel Müdürlüğü, 21.

T.C. Kültür ve Turizm Bakanliği. Yatırım ve İşletmeler Genel Müdürlüğü, 22.

Ibid.

T.C. Sağlık Bakanlığı: Türkiye'deki Günlük COVID-19 Vaka Sayıları. <https://covid19bilgi.saglik.gov.tr/tr/ haberler/turkiye-deki-gunluk-covid-19-vaka-sayilari.html > Accessed: 24 June 2020. 33

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fell victim to the pandemic between 1 June and 15 June 2020.34 Thus, at the end of June 2020, the slowdown of the pandemic can be read from the statistics, but at the same time, one cannot talk about the end of the pandemic by far. Moreover, taking the repeated increase of the COVID-19 cases in many European countries into consideration, along with the latest prospects and assumptions of a second wave of the pandemic, the worsening of the tendencies shwould be expected. This risk must therefore be borne in mind in all countries, including Turkey. 1 April

15 April

1 May

15 May

1 June

15 June

15,679

69,392

122,392

146,457

164,769

179,831

Deceased

277

1,518

3,258

4,055

4,563

4,825

Recovered

333

5,674

53,808

106,133

128,947

152,364

Infected

1. COVID-19 situation in Turkey (2020)35 2015

2016

2017

2018

2019

Number of departing visitors36 (person)

41,617,531

31,365,330

38,620,346

45,628,673

51,860,042

Tourism sector’s revenue (thousand USD)

31,464,777

22,107,440

26,283,656

29,512,926

34,520,332

3.7

2.6

3.1

3.8

N/A

Tourism revenue’s share in GDP (%) 2. Key tourism data for Turkey37

Number of visitors 1. Russian Federation

7,017,657

2. Germany

5,027,472

3. Bulgaria

2,713,464

4. United Kingdom

2,562,064

5. Iran

2,102,890

3. Countries with the most visitors to Turkey in 2019, based on border statistics38

Ibid.

The figures include both foreign citizens, and Turkish citizens residing abroad.

The source of data in the table: Türkiye Seyahat Acentaları Birliği: Turizm Gelirleri. 2020. <https://www.tursab. org.tr/istatistikler-icerik/turizm-geliri > Accessed: 6 July 2020; Türkiye İstatistik Kurumu: Çıkış Yapan Ziyaretçi Sayısı ve Ortalama Geceleme Sayısı. <http://www.tuik.gov.tr/PreTablo.do?alt_id=1072 > Accessed: 6 July 2020. 37

T.C. Kültür ve Turizm Bakanliği. Yatırım ve İşletmeler Genel Müdürlüğü: 2019 Yılı Sınır Giriş-Çıkış İstatistikleri. 2019. <https://yigm.ktb.gov.tr/TR-249709/yillik-bultenler.html > Accessed: 6 July 2020. 38

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2015

2016

2017

2018

2019

1 .Czechia

212,464

87,328

126,567

228,251

311,359

2. Hungary

140,197

64,737

79,899

123,448

149,523

3 .Poland

500,779

205,701

296,120

646,365

880,839

4 .Slovakia

151,514

61,477

97,967

157,003

207,108

4. Visitors from V4 countries to Turkey in 2019, based on border statistics39

It is important to note that in case of Turkey, one should not only look at the tourism sector as part of the economy, but also as an integral part of the country’s soft power capabilities: Turkey’s coastal resort areas are well-known and popular around the world, especially the neighbourhood of Antalya, Alanya, Bodrum, and Marmaris, but the cultural and business appeal of the metropolis of Istanbul with its population of 15.5 million is also outstanding. These places significantly contribute to the promotion of Turkey’s nation brand, improve the country’s visibility in the world, attract millions of visitors to the country, and generate significant revenues for the Turkish economy. In 2019, Russia, Germany, and Bulgaria gave the largest number of visitors to Turkey. These countries make up close to 30% of all touristic visits to Turkey.40 In contrast, the Visegrad countries together accounted only for 3% of all touristic visits to Turkey in 2019.41 When it comes to tourism, it is equally important to shed light on the situation of the largest Turkish aviation company. Turkish Airlines undeniably contributes to Turkey’s role as a hub among continents. The company flies to the most countries in the world, precisely to 125, and is not only a prominent player in bringing tourist to Turkey, but also a key service provider for tourists catching connecting flights in Istanbul, and flying almost to anywhere in the world.42 Thus, Turkish Airlines plays an unquestionable role in that Turkey should not only be a geographical meeting point between continents, but it should also provide services that support global connectivity and strengthen the country's role as a hub, the promotion of which is a recurring element in Ankara’s foreign policy discourse. However, due to the shutdown of the aviation sector, Turkey has not been able to play this role, either. Most of Turkish Airlines’ scheduled flights were suspended in March 2020 and, after a three-month break, the company resumed flights only to a limited number of cities. A more substantial resumption of services is scheduled for July, but still with a limited number of flights. As an example one can mention the airline's flights to Budapest, which is expected to be resumed on 15 July 2020, albeit initially with only five pairs of flights a week, which is a significant drop compared to the three pairs of flights a day before the

Ibid.

Türkiye İstatistik Kurumu; T.C. Kültür ve Turizm Bakanliği.

Ibid.

Andrew Curran: Turkish Airlines Now Fly To An Incredible 125 Countries. Simple Flying. 1 August 2019. <https://simpleflying.com/turkish-airlines-125-countries/ > Accessed: 6 July 2020. 42

Antall József Knowledge Centre of Political and Social Sciences

pandemic.43 In line with this, it is important to point out that on 11 June Turkey opened most of its border crossing points to Turkish and foreign nationals, but it must be seen that since the vast majority of flights have not yet been resumed, thus the border opening could not ramp up the number of visitors swiftly.44 Today, along with many other countries, Turkey faces a triple challenge in consequence of the novel coronavirus pandemic. First, the health crisis itself, second, the ensuing economic difficulties, and third, a crisis of confidence that can be conceptualised, for example, in the field of foreign investments or in the tourism sector. With regard to the latter, it should be pointed out that after the travel restrictions have been lifted, it has become a key issue when tourism can return to its previous levels, as many visitors are likely to be deterred by distrust arising from fears about the health risks of travelling these days. Relaunching tourism in Turkey is therefore an important task in which the government and service providers working in the sector must cooperate effectively. Restoring the former attractiveness of Turkey as a tourist destination will therefore require joint efforts, and the increased visibility of the country’s image on international level, which focuses not only on tourism values but also on travel safety, public health standards and hygiene, will play a key role in this. These aspects are likely to be taken into account more than ever by tourists when considering their trip. That is why the initiative to introduce a so-called 'healthy tourism certification' programme is of major significance. This certification will be awarded to airlines, airports, transportation service providers, hotels, and restaurants, and will oblige them to create sufficiently safe and hygienic conditions for both tourists and workers. Turkey’s official tourism promotion platforms, the “Go Turkey” website and its associated social media platforms have also begun showcasing advertisements for reopening and safe travel, conveying the message that the country is now ready to receive guests, and that increased safety and hygiene measures will be ensured.45 In line with the gradual resumption of flight connections, an increase in the number of tourists arriving to Turkey is therefore expected to start from July/August, but even despite measures focusing on increased health and safety, the prospects for the tourism sector are considerably negative: chairman of the Mediterranean Touristic Hoteliers and Investors Association, Erkan Yağcı believes that opening 50% of hotels in July would already be a significant achievement given the present circumstances.46 In addition, a major problem is that foreign currency revenues from tourism are expected to decline by 60-70% in 2020.47

43 Turkish Airlines: Sky calls for freedom: July 2020 flight plan. <https://www.turkishairlines.com/en-int/ announcements/coronavirus-outbreak/current-flight-plan/ > Accessed: 6 July 2020.

Muhammed Boztepe: Turkey eases border restrictions for travel. Anadolu Agency. 11 June 2020. <https:// www.aa.com.tr/en/latest-on-coronavirus-outbreak/turkey-eases-border-restrictions-for-travel/1873944 > Accessed: 6 July 2020. 44

Go Turkey: Safe Tourism Program Turkey. <https://www.goturkey.com/video-gallery#SafeTourism > Accessed: 6 July 2020. 45

Ceyda Çağlayan; Daren Butler: Turkey hopes 'healthy tourism' scheme will conquer coronavirus slump. Reuters. 22 May 2020. <https://www.reuters.com/article/us-health-coronavirus-turkey-tourism/turkey-hopeshealthy-tourism-scheme-will-conquer-coronavirus-slump-idUSKBN22Y1YJ > Accessed: 6 July 2020.

Ibid.

Antall József Knowledge Centre of Political and Social Sciences

Previously, a sharp decline in inbound tourism to Turkey was registered in 2016, as a consequence of multiple factors. First, the increased number of terrorist attacks at the time, second, the situation unfolded in the wake of the failed coup attempt of 15 July 2016, and third, the introduction of sanctions by Russia following the shooting of its SU-24 jet fighter by the Turkish Air Force have all resulted in a slump in the tourism sector of the country. From 2015 to 2016, the number of visitors fell by about a quarter, or ten million. Over the same period, the amount of tourism revenues fell by about 30%.48 However, the downturn in 2016 was a local, country-specific phenomenon with a significant political context, while the current tourism crisis associated with the novel coronavirus pandemic poses a different kind of challenge, as it is to be interpreted in the context of a global health crisis that is not limited to Turkey. It remains to be seen what kind of competition may arise among the countries attracting the most tourists to get visitors back in the post-coronavirus era, or at least when the curve of the pandemic is significantly flattened. As Turkey is a remarkable player among them, it has a clear interest in maintaining this position or in gaining an advantage over its competitors. In this, not only the further trends of the pandemic, but for example also the success of tourism marketing activities will be key determining factors, and the latter will definitely require concerted efforts by the public and private sectors. The previous target of attracting 75 million visitors to Turkey by 2023 seems rather far away today in the light of the pandemic, as per the present outlooks it could take years to return to normal levels of tourism.49 In April 2020, a 99% year-on-year decrease in the number of foreign visitors arriving to Turkey was registered, while in the first four months of 2020 there was a 51% decrease in the number of foreign visitors compared to the previous year.50 With regard to expectations, the country's Minister of Culture and Tourism, Mehmet Nuri Ersoy, said in an interview that in 2020 the number of visitors could perhaps reach half of the previous 45 million, which represents an unprecedented decline.51 Prior to the outbreak of the pandemic, tourism revenues were expected to reach USD 40.1 billion by 2021, and USD 46.5 billion by 2022, which seem much less realistic today than they seemed at the end of 2019.52 With regard to this, experts point out that tourism is the sector that is expected to face the longest recession.53 Moreover, it is also important to

Türkiye İstatistik Kurumu; Türkiye Seyahat Acentaları Birliği.

Turkey hosts nearly 43 mln foreign tourists by year-end 2019. Hürriyet Daily News. 30 December 2019. <https://www.hurriyetdailynews.com/turkey-sees-14-31-pct-surge-in-number-of-foreign-visitors-150430 > Accessed: 6 July 2020. 48 Turkish foreign visitor arrivals plummet 99% in April -tourism ministry. Reuters. 22 May 2020. <https://in.reuters.com/article/turkey-economy-tourism-arrivals/turkish-foreign-visitor-arrivalsplummet-99-in-april-tourism-ministry-idINA4N2AA022 > Accessed: 6 July 2020. 49

50 Turkish foreign visitor arrivals plummet 99% in April -tourism ministry. Reuters. 22 May 2020. <https:// in.reuters.com/article/turkey-economy-tourism-arrivals/turkish-foreign-visitor-arrivals-plummet-99-in-apriltourism-ministry-idINA4N2AA022 > Accessed: 6 July 2020. 51 Ceyda Çağlayan; Jonathan Spicer; Kaan Soytürk: Turkey’s lonely tourist attractions face make-or-break week. The Jakarta Post. 22 June 2020. <https://www.thejakartapost.com/travel/2020/06/22/turkeys-lonely-touristattractions-face-make-or-break-week.html > Accessed: 6 July 2020.

Hürriyet Daily News.

Ceyda Çağlayan; Jonathan Spicer; Kaan Soytürk.

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refer to these issues in the context that Turkey's economy has been in decline for years now, and the country's GDP has been shrinking since 2013. In 2013, a GDP of USD 950 billion was recorded, which fell to 859 billion by 2015, and to 754 billion by 2019.54 The challenges facing the tourism sector in light of the novel coronavirus pandemic are thus exacerbating the situation of the already struggling Turkish economy.

THE IMPACT OF COVID-19 ON TOURISM IN THE MIDDLE EAST55 ÁDÁM ÉVA

TOURISM IN THE MIDDLE EAST In recent years, tourism has become an important sector of the economies in almost all countries of the Middle East, even in countries where previously state assets from crude oil revenues did not require governments to exploit the potential of pleasure tourism. Out of the components of economic diversification programs, tourism is the easiest to develop as all Middle Eastern countries are rich in natural and cultural values and resources. Saudi Arabia is a particularly good example of opening up, as the conservative Sunni monarchy has carried out56 comprehensive social reforms in addition to visa reforms in order to avoid that the tourists who arrive in large numbers from countries that have different value systems— and do not come for the pilgrimage—would not have tensions with the local authorities and the people. While there are many other reasons for social reforms, tourism can be the sector of the country’s economy where the greatest real profit can come from social liberalization, as the country’s natural and cultural values are not only valuable to locals but they also provide ample resources for connecting to the regional and global tourism. In the case of Jordan, Lebanon, Morocco or Tunisia, tourism revenues account for 10-20% of annual GDP and the tourism sector has a similar share of total employment.57 Decades of dictatorships in the Middle East have obscured tensions within the societies and have also dealt seemingly well with economic crises with their illusory measures. However, as these weaknesses were only hidable until the early 2000s, after which they exploded during the events of the Arab Spring, economic crises and political transformations that have caused state

54 The World Bank: GDP (current US$) – Turkey. <https://data.worldbank.org/indicator/NY.GDP.MKTP. CD?locations=TR > Accessed: 6 July 2020.

Text submitted 24 July 2020.

Frank Gardner: Saudi Arabia to open up to foreign tourists with new visas. BBC. 27 September 2019. <https://www.bbc.com/news/business-49848068 > Accessed: 5 July 2020. 56

OECD: COVID-19 crisis response in MENA countries. 9 June 2020. <http://www.oecd.org/coronavirus/policyresponses/covid-19-crisis-response-in-mena-countries-4b366396/ > Accessed: 5 July 2020. 57

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instability have been regular over the past decade. However, the Arab Spring did not equally affect some sub-regions, as exemplified by the asymmetry in the dependence on tourism between poor and fragile countries and rich oil monarchies. While Egypt, Tunisia, Yemen, Syria, and Libya felt a significant decline in tourism during the Arab Spring and only a modest improvement since then, the UAE, Saudi Arabia and the rest of the Persian Gulf have remained stable and have become alternative tourist destinations in the Middle East.58 In addition, the Gulf has become one of the most important regions in the field of aviation, as it provides headquarters to the highly dynamic airlines with global networks such as Emirates, Etihad and Qatar Airways. After the Arab Spring, there has been a slow increase in the number of tourists in some countries, while in other countries witnessed rapid growth. Of course, the nature of tourism is different in each country. While Egypt is clearly the most popular destination for Western tourists in the Middle East, the Francophone Arab countries of the Maghreb subregion have high numbers of expatriate tourists, or some countries have high numbers coming from the Gulf, while Bahrain is visited almost exclusively by tourists from other GCC member states. The point is that in 2018, the number of tourists in the countries directly affected by the Arab Spring, including Tunisia, returned to the level of the year before the turmoil. In Tunisia or Saudi Arabia, there was double-digit growth in this respect between 2017 and 2018 (see Figure 1).59 The Middle East is still the most popular tourist destination among the population of the region, meaning a much higher number of travelers inside the region than outside of it. This means a crowd of nearly 400 million people regionally, who make up about 5% of the world’s tourist traffic each year.

2000

2010

2016

2017

2018

Middle East

Egypt

5.1

14.1

5.3

8.2

N/A

Saudi Arabia

6.6

10.9

16.1

United Arab Emirates

3.1

7.4

14.9

15.8

15.9

Morocco

4.3

9.3

10.3

11.3

12.3

Tunisia

5.1

7.8

5.7

7.1

8.3

Tourist traffic in the Middle East and the five most popular countries (million people), source: World Tourism Organization

58 Nadejda Popova: New Report: Impact of the Arab Spring on Travel and Tourism in the Middle East. Euromonitor International. 26 September 2011. <https://blog.euromonitor.com/new-report-impact-of-the-arabspring-on-travel-and-tourism-in-the-middle-eastarticle-26-sep-2011/ > Accessed: 5 June 2020.

World Tourism Organization (UNWTO): Tourism in the MENA Region. UNWTO. Madrid. 2019. 4.

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Looking at tourism trends, in addition to steady growth, the effects of one-off or recurring shocks and crises are also visible. The latter include the region’s constant threat from extremist organizations of political Islam. While tourist numbers in Tunisia or Egypt slowly recovered after the Arab Spring, after 2015, several acts of terrorism in both countries resulted in an immediate significant decline in tourist traffic, followed by a slow recovery. In 2015, terrorists shot down a Russian passenger plane over the Sinai Peninsula, and in 2016, Egypt Air’s flight between Paris and Cairo fell victim to a terrorist attack. In 2015 in Tunisia, a massacre at the Bardo Museum in Tunis was followed a few months later by a terrorist attack against foreign tourists in the resort area of the city of Sousse in the Mediterranean 60 coastal region. However, as the Mediterranean region has maintained its popularity uninterruptedly in recent decades and the Tunisian government has taken serious steps to restore or improve the country’s security, there has been a slow increase in tourist traffic as early as 2015. As it can be seen from the above examples, the impact of shocks on tourism in the region is extremely short-lived. Of course, it is also clear that in the absence of shocks, the increase in revenues from the sector could be much more significant.

COVID-19 IN THE MIDDLE EAST The global coronavirus pandemic is the first crisis in the Middle East to hit poor and rich / fragile and stable states in the region equally seriously, and in which the crisis situation in one state does not provide economic opportunities for any other state. The only significant difference between the states in the region is how much resources they have to mitigate the economic effects of the crisis. The pandemic did not cause crises to the same extent and at the same time in the Maghreb, Mashreq, and Gulf subregions. Few have become ill in the Maghreb and the serious danger has quickly waned, but in the Gulf, severe restrictions have only led to temporary success, as the number of infected people is currently rising rapidly and further drastic increases are expected.61 As most states in the Middle East have become partially or completely isolated from each other and from the world in terms of economic relations, including tourism, all countries had to deal with the coronavirus epidemic for the most part on the basis of their own economic capabilities. In the currently war-torn states of the region (Libya, Syria, Yemen), it was not possible to take central measures to curb the epidemic. In contrast, rich oil monarchies have been at the forefront when it came to the implementation of pervasive actions, as previous SARS, MERS and H1N1 epidemics have already prepared them for similar crises.62 Saudi Arabia acted the earliest and was one of the most decisive in the face of the epidemic: the ruler not only

60 Dallen J. Timothy: Tourism trends and patterns in MENA: A resource perspective. 2019. 37. In: Dallen J. Timothy (ed.): Routledge handbook on tourism in the Middle Eastand North Africa. Routledge. New York. 2019.

James Reinl: Middle East faces ‘scary’ rise in Covid-19 deaths, expert says. The National. 14 July 2020. <https:// www.thenational.ae/world/mena/middle-east-faces-scary-rise-in-covid-19-deaths-expert-says-1.1048829 > Accessed: 17 July 2020. 61

62 Tania Sawaya et al.: Coronavirus Disease (COVID-19) in the Middle East: A Call for a Unified Response. Frontiers in Public Health. 19 May 2020. <https://www.frontiersin.org/articles/10.3389/fpubh.2020.00209/full > Accessed: 6 July 2020.

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imposed a total curfew throughout the country from sunrise to sunset, but also closed or allowed only limited opening hours in the world’s major religious centers, including also the restrictions on pilgrimage.63 This was also necessary because Iran, which did not cease its passenger and goods traffic with China, the first epicenter of the pandemic, took action very belatedly and the epidemic quickly spread to the Arab states of the Persian Gulf. For the Gulf oil monarchies, not only the viral situation in Iran, but also the trips of Asian expatriate guest workers to Asia and back posed a serious threat. Strict measures have brought rapid initial successes in epidemic management, but by July 2020, the number of people infected in the Middle East had reached 1.2 million, of which thirty thousand passed away.64 Only about North African countries such as Morocco, Algeria and Tunisia might be said that governments have achieved lasting success. In Tunisia, for example, not only was the number of cases low, but the number of deaths was only 50 by mid-July 2020. Of course, we cannot get a real picture of the severity of the epidemic in Libya, Syria, and Yemen due to a lack of data provision in these countries, and the same may be true for several Middle Eastern countries where either insufficient resources are available to carry out the appropriate number of tests or the government does not communicate the real hazard properly for security reasons. On the other hand, it is surprising that the number of cases in the Persian Gulf monarchies—who have applied the strictest measures to curb the epidemic—suddenly increased significantly after the initial control, just as in Israel. Saudi Arabia, Bahrain, Kuwait and Israel saw an increase of up to 50% in July.65 The apparent anomaly may be due to the fact that the majority of Gulf societies are Asian immigrants, among whom case reporting and testing are inadequate. While there was a lack of cooperation between Arab states (the Arab League is not competent in the current crisis management), there was serious cooperation between technology companies in Israel and the UAE to map the epidemic using artificial intelligence.66 The unequal distribution of territorial, population and economic performance between the countries of the Middle East is compensated for in the tackling of the epidemic, as poorer states, due to their larger territory and lower population density, may emerge from the crisis better off than their small, rich but densely populated neighbours, who have the capacity to manage a second or third wave effectively and without financial constraints. One of the sectors most severely affected by the COVID-19 epidemic was tourism, which is a major pillar of the economy in many countries of the region (e.g. Morocco, Tunisia, Lebanon, Egypt), while for Gulf monarchies—who traditionally base their economies on oil

Hussein Solomon: The Impact of Covid-19 on the Middle East and North Africa. Jerusalem Center for Public Affairs. 12 April 2020. <https://jcpa.org/article/the-impact-of-covid-19-on-the-middle-east-and-north-africa/ > Accessed: 6 July 2020. 63

Seth J. Frantzman: Coronavirus: 1.2 million COVID cases in MidEast, 30,000 deaths. The Jerusalem Post. 2 July 2020. <https://www.jpost.com/middle-east/coronavirus-12-million-covid-cases-in-mideast-30000deaths-634863 > Accessed: 6 July 2020. 64

Ibid.

G42: G42 joins forces with Israeli Rafael and IAI to defeat Covid-19. 2 July 2020. <https://g42.ai/news/ healthcare/g42-israeli-rafael-iai-covid-19/ > Accessed: 10 July 2020. 66

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rents—have considered it an important sector for their economic diversification policies of the recent years. In 2019, tourism generated GDP growth of about 5.3% across the Middle East and provided 6.7 million jobs.67 As the tourism sector of Egypt and several Arab countries is highly dependent on Western tourists, the financial discipline and fear of travel resulting from COVID-19 in the US, Europe and Russia will be a severe blow to these economies. But it is not just the lack of incoming Western tourists that the sector will suffer from. The failure to make the usual Saudi pilgrimage and the postponement of the Dubai Expo scheduled for 2020 also mean a serious loss of revenue for these countries’ economies. In addition, these events required a significant upfront capital investment. The cancellation of the Dubai Expo means the absence of about 25 million tourists.68 Risk analysts at PwC estimated that measures to restrict tourism in the Gulf for about half a year could lead to the loss of about 30% of the sector’s revenues or jeopardize four hundred thousand jobs within the tourism industry.69 To bail out the tourism sector, the governments of many Middle Eastern countries have created financial aid packages and other instruments. It is important to add that this is not a unique and extraordinary case, as due to the constant volatility of the region, actors in the tourism sector in Arab states often need rescue packages from governments and financial institutions. The actors in the sector themselves can, at best, help to make a country attractive by taking serious measures to make the infrastructure associated with the sector safe from infections. At the same time, severe unilateral or bilateral entry restrictions restrict business and leisure travelling from the outset. The Egyptian Ministry of Finance and the Central Bank of Egypt have made a joint effort to provide low-interest loans to companies in the sector and to take over the salaries of employees of companies. The condition for companies to benefit from the support was that they could not lay off their employees during the epidemic.70 The Egyptian government has been practically implementing similar measures since 2011, given the regular occurrence of political and security crises in the country. In Egypt, movements and organizations linked to political Islam often use the means of terror to achieve their political goals, which can cause serious damage to the government and the country through a decline in tourism revenues. Tunisia is one of the flagship destinations of tourism in the Mediterranean, but the change of political regime in 2010-11 also had a lasting impact on the sector, and the emergency situation caused by the terrorist attacks of 2015 did not benefit the tourism sector either. In 2018, in terms of absolute numbers, not only did the number of incoming tourists reach pre-

OECD

Arab News: Dubai Expo 2020 to ‘adjust’ preparations due to virus. 23 March 2020. <https://www.arabnews. com/node/1645726/business-economy > Accessed: 14 July 2020. 68

69 Marwan Bejjani et al.: How the GCC’s travel and tourism industry can get ready for the post-COVID-19 recovery. PwC. April 2020. <https://www.strategyand.pwc.com/m1/en/articles/2020/how-the-gccs-travel-andtourism.html > Accessed: 14 July 2020.

Hossam Mounir: Central Bank of Egypt allocates $185.3mln from tourism initiative for salaries, maintenance works. Zawiya. 17 June 2020. <https://www.zawya.com/mena/en/business/story/Central_Bank_ of_Egypt_allocates_1853mln_from_tourism_initiative_for_salaries_maintenance_works-SNG_177324915/ > Accessed: 14 July 2020 70

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2011 levels, but it significantly exceeded it.71 In 2019, Tunisia achieved significant economic results as the country increased its foreign currency reserves by almost 50% thanks to tourism.72 By this, tourism has become a driving force for the Tunisian economy, as it has created the resources that are vital for the development of other economic sectors of the North African state. Thanks to the Tunisian government’s successful tourism campaigns, the number of tourists from the richest Western European countries has increased significantly, and as of this year, the government planned to expand the campaign to the Russian and Chinese markets. In Tunisia, tourism provides the largest number of jobs after agriculture, so the crisis of 2020 placed a significant burden on the government, especially bearing in mind that the primary social driver of the “Jasmine Revolution” was the significant unemployment and impoverishment of the people. To improve its tourist receiving capacity, Tunisia has created all the legal conditions for its largest airports to receive low-cost flights,73 thus significantly reducing the cost of travel for tourists. At the end of June 2020, the Tunisian authorities decided to open the country’s land, air and sea borders, following a drastic reduction in the number of people infected with the coronavirus.74 Hence, on the part of Tunisia, unilateral obstacles have been removed, and the country is once again ready to receive tourists. The extent to which tourism-based economies are being forced to restart the sector as soon as possible is well-illustrated by Dubai’s efforts. In the UAE, which consists of seven emirates, there has always been a kind of competition between Abu Dhabi and Dubai for the country’s leadership. However, while Abu Dhabi has built its economy on revenues from its significant oil resources, Dubai’s main revenues come from trade, tourism, and real estate investments.75 Although there has been a significant increase in the number of people infected in the Emirates recently, Dubai has decided to open the emirate and is once again welcoming tourists from many countries. In contrast, Abu Dhabi was able to maintain its strict entry conditions. This duality shows well the difference between the tourismdependent countries of the region and those that see tourism only as a tool for economic diversification. On the other hand, as there are also large differences between foreign policy principles and goals between the two emirates mentioned above (Abu Dhabi is interested in imposing economic restrictions on Iran and its allies—Dubai’s economy is intertwined with Iran and Persian traders), it can be predicted that tourism-dependent countries might become vulnerable in the long run if there are further waves of the pandemic.

Trading Economics: Tunisia-Tourist Arrivals 1990-2018. <https://tradingeconomics.com/tunisia/touristarrivals > Accessed: 17 July 2020.

Riadh Bouazza: Tunisia’s tourism sector shows signs of recovery. The Arab Weekly. 19 January 2020. <https://thearabweekly.com/tunisias-tourism-sector-shows-signs-recovery > Accessed: 14 July 2020. 72

Ibid.

Mohammed Jamjoom: Tunisia's tourism sector hopes for a quick recovery as borders reopen. Aljazeera. 27 June 2020. <https://www.aljazeera.com/blogs/middleeast/2020/06/tunisia-tourism-sector-hopes-quickrecovery-borders-reopen-200627065341095.htm > Accessed: 14 July 2020. 74

75 Paul Schemm: Rivals Dubai and Abu Dhabi tackle coronavirus in very different ways. The Washington Post. 13 July 2020. <https://www.washingtonpost.com/world/middle_east/coronavirus-united-arab-emirates-dubaiabu-dhabi/2020/07/12/23fbfef2-bf89-11ea-8908-68a2b9eae9e0_story.html > Accessed: 17 July 2020.

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CONCLUSION We cannot predict for sure what the long-term economic consequences of the COVID-19 pandemic will be in a region that has been virtually permanently unstable for two decades now. However, in terms of its short-term economic impact, it is clear that tourism is one of the most vulnerable economic sectors. As a result of the pandemic, the number of tourists has dropped drastically—as in most regions of the world—and it is not possible to predict the extent and pace of the increase in the number of tourists travelling to the region as public health improves. The sub-regions of the Middle East were unequally and not simultaneously affected by the epidemic. While the states of the Maghreb survived the emergency with minor losses and quickly recovered, there was a sudden and drastic increase in the number of infected people in the Gulf. Although rich oil monarchies have the money and resources to deal effectively with the epidemic, due to their specific geographical and social situation they are still more affected by the epidemic than the poorer Arab countries. At the same time, it is important to keep in mind that while the economies of the poorer states in the region are dependent on tourism, the rich oil monarchies can afford to consider leisure tourism to be a tool for economic diversification. Thus, in case of a decline in tourism, they can compensate for their loss of revenue through other economic sectors. Thus, if the virus reaches the region in several waves, a deep interdependence may develop between the region’s tourism-dependent and economically stable countries.

THE SPECTER OF DEGLOBALIZATION76 BENCE KOCSEV

INTRODUCTORY REMARKS While this may sound cliché, it certainly is true that the current pandemic has rapidly changed our world and influenced almost all realms of our everyday life in an unprecedented way. The quickly rising number of infections challenged the public health system, and in some cases even exhausted its capacities; the lockdowns and the ensuing global shock severely impacted the economy, and among others led to massive state interventions and relief programs that were simply unthinkable a few months ago; the exceptional situation caused by the virus affected the everyday political practices and reshaped the political landscape in many countries; policies and procedures related to the COVID-19 outbreak (like home office and digital collaboration) changed the way we work; social distancing imposed to prevent the further spread of the virus limited our real-life social networks and

Text submitted 24 July 2020.

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our free movement (including travel and visit activities), and the list could go on. Similarly, the pandemic has been influencing and challenging the field of sciences, too. While in this regard, the rush to find an appropriate vaccine and medicines necessarily and obviously gives prominence to the biochemical and medical disciplines, the pandemic also ushers research in the fields of humanities and social sciences. Given the ongoing major changes in the global economy and more generally in the global order, the research on globalization (especially on its economic aspects) has been particularly prolific during the last couple of months. Yet, in a sense, Jürgen Habermas’s bon mot, stating that there has never been so much knowledge about our ignorance (“So viel Wissen über unser Nichtwissen … gab es noch nie.”),77 seems to properly encapsulate the current situation in this research field, too, as, despite the burgeoning literature on the immediate effects of the virus, there is currently no expert who can safely estimate the consequences of the pandemic on globalization. In the context of research on globalization, the discussion circles around the question of whether or not the pandemic will have lasting impacts on processes of globalization, i.e. whether the current changes will substantially weaken globalization and will lead to an era of ‘deglobalization’ or we are facing different processes. Although many have been claiming that the COVID-19 pandemics will further accelerate disruptive processes that had started earlier, the current situation, as it was pointed out in a recent discussion forum, is rather subtle and could be discussed along two, in many ways interrelated questions: is the current crisis with all its repercussions providing decisive evidence that we enter a phase of deglobalization, or rather is it just challenging the way we are thinking about globalization and thus globalization is not in retreat but has simply entered a different phase?78 Apparently, the recent situation serves as a particular moment of reflexivity, and expectations are high that the experts of globalization (economists, sociologists, IR scholars, global and economic historians, etc.) have something to offer on these questions. Nevertheless, as we are at the beginning of a process, we should remain modest. Therefore, in this short chapter, my only aim is to reflect on a few aspects of globalization that might be useful in examining and understanding current processes.

LIVING AND DEALING WITH UNCERTAINTIES Perhaps the last time one had to fear an invisible danger in Europe was in 1986 when one of the reactors exploded in Chernobyl, and the radioactive cloud spread throughout Europe. With unintended perfect timing, a few months later, a book by the German sociologist Ulrich

Jürgen Habermas über Corona: „So viel Wissen über unser Nichtwissen gab es noch nie“ <https://www. fr.de/kultur/gesellschaft/juergen-habermas-coronavirus-krise-covid19-interview-13642491.html > Accessed: 1 August 2020. 77

Global Studies COVID-19 Forum of the Global and European Studies Institute and the Interdisciplinary Research Centre Global Dynamics (both at Leipzig University) taking place during the summer term of 2020. The Forum was aimed to serve as a platform for first attempts to study the changes of the global condition under the current crisis. During the semester, the discussion touched upon issues like the global history of pandemics, the effects of the virus on the spatial processes, the specter of deglobalization, forecasting and scenario building, transregional learning and effects of the coronavirus on social differences. Here, it should also be acknowledged that certain parts of this chapter are based on the perspectives provided by the forum. 78

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Beck was published, in which he described the distribution of new risks produced by the late modern society.79 One of the main points of the Risikogesellschaft (Risk Society), describing how late (or second) modernity has emerged out of the industrial (or first) modernity, was that with technical progress (that is supposed to protect us from the risks of life) we create socially unintended side effects, which, in turn, appear as unpredictable and uninsurable risks for our everyday life. A decade later, the theory was further elaborated into his concept of World Risk Society in which Beck, almost prophetically, stated that the new man-made, incalculable, non-compensable (i.e. protection against them cannot be guaranteed) and de-localized risks would no longer be confined in space and time, and would affect all countries and social classes.80 Apparently, Beck was not alone in his observations. In a quite similar vein, Anthony Giddens argues that modernity has completely changed the nature of risks we have to face and distinguishes between external and manufactured risks. While external risks are (chiefly) related to the threats that nature posed to humanity (bad weather, droughts, earthquakes, or floods), manufactured ones are produced by the modernization process and thus consequences of human activities (global warming, genetically modified organisms).81 In his view, we live after the end of nature, that is to say modern society has barely left “any aspects of the physical world untouched by human intervention,”82 and hence manufactured risks rather than natural risks would prevail. Under these conditions, we „often don’t really know what the risks are, let alone how to calculate them accurately in terms of probability tables.”83 While prima facie the current COVID-19 epidemic seems rather to fall into the external risk category, as it was pointed out, epidemics that have been rising sharply in recent decades on the planet (SARS, Ebola, and even the COVID-19) are predominantly zoonosis and these diseases or infections with the ability to transmit from vertebrate animals to humans accelerated by the destruction of natural environments and thus are consequences of human activities.84 With this in mind, the question also arises whether the French thinker (and the foreword-writer of the French translation of Beck’s Risikogesellschaft), Bruno Latour was right and we have never been modern in a sense that the socio-political order could never separate itself from the natural one, and thus the current disease, a Latourian ‘hybrid’, yet again and very clearly revealed the inappropriateness of this distinction.85 In his recent paper, Latour even hints that the seemingly natural phenomena, the COVID-19 virus has become a quasi-political actor and only the recognition of the nonseparation of

Ulrich Beck: Risikogesellschaft. Auf dem Weg in eine andere Moderne. Suhrkamp, Frankfurt a. M. 1986.

Ulrich Beck: World Risk Society. Polity Press, Cambridge, 1999.

Anthony Giddens: Runaway World: How Globalization is Reshaping Our Lives. Profile, London, 1999.

Anthony Giddens: Risk and Responsibility. The Modern Law Review. 1999/1. 1-10.

Ibid. 4.

See, e.g., Philippe Grandcolas - Jean-Lou Justine: Covid-19 ou la pandémie d’une biodiversité maltraitée. <https://theconversation.com/covid-19-ou-la-pandemie-dune-biodiversite-maltraitee-134712 > Accessed: 11 July 2020. 84

In Latour’s concept hybrids have the ability to blur the line between the natural and social realms. Bruno Latour: We have never been modern. Harvard University Press, 1993. 85

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nature and society and the concomitant reordering of the world economy (and, accordingly, our daily lives) could open the way for the emergence of a proper post-COVID “Zeitgeist”.86 Regardless whether or not Latour’s assessment of the current situation is right, what became clear for soon after the outbreak of the virus is that (more globally and simultaneously than ever in the last couple of decades) we not only have to deal with a par excellence manufactured risk (or, to use Beck’s own terminology, with a “man-made hybrid”)87 that jeopardizes many segments of our everyday life, but also with its supposedly disruptive effects on the current world order. Obviously, present uncertainties would not just impact and reconfigure the global production and supply chains (and the world economy as a such), but would likely affect the dynamics of globalization, too. There are, however, competing narratives concerning the effects of the COVID-19 pandemic on globalization. For some observers, the pandemic serves as a definitive proof that we are entering a phase of deglobalization, others dispute these claims and argue, that—to use Peter L. Berger’s famous phrasing—things are not what they seem to be and thus we should better see behind the curtains before making such verdicts. In fact, as debates concerning the nature of globalization have been ongoing for decades, it is assumable that some aspects of this discussion could help us to have a clearer view on the current situation. Hence, in the coming pages I would like to superficially cover some discussion points that might help us to contextualize processes that are visible at work today.

THE END OF GLOBALIZATION: ARGUMENTS AND COUNTERARGUMENTS To be sure, the COVID-19 pandemic is not the first event that has triggered a debate on deglobalization and is not even the first in the last decades. Whereas the discussion once revolved around the issue to what extent did the crisis of 2008 led to the retreat of globalization, a few years later the migration crisis, the Brexit and the election of Donald Trump as president of the United States offered new materials for those inclined to declare the end of globalization.88 Recently, yet again, a number of experts, politicians, and opinion leaders are claiming that—to paraphrase the Communist Manifesto—a specter is haunting the world, the specter of deglobalization. Others, mainly historians, examining globalization from a different perspective, however, argue that there is nothing really new under the sun and we should be rather cautious with our statements. Nevertheless, while it might be true that the intensity of global processes (global flows of goods, people, and capital)

86 Bruno Latour: What protective measures can you think of so we don’t go back to the pre-crisis production model. <http://www.bruno-latour.fr/sites/default/files/P-202-AOC-ENGLISH.pdf > Accessed: 31 July 2020.

Ulrich Beck: The Politics of Risk Society. In: John S. Dryzek – David Schlosberg (eds.): Debating the Earth: the environmental politics reader. Oxford University Press, 2005. 588. 87

88 See e.g.: Florian Bieber: Debating Nationalism: The Global Spread of Nations. Bloomsbury Academic. 2020. or articles like: He Yafei: Brexit May Be Part of the First Wave of Deglobalization, World Post, 1 July 2016 <https://ww w.huffpost.com/entry/brexit-deglobalization_b_10755862 > Accessed: 12 July 2020; Ruchir Sharma When Borders Close. New York Times, 12 November 2016 <https://www.nytimes.com/2016/11/13/ opinion/sunday/when-borders-close.html > Accessed: 12 July 2020; Laurence Chandy – Brina Seidel: Donald Trump and the future of globalization. <https://www.brookings.edu/blog/up-front/2016/11/18/donald-trumpand-the-future-of-globalization/ > Accessed: 12 July 2020.

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will temporarily slow down, this not necessarily means that globalization is in decline.89 In fact, if we carefully look at the longer dynamics of globalization, we might be able to identify similar periods that could help us to better understand the current state of affairs. The debate among world and economic historians on certain junctures of the history of globalization, on which we just tangentially could touch upon, could yield some important insights. Especially as a number of experts are inclined to interpret current events in the light of these past crises. According to one of the most accepted narratives, the first wave of modern globalization gained significant momentum around the second half of the 19th century, and its second wave unfolded after World War II.90 The interwar period has then often been characterized as a great rupture and as the demise of a previous era of globalization.91 Challenging this widely acknowledged periodization, Adam Tooze and Ted Fertik, however, argue that the war did not lead to the retreat but to the acceleration of projects of economic ordering. Hence, “the war could not undo or reverse globalization. What it did do was to render the organization of that economy more complex, more politicized, and ultimately more fragile.” The same holds true for the economic breakdown of the 1930s and whereas the Great Depression seems indeed represent a rupture in global processes, it nevertheless did not produce a shrunken global economic system and did not commence a period of deglobalization. This period—they argue —could rather be seen as the next round in the ongoing struggle over the relationship between world economy and world power.”92 Consequently, the cataclysms of the war and the economic crisis of the 1930s not evidently led to a retreat in global processes, but rather, they stimulated the reordering of the world economy.93 Yet another discussion was ignited over deglobalization in the aftermath of the 2008 financial crisis, when the so-called second (or for those who distinguish between the pre-

Michael Zürn: The Death of Globalization? COVID 19 and the Nation-State. <https://www.theglobalist.com/ globalization-coronavirus-pandemic-deglobalization-society-digitalization-commerce/ > Accessed: 15 July 2020. 89

90 Examining the history of globalization has been posing a number of difficulties ever since the term gained particular importance around the 1990s. In this regard, it seems particularly problematic to determine which period brought a whole new quality of global interconnections and how globalization then unfolded. As it was summarized in an article authored by Kevin H. O’Rourke and Jeffrey G. Williamson, there are three schools concerning the genesis of the globalization. While for some, the starting point of globalization is attached to the discovery of America by Columbus and to the opening of the sea route to India by Vasco da Gama, others argue that it started much earlier. Most of the researchers however consider the second half of the 19th as the big bang of globalization as a result of the rapid development of trade, infrastructure and communication and the increased human and capital flows. For more about the genesis of globalization see: Kevin H. O’Rourke – Jeffrey G. Williamson: When did globalization begin? European Review of Economic History. 2002/1. 23-50. About the two waves theory see: Richard E. Baldwin – Philipp Martin: Two Waves of Globalisation. Superficial Similarities, Fundamental Differences. In: Siebert, Horst (ed.): Globalization and Labor. Tübingen. 1999. 3-58.

According to this view, first formulated probably by John Maynard Keynes, World War I brought the liberal economic order that emerged in the late 19th century to a sudden halt. Kevin H. O’Rourke – Jeffrey G. Williamson: Globalization and History. The Evolution of a Nineteenth-Century Atlantic Economy. Cambridge, MA. 1999. 429. Cf. with John Maynard Keynes: The Economic Consequences of the Peace. London. 1920. 11. 91

Adam Tooze – Ted Fertik: The World Economy and the Great War. Geschichte und Gesellschaft. 2014/2. 236-238.

Ibid. 226.

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and the post-1970s era of globalization, even the third) wave of globalization, that led to the unparalleled levels of global connectivity and integration, came to a rupture in 2008. Not surprisingly, a number of economists and historians were quick to compare the effects of the financial crisis with the one in the early decades of the 20th century and defined it as yet another rupture in the history of globalization, if not even as the starting point of deglobalization.94 In his article, When Borders Close, Ruchir Sharma summarized this as follows: “2008 looks to be as clear a turning point as 1914. With global demand weak, and many nations erecting import barriers, trade is slumping. ... Globalization stalled. A new age of deglobalization hit full stride.”95 Those subscribing to this radical approach furthermore predicted that the consequences of the economic crisis (retreat into protectionism and the rise of nationalism), like in the interwar period, might even lead to an increased instability with a higher probability of interstate wars.96 Here again, observers were divided about the validity of this comparison, and those who were rather humble in their judgments claimed that while—like in the interwar period—the global flows of goods, services, and finances declined … other data „suggest that the pace of global integration has slowed but not reversed.”97 While after 2008 the nature of globalization changed significantly, but eventually, the pace of globalization managed to return to that level before the crisis. While given the different nature of the problems, and a different world economic setting, comparing the current situation with these two periods might seem pointless, the superficially examined examples could nevertheless provide an additional and productive lens to conceptualize what we are facing today. In this context, the pandemic is threatening not so much the globalization but represents a great challenge to the structure of the current global order. Furthermore, with regard to the current crisis, non-economic points arose, too. Nevertheless, none of these points are really new, as the same indicators were used to underline the assumed severe deglobalizing effects of the 2008 financial crisis. Among others, the comeback of the nation state as a potent political actor and the decreasing connectivity were seen as decisive evidences that globalization came to an end or at least reached a halting point. While for a long time it was widely anticipated that the dense global connectivity not just pose a challenge to the traditional notion of nation-states, but that, in a longer run, this socio-spatial format would eventually disappear and new formats would prevail, today voices are rising that the nation state is “striking back” and that— according to them—would derail the project of globalization. Although the re-emergence of the nation state in the current situation is indeed undeniable, it is more likely that this current phenomenon is not a sing of deglobalization either, rather part of a permanent

94 See, e.g., Harold James: International order after the financial crisis. International Affairs (Royal Institute of International Affairs). 2011/3. 525-537.

Ruchir Sharma: When Borders Close”, New York Times, 12 November 2016. <https://www.nytimes. com/2016/11/13/opinion/sunday/when-borders-close.html > Accessed: 14 July 2020. 95

96 See, e.g., Evan E. Hillebrand: Deglobalization Scenarios: Who Wins? Who Loses? Global Economy Journal. 2011/2. pp. 1-19.

Laurence Chandy – Brina Seidel: Is Globalization’s Second Wave about to Break? Brookings Institute <https:// www.brookings.edu/research/is-globalizations-second-wave-about-to-break/ > Accessed: 14 July 2020. 97

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tension between conflicting projects of sovereignty. In order to understand exactly what this means, it is worth briefly referring to the research on globalization inspired by the socalled spatial turn. Those describing globalization from a spatial perspective even argue that this, or more precisely globalizations in plural are to be understood as permanent processes of de- and reterritorialization and the current situation thus serves as a unique moment of respatialization with spatial formats (like the long-distance value chains and production networks) decreasing, while others (like the nation state or regionalisms) taking proximity, production safety and increasingly the climate issues into account are in the rise. In this context, authors also underline that the current situation does not mean the end of globalization, but that through the respatialization of the world new kinds of globalizations (and actors performing authority within these processes) would emerge. Others, identifying globalization with connectivity, claim to identify a plethora of alarming factors, too, and—like in 2008, or during the peak years of the migration crisis—are quick in declaring the end of globalization. What they however often tend to forget is that these are probably temporal circumstances, and counter tendencies like the densification of digital networking and new methods of communicating have increasingly been showing up to partially equalize the shrinking effects of the virus on global connectivity. Hence, what we recently witness with the re-emergence of the nation state and with the changing patterns of connectivity is more likely a structural transformation of globalization and thus—as the vaguely discussed historical precedents have also taught us—we should remain cautious in prematurely proclaiming the end of globalization. To underline once more the necessity of remaining modest when it comes to the future of globalization and the projected end of it, I would like to conclude this chapter by briefly uncovering another feature of globalization that might help us to better understand recent processes.

MULTIPLE GLOBALIZATIONS The term globalization became a buzzword in the turn of the 1980s/1990s and has been framing public and scientific discourses ever since. Within the scientific field, the increasing interest resulted not just in a growing corpus of literature, but in a certain rearrangement of the research environment, especially in humanities and social sciences. Recognizing that research on globalization is not something that can be solved by any single academic discipline, new interdisciplinary avenues of research opened up. In this context, certain (sub)disciplines (global studies, area studies) and approaches (transnational and transregional historiography, transfer research) re-emerged or gained new importance. Paying more and more attention to the study of transregional entanglements, this newly organized environment has increasingly highlighted the fact that globalization is not a result of a process that could only have developed in the West. As pointed out by experts of transregional history, it makes better sense to speak about the multiplicity and co-existence of globalization projects. Hence, perceiving it as a unilateral and all-encompassing process without any alternatives and considering the advanced capitalist countries as the primary agents of this process is in many ways misleading. In a historical context, the research on global socialism has brought new arguments in this regard when claiming that in the face of Western globalization socialist countries

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pursued large scale global projects during the Cold War years.98 Therefore, the socialist bloc was not isolated from global processes as many authors have claimed but was rather one of the post-World War II centers of global interactions. Even after 1989, when the Western/neoliberal form of globalization managed to declare triumph over its competitor, the accommodation and adjustment to it did not last long, and its agenda found itself soon confronted by a growing crisis of legitimacy and increased resistance.99 In this context, the Filipino academic, Walden Bello, who is supposed to have coined the term ‘deglobalization’, took a leading position and called for a new agenda of regulating globalization and for the introduction of new values and rules of the game.100 He even pleaded for the deconstruction of the institutions on which Western globalization was rested (World Trade Organization, World Bank, and International Monetary Fund) and for the construction of ones. Eventually, once the world economic conditions have substantially changed in the aftermath of the economic crisis of 2008, new political contexts and narratives have emerged that considered the Western form of globalization rather unsustainable. With China as one of the main actors in this regard, these projects have been offering new rules and directions of cooperation within the international economic system and thus a better integration for a number of countries suffering from the disadvantageous interdependencies the neoliberal rules of the world economy have been imposing on them. Undoubtedly, the Western globalization has been the most significant project, that for decades managed to cement its leading position (and its normative radiance is still the most influential one), but what becomes evident from these brief examples is that globalization is neither to be understood as a natural occurrence developed in the West that conquered the “rest,” nor as a singular process. Instead, a nuanced globalization interpretation should be taken into account, that recognizes the multiplicity and co-presence of globalizing projects. In this understanding, the recent pandemic is thus threatening not so much the globalization, but represents a great challenge to certain global projects.

A CONCLUDING REMARK The disruption and chaos that the current global pandemic has caused are severe and its effects and lasting impacts on the global order are already apparent. The world is thus not flat anymore, at least not in the way Thomas L. Friedman suggested and within a few weeks, a more fragmented world came into being.101 Hence, declaring that the specter of deglobalization is haunting us is an obvious first reaction. Nevertheless, what the abovementioned examples can teach us is that the deconstructive effects of the pandemic on

98 For more see, e.g., Alternative Globalizations: Eastern Europe and the Postcolonial World. Eds.: James Mark – Artemy M. Kalinovsky – Steffi Marung . Bloomington, Indiana University Press. 2020; Between East and South: Spaces of Interaction in the Globalizing Economy of the Cold War. Eds.: Anna Calori et. al. Berlin, De Gruyter. 99 This culminated, among others, in the protests during the Inter-Ministerial Meeting of the World Trade Organization in Seattle in 1999 and two years later in Geneva.

Walden Bello: Deglobalization. Ideas for a New World Economy. Zed Books, London, 2002.

100

Thomas L. Friedman: The world is flat: a brief history of the twenty-first century. Farrar, Straus and Giroux, New York, 2005.

101

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the global order would not necessarily mean that globalization is over. Rather, it would commence an era of reconfiguration among competing global projects and visions in which global hegemonies and interconnections will be renegotiated and which may lead to „permanent shifts in political and economic power in ways that will become apparent only later.”102 In this view, globalization is thus not in retreat but has simply entered a different phase. It seems more likely that the current situation is just challenging the way we are thinking about globalization. In this regard, the virus can be seen as the catalyst of a Schumpeterian creative destruction that would lead to the dismantling of the current world in order to give rise to a new one.103

MENTAL HEALTH CONSEQUENCES OF THE COVID-19 PANDEMIC104 BIANKA RESTÁS

On 30 January 2020, the Director General of the World Health Organisation (WHO) declared that the novel coronavirus (COVID-19) outbreak constitutes a Public Health Emergency of International Concern (PHEIC).105 The global community has experienced an unprecedented challenge in recent months facing the immediate impacts of the pandemic. It is certain that the pandemic is going to have significant medium and long-term consequences too, affecting our economy, global market, society, politics, tourism, healthcare facilities, and other relevant areas. Fear, worry, and stress are normal responses to perceived or real threats, or at times when we are facing uncertainty or unknown, unexplained phenomena. In this context the WHO called attention to the fact that “it is normal and understandable reaction that people are experiencing fear as a consequence of the COVID-19 pandemic.”106 The virus has already had a direct impact on the physical health of million people, and at the same

How the Economy Will Look After the Coronavirus Pandemic? Foreign Policy. 15 April 2020. <https://foreignpolicy. com/2020/04/15/how-the-economy-will-look-after-the-coronavirus-pandemic/ > Accessed: 15 July 2020.

102

In Schumpeter’s view, creative destruction is a process through which long-standing practices are being dismantled in order to make way for innovation. Joseph Schumpeter: Capitalism, Socialism and Democracy. Routledge, London, 1994. [1942].

103

Text submitted 24 July 2020.

104

World Health Organisation (WHO): COVID-19 Public Health Emergency of International Concern (PHEIC) Global research and innovation forum. WHO. 12 February 2020. <https://www.who.int/publications/m/item/ covid-19-public-health-emergency-of-international-concern-(pheic)-global-research-and-innovation-forum > Accessed: 5 June 2020. 105

World Health Organisation (WHO): Mental health & COVID-19. <https://www.who.int/teams/mental-healthand-substance-use/covid-19 > Accessed: 5 June 2020. 106

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time, it is supposed to cause a significant mental health threat worldwide.107 Experts point out that the still ongoing pandemic is a relatively new form of stressor or trauma for mental health professionals. As a consequence, the number of those who will need psychiatric help is going to increase in the next weeks or months, requiring the reconsideration of current practices.108 A study that focus on the impact of quarantine and physical distancing on mental health points out that from a medical and sociological viewpoint, the pandemic represents a unique event, as it does not similar to any other previous traumatic event, such as earthquakes or tsunamis. In this context experts highlight that in those cases, the traumatic factors are usually limited to a specific area and to a particular period of time. As a consequence, people know that they can escape from the event. In the case of COVID-19, however a significant difference is that the “threat” can be everywhere and it can be carried by every person next to us.109 The worldwide contagion and the lockdown could pose serious psychological and mental health problems not only for those directly impacted by the pandemic, but for the entire society in general. These effects might represent mental health outcomes for people affected by COVID-19 or be associated with the prevention measures and the socio-economic impact for the general population. Furthermore, certain groups of the society like the elderly, the children, and the healthcare workers might experience different level of psychological distress. Experts emphasise the need to pay specific attention to the potentially more vulnerable groups—such as people with pre-existing psychiatric conditions, pregnant women, persons in detention, international migrant workers, and international students—that may need tailored interventions.110 The global community has had to face the same, unknown situation worldwide, although different countries have been affected in different ways and extent. Dr Konstantinos Petsanis, a neurologist and consultant in Service Delivery and Safety Department at World Health Organization pointed out in the context of post-pandemic life, that “mental health repercussions regarding what is happening during this pandemic for people, today and beyond, will really be a problem in general.”111 Experts highlight that restrictive measures

Dalila Talevi–Valentina Socci–Margherita Carai–Giulia Carnaghi–Serena Faleri–Edoardo Trebbi–Arianna Di Bernardo–Francesco Capelli–Francesca Pacitti: Mental health outcomes of the CoViD-19 pandemic. Rivista di Psichiatria. June 2020. 137. <https://www.researchgate.net/publication/341804735_Mental_health_outcomes_ of_the_CoViD-19_pandemic > Accessed: 5 June 2020.

107

Andrea Fiorillo–Philip Gorwood: The consequences of the COVID-19 pandemic on mental health and implications for clinical practice. European Psychiatry. Cambridge University Press. 2020. 1. <https://www. cambridge.org/core/services/aop-cambridge-core/content/view/E2826D643255F9D51896673F205ABF28/ S0924933820000358a.pdf/consequences_of_the_covid19_pandemic_on_mental_health_and_implications_ for_clinical_practice.pdf > Accessed: 5 June 2020.

108

Giallonardo–Sampogna–Del Vecchio–Luciano–Albert–Carmassi–Carrà–Cirulli–Dell’Osso–Nanni–Pompili– Sani –Tortorella–Volpe–Fiorillo: The Impact of Quarantine and Physical Distancing Following COVID-19 on Mental Health: Study Protocol of a Multicentric Italian Population Trial. Front. Psychiatry. 5 June 2020. 2. <https://www.frontiersin.org/articles/10.3389/fpsyt.2020.00533/full#B8 > Accessed: 20 July 2020. 109

Talevi–Socci–Carai–Carnaghi–Faleri–Trebbi–Di Bernardo–Capelli–Pacitti, 137.

110

World Health Organisation (WHO): Facing mental health fallout from the coronavirus pandemic. 29 May 2020. <https://www.who.int/news-room/feature-stories/detail/facing-mental-health-fallout-from-thecoronavirus-pandemic > Accessed: 5 June 2020. 111

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such as quarantine, isolation, and social distancing, have an impact on the psychological well-being of people as well as on the emotive reactions to the pandemic itself. Psychological reactions to pandemics include maladaptive behaviours, emotional distress and defensive responses, such as “anxiety, fear, frustration, loneliness, anger, boredom, depression, stress, avoidance behaviours.”112 For a large group of people quarantine and self-isolation represented a new, unexperienced situation. The long-term effects of that could be very different, depending on many factors and circumstances: the general mental health of people and their age, the way they have been affected by the pandemic, and whether they have gone through the crises on their own or together with their family or friends. The WHO published different materials on how to cope with the stress during the outbreak113, some of those providing basic psychosocial skills for COVID-19 responders114 or storybook on COVID to help children and young people cope with the pandemic.115 The organisation has called attention to the importance of gathering credible, up-to-date information that can help people to accurately evaluate the real picture of risk and consequently, understand reasonable precautions. The WHO highlighted too that lessening the time we spend watching or listening media coverage can reduce worry and agitation in general.116 Aiysha Malik, a mental health expert at WHO pointed out too that facts and information can reduce the feeling of fear, and she advised to minimise the amount of time that people are exposed to news. Among others, she emphasised the importance of keep maintaining routines and social contacts during the quarantine, and using effective, already experienced personal strategies to minimise fear and anxiety.117 Italy has been one of the countries worst-affected by the COVID-19 both in terms of confirmed cases and fatalities and from an economic point of view. Surveys reveal that in May 42%118 of the Italians expressed their fear in the context of the reopening of the country, while 62% told119 that he or she will need psychological support to face the second phase

Talevi–Socci–Carai–Carnaghi–Faleri–Trebbi–Di Bernardo–Capelli–Pacitti, 138.

112

World Health Organisation (WHO): Coping with stress during the 2019-nCov outbreak. <https://www.who. int/images/default-source/health-topics/coronavirus/risk-communications/general-public/stress/stress. jpg?sfvrsn=b8974505_14 > Accessed: 5 June 2020.

113

114 World Health Organisation (WHO): Basic Psychosocial Skills: A Guide for COVID-19 Responders. 1 June 2020. <https://www.who.int/news-room/detail/01-06-2020-basic-psychosocial-skills-a-guide-for-covid-19-responders > Accessed: 5 June 2020.

World Health Organisation (WHO): Children’s story book released to help children and young people cope with COVID-19. 9 April 2020. <https://www.who.int/news-room/detail/09-04-2020-children-s-story-bookreleased-to-help-children-and-young-people-cope-with-covid-19 > Accessed: 5 May 2020.

115

WHO: Coping with stress during the 2019-nCov outbreak.

116

World Health Organisation (WHO): Q&A on COVID-19 and mental health. 28 April 2020. <https://www.who. int/teams/mental-health-and-substance-use/covid-19# > Accessed: 5 May 2020.

117

Andrea Turco: Sondaggi politici Ipsos: fase 2, cala la paura del contagio tra gli italiani. Termometro Politico. 21 May 2020 <https://www.termometropolitico.it/1533073_sondaggi-politici-ipsos-fase-2-cala-la-paura-delcontagio-tra-gli-italiani.html > Accessed: 5 June 2020. 118

Andrea Turco: Sondaggi Piepoli: 62% italiani pensa ad aiuto psicologico per affrontare fase 2. Termometro Politico. 5 May 2020. <https://www.termometropolitico.it/1530097_sondaggi-piepoli-62-italiani-pensa-adaiuto-psicologico-per-affrontare-fase-2.html > Accessed: 5 June 2020. 119

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of the country’s response to the pandemic. At the same time, psychologists pointed out that many people will face difficulties during the “return” phase back to normal life.120 For people leaving in areas that have been on the frontline of the crisis, such as Lombardy in Italy, the psychological impacts of the virus have become a major concern, along with the mental health and well-being of frontline workers. COVID-19 has killed more than 35,045 people in Italy until 19 July,121 putting a significant pressure on the healthcare system and economy. But as the emergency started to slow down and the lockdown has been lifted in the country, the toll on mental health has started to become visible. In a recent survey conducted by Italy’s order of psychologists (CNOP) eight in ten Italians said they needed psychological support to overcome the pandemic. Psychologists have reported an increase in the number of people turning to them for support for handling the ongoing fear of the virus, the emotional impact of physical distancing and economic distress. Taking into account the labour market and economic impacts of the pandemic, psychologists warn of a cataclysm in mental health as people struggle with financial difficulties.122 The pandemic has already provoked visible mental and psychological consequences in the society: anxiety, depression, anger, panic attacks, fear of dying, insomnia and survivor's guilt are symptoms that have already been reported. The Italian Ministry of Health launched an emergency help line in late April providing psychological crisis support after experiencing a serious death toll and as a result, many people dealing with grief.123 A recent study shows that besides experiencing depression (50%) insomnia (34%), anxiety (44,6%), nightmare (almost 50%) and other symptoms, 70% of health workers dealing with COVID-19 in Italy's hardest-hit areas are suffering from burnout.124 Serena Barello, the author of the study pointed out that “this is actually the hardest moment for doctors and nurses” and at the same time she expressed her worries that a lot of doctors and nurses will have post-traumatic stress disorder (PTSD) symptoms long after the pandemic.125 Posttraumatic stress disorder is a psychiatric disorder that can occur in people who have experienced or witnessed a traumatic event such as a natural disaster, a serious accident, a terrorist act, war/combat, rape or other violent personal assault. People with PTSD have intense, disturbing thoughts and feelings related to their experience that last long after the traumatic event has ended.

Turco, 2020b.

120

Dipartimento della Protezione Civile: COVID-19 Italia - Monitoraggio della situazione. 7 June 2020. <http:// opendatadpc.maps.arcgis.com/apps/opsdashboard/index.html#/b0c68bce2cce478eaac82fe38d4138b1 > Accessed: 8 June 2020 121

Angela Giuffrida: Italy's lockdown has taken heavy toll on mental health, say psychologists. Guardian. 21 May 2020. <https://www.theguardian.com/world/2020/may/21/italy-lockdown-mental-healthpsychologists-coronavirus#maincontent > Accessed: 8 June 2020 122

123 Marta Bellingreri: Coronavirus: Italy’s other emergency - survivors’ mental health. Guardian. 11 May 2020. <https://www.bbc.com/news/world-europe-52491203 > Accessed: 8 June 2020.

Sanità24 – Il Sole 24 Ore: Coronavirus/ Università Cattolica: 7 operatori sanitari su 10 colpiti da burnout. 14 May 2020. <https://www.sanita24.ilsole24ore.com/art/lavoro-e-professione/2020-05-14/coronavirusuniversita-cattolica-7-operatori-sanitari-10-colpiti-burnout-172245.php?uuid=ADO7kbQ > Accessed: 8 June 2020. 124

Sofia Bettiza: Italy's medical workers: 'We became heroes but they've already forgotten us'. BBC. 26 May 2020. <https://www.bbc.com/news/world-europe-52784120 > Accessed: 8 June 2020. 125

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They may relive the event through flashbacks or nightmares; they may feel sadness, fear or anger; and they may feel detached or estranged from other people.126 Neuroscientists and psychologists call attention to the fact that there are many possible sources of trauma that might lead to or worsen PTSD during the COVID-19 pandemic. Some people with PTSD may benefit from trying self-help approaches. Having sources of social support is also important. Other people may require professional help or medication.127 The mental health impacts of the pandemic represent a complex issue with several aspects to be considered. According to Anant Kumar and K. Rajasekharan Nayar “the biggest challenge in mitigating mental health consequences of the COVID-19 pandemic is the lack of mental health professionals, practitioners, counsellors, and health facilities where one can approach for such help.” In countries where the available number of such professionals is limited, the mental health outcomes of the pandemic could pose significant challenges.128 Experts support the idea that public mental health interventions should be formally integrated into public health preparedness and emergency response plans. Furthermore, future studies are needed to investigate the long-term psychological consequences of the outbreak.129 It should be noted that the public health response to the emergency has focused predominantly on acute needs and their treatment, while much less attention has been paid to the mental health consequences of the pandemic. The coronavirus has already impacted many areas of our life and it is still hard to foresee its long-term effects and their magnitude. In the lack of research, monitoring, and access to mental health and psychological treatment and services, the pandemic could cause serious long-term problems for those affected by the new disease, particularly for the most vulnerable groups, and as a consequence, for the whole population. We all have a role to play in tackling these consequences.

American Psychiatric Association: What Is Posttraumatic Stress Disorder? <https://www.psychiatry.org/ patients-families/ptsd/what-is-ptsd > Accessed: 8 June 2020.

126

Aaron Kandola: How can the COVID-19 pandemic affect PTSD? Medical News Today. 13 May 2020. <https://www.medicalnewstoday.com/articles/ptsd-and-covid-19#when-to-seek-help > Accessed: 8 June 2020 127

128 Anant Kumar–K. Rajasekharan Nayar: COVID 19 and its mental health consequences. 27 April 2020. Journal of Mental Health. 2. <https://www.researchgate.net/publication/340954951_COVID_19_and_its_ mental_health_consequences > Accessed: 8 June 2020.

Talevi–Socci–Carai–Carnaghi–Faleri–Trebbi–Di Bernardo–Capelli–Pacitti, 142-143.

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OF EASTERN PARTNERSHIP, GREAT POWER POLITICS, AND CRISIS MANAGEMENT IN THE POST-COVID WORLD130 PÉTER STEPPER

INTRODUCTION The SARS-CoV 2 (also known as COVID-19) virus that emerged in China and evolved into a pandemic influenced global markets in a very similar way to the 2008 financial crisis. It is important to emphasise that crisis management opportunities differ from region to region, creating greater challenges for countries lacking financial liquidity. Eastern European countries have to tackle more serious economic challenges, therefore they look for help in any form of financial assets either coming from the East or West. Rivalry for their friendship is anything but new in the imminent neighbourhood of Russia. The fate of this geopolitical game fundamentally depends on the success of recent crisis management efforts. In the meantime, Russia’s intentions to exploit every situation are to be expected – for instance, the frozen conflicts in Georgia and Moldova or the recent situation in eastern Ukraine.131 However, the European Union seems to be reluctant to play a significant role in the life of this region. The EU uses a hybrid approach in terms of its development policy. A mixture of modernisation by democracy building and maintaining stability by giving economic support is a compromise. Coercive diplomacy and withholding financial assets to enforce democratic reforms are not what most EU members and Eastern Partnership (EaP) states are currently looking for. Therefore, the EaP is increasingly heterogeneous and inclusive, supporting not just the front-runners, but all six countries. Armenia, Azerbaijan, and Belarus might not seek EU membership, but they still maintain their partnership. Nevertheless, it is important to admit that EU’s ambition towards the Eastern Partnership has never been too high. In the period of 2010 and 2011, the EaP budget peaked around 600 million euros per year. To put it into perspective, CAP resources allocated for agricultural development of Poland exceeded 12 billion euros132 annually. Due to the expected economic hardships caused by the coronavirus pandemic, all foreign aid and development projects are essential for these countries, regardless of how little funds are available.

CORONAVIRUS IN THE EASTERN PARTNERSHIP STATES Armenia adopted a bill on a nation-wide state of emergency on 16 March and introduced a prohibition of disseminating COVID related information not approved by the government.

Text submitted on 22 July 2020.

130

Stepper Péter: Eastern Partnership in times of coronavirus. New Eastern Europe. 2020/4. 77-80.

131

Dobrowiecki Péter–Stepper Péter: Hungary’s Foreign Policy and the EU’s Eastern Partnership. AJKC-Research Blog. 2020/2. <https://ajtk.hu/en/research/research-blog/hungarys-foreign-policy-and-the-euseastern-partnership > Accessed: 15 July 2020. 132

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The Armenian government closed all kinds of educational facilities (kindergarten, school, university) and encouraged people to accept the self-quarantine regime in shopping malls. It has also been forbidden to enter the country from regions particularly affected by SARSCoV 2 virus. In the second phase of protection measures, citizens have been allowed to leave their homes in case of prime necessity. However, cafes and restaurants remained closed. The third phase mainly focused on economic crisis management. Some beneficiaries could reimburse fifty percent of their electricity and gas bills under certain conditions, and the government started programs in order to help remote work and education.133 In Azerbaijan, the government closed the borders right after introducing the state of emergency. People returning from Iran were obliged to stay in a preventive quarantine. Other social isolation measures such as the closure of shopping malls have also been introduced. In the second phase, Baku took stricter quarantine measures, closed schools, and prohibited public gatherings, no more than ten citizens were allowed to stay in the same place. The third phase started with the re-opening of the schools, but the quarantine regime will last until the end of the year.134 Belarus had the most confirmed cases, almost twice the number of people who tested positive in Ukraine, a country that experienced the second largest proportion of COVID-19 patients. The regime was less precautious than any other government in the region. The Ministry of Health supposed that the closure of schools would not be effective, because young people would have gatherings either way, and e-learning per se would not keep them home. He argued that border closures would not stop the virus either, because returning Belarusian citizens could spread SARS-CoV 2, even if foreigners are not allowed to enter the country. Hence, borders remained open much longer than in the neighbouring countries. Although most of the mass events have been cancelled, schools remained open. Lukashenka did not cancel the Victory Day parade135, where thousands of people attended. Although Belarus received humanitarian aid from China and the EU, there is a long road ahead to manage the situation. Georgia had the lowest number of cases so far in the region. However, authorities urged to close educational facilities in early March and announced a full border closure with Armenia two weeks later. After imposing quarantine measures, the government launched a 600 million dollars financial package136 to support the Georgian economy and help families suffering from unemployment and unable to pay utility bills. Georgia was among the first to open safe corridors with other countries and encouraged tourism. Moldova had a lot of citizens returning from Italy, thus they feared a massive spread of the virus, which eventually has happened. The state of emergency

New Eastern Europe: Coronavirus in the Eastern Partnership states (updates). <https://neweasterneurope. eu/2020/03/16/coronavirus-in-the-eastern-partnership-states/ > Accessed: 15 July 2020. 1-2.

133

Ibid. 3.

134

Tanya Kapitonova: Celebrations on the occasion of Vicory Day were visited by thousands of Minsk residents. Belsat. <https://belsat.eu/ru/news/prazdnichnye-meropriyatiya-po-sluchayu-dnya-pobedy-posetilitysyachi-minchan-bolshoj-fotoreportazh/ > Accessed: 15 July 2020.

135

OC-Media: Coronavirus live updates. <https://oc-media.org/coronavirus-live-updates-1-april/ > Accessed: 15 July 2020. 136

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has been announced on the 17 March.137 Quarantine measures and closure of educational facilities helped to flatten the curve. Meanwhile the Prime Minister, Ion Chicu focused on the economic reconstruction package. However, the anti-crisis package has been found unconstitutional by the Moldovan Constitutional Court, because of certain measures related to GAZPROM deals, not related to the pandemic situation directly, thus the court questioned its legality.138 Since early May, all shops could resume their work, the state of emergency ended on 15 May 15 completely. Ukraine had half as much confirmed cases— namely 24.000139—as Belarus, having a population four times larger, over 40 million people. It is also much better than the case of Moldova, that has 2.5 million inhabitants and almost 10.000 confirmed cases. The death ratio also remained below 3% percent until now. Strict quarantine measures have been introduced in April, and the government launched a voluntary mobile app called Act at Home to track people and their last contacts. However, at the end of April, hundreds of entrepreneurs protested to ease the restrictions and relaunch the economy. The government remained firm about its five-stage plan to lift the restrictions. They started to ease up the restrictions since 11 May and the second stage began on 22 May 22 with reopening hotels, religious services, and public transport. Air travel was about to work again from the 15 June.140

Armenia

Azerbaijan

Belarus

Georgia

Moldova

Ukraine

State of emergency

16 March – 13 July

24 March – 31 May

21 March – 23 May

17 March – 15 May

25 March –

Closing schools

1st week of March

2nd week of March

Closing borders

yes

yes, but safe corridors

yes

Social distancing

yes

Restrictions for shops

yes

1. Table: Governmental and social measures in EaP countries from March to June. Source: Neweasterneurope.eu Eastern countries have been affected by coronavirus infections to varying degrees. In Belarus there were 1/233 infected cases per capita, but in Ukraine, this ration remained „only” 1/1583.

137 New Eastern Europe: Coronavirus in the Eastern Partnership states (updates). <https://neweasterneurope. eu/2020/03/16/coronavirus-in-the-eastern-partnership-states/ > Accessed: 15 July 2020. 138 Nadezhda Koptu: Hold the bag wider. Who benefits from the decision of the Constitutional Court to suspend anticrisis measures of the government. NewsMaker. 10 April 2020. <https://newsmaker.md/rus/novosti/derzhi-paket-shirekomu-vygodno-reshenie-ks-priostanovit-deystvie-antikrizisnyh-mer-pravitelstva/ > Accessed: 15 July 2020. 139 New Eastern Europe: Coronavirus in the Eastern Partnership states (updates). <https://neweasterneurope. eu/2020/03/16/coronavirus-in-the-eastern-partnership-states/ > Accessed: 15 July 2020. 140 Ibid. 6.

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Total cases

Total deaths

Total recovered

Armenia

9,492

139

3,402

Azerbaijan

5,494

3,428

Belarus

42,556

235

18,514

Georgia

794

624

Moldova

8,251

295

4,581

Ukraine

24,012

718

9,690

2. Table: Coronavirus cases in EaP countries. Source: Neweasterneurope.eu

Regarding the economic consequences, the most optimistic scenarios expect a decrease of 5% of GDP this year. Economic conditions are fundamentally decisive in terms of political and societal repercussions. While Putin and Lukashenka’s popularity rate seems to be record low, the most stable leadership is of Zelensky’s in Ukraine.141 The EaP recovery packages introduced by the Commission can be considered as a significant help economically. However, there is an elephant in the room: how the EU can resolve its own crisis. The recently-launched European recovery package is a good sign and shows the strength and ability of the EU to handle internal matters, and also the willingness to help countries through the framework of EaP too. Considering the political situation, and the upcoming elections in Belarus, the EU needs to pay attention indeed. The pandemic did not reduce the intensity of the great power play in the region. Russia tries to present a friendly image for some European partners by helping the fight against the virus in Italy and moderately supporting French President Emmanuel Macron’s efforts for a reset policy. In the meantime, Putin looks for every opportunity to gain popularity by foreign policy as he always did, when his approval rate went south. China is also an important player in Eastern Europe, and it seems that the communist party could handle the situation well. Their economic attributes look slightly better than in the case of Western countries.142 Tackling this double challenge of Russian and Chinese influence has its utmost importance for the EU. However, East-West divide on democratic values and the MFF negotiations does not help to overcome this test of resilience. Despite the Russian efforts to gain leverage during the spread of COVID-19, it is also important to see how the pandemic affected the Eurasian Economic Union (EEU) and the whole post-soviet region. It revealed the problems of EEU, mentioning for example the summit on the 19th of May, when Kazakhstan’s leader, Toqaev refused the inclusion of health care policies into the sphere of EEU competencies. Russia’s debate on gas practices with Armenia and Belarus has not yet been resolved, which makes North Stream II far less useful political asset for Moscow. The clash between the former Soviet member-state and Moscow

Wojciech Kononczuk: Post-COVID Eastern Europe: Equation with many unknowns. New Eastern Europe. 2020/4.

141

Alena Kudzko: COVID-19 not to spare Eastern Europe from great power competition. New Eastern Europe. 2020/4.

142

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became also clear right after the Belarusian decision on not cancelling the Victory Day parade.143 Lukashenka showed Putin how fearless he is, taking this absolutely unnecessary and reckless decision to organise the military parade. Furthermore, he started negotiations with the United States to open energy markets for Western gas and oil products. Obviously, these steps did not reflect a genuine shift of orientation towards the West, but he is using it as a bargaining chip against the Kremlin. The drop in energy prices and the border closures resulted in various economic consequences in the region. Oil prices particularly affected Russia, Azerbaijan, and Belarus. Remittances inflow from migrant workers has dramatically reduced in the region, especially in Ukraine, where COVID caused a loss of 4 billion dollars of remittances only in the last year.144

EU HELPS TO FIGHT COVID IN EASTERN PARTNERSHIP COUNTRIES The European Commission has taken numerous actions on different levels such as responding to immediate needs, providing basic equipment to build healthcare infrastructures, and longterm economic help to provide financial liquidity. Assistance deployed 145 to Ukraine, Georgia, Moldova and some countries in the southern neighbourhood totalled 3.3 billion euros. Fighting the immediate consequences of COVID–19, the EU introduced an emergency support package of 80 million euros and 883 million euros for medium-term support of economic recovery. Armenia received 92 million euros for its immediate needs. Elderly people in Shirak, Tavush, and Lori regions received humanitarian aid packages. Azerbaijan received 14 million euros in the form of direct aid, and with the help of EU funds, the Vocational Education Schools in several regions purchased equipment to produce personal protection garments for medical staff. Belarus has been the beneficiary of 60 million euros to support its short-term needs. Thanks to EU cross-border co-operation projects linking communities in Belarus, Ukraine, and Poland, emergency medical services were available to help doctors in hospitals. Georgia received 183 million euros for immediate needs and started more EUfunded projects to produce safety equipment. A Georgian producer of medical textiles has produced 40,000 medical robes within a week after he was able to purchase 12 additional needlework machines. EU projects in Moldova were already in progress providing protection equipment such as gloves and masks for vulnerable people and medical staff; the country also received 87 million euros of direct financial support. In Ukraine, the EU supported resilience building, helped the transition to online education, and supported the fight against disinformation campaigns. Kyiv also received over 190 million euros in financial assistance.146 The COVID-19 crisis might bring about significant changes in some of the front-runner

Andrey Makarychev: Gone with the virus: How the pandemic makes Russian strategy evanescent. New Eastern Europe. 2020/4.

143

Karina Shyrokykh: The Eastern Partnership and Russia in the post-COVID world. New Eastern Europe. 2020/4.

144

Várhelyi Olivér–Suma Chakrabarti: What help is needed for the EU neighbourhood to come through the COVID-19 crisis? Online discussion organized by Bruegel. <https://www.bruegel.org/events/what-help-isneeded-for-the-eu-neighbourhood-to-come-through-the-covid-19-crisis/ > Accessed: 15 July 2020.

145

European Commission: The EU’s response to the coronavirus pandemic in the Eastern Partnership. <https:// ec.europa.eu/neighbourhood-enlargement/sites/near/files/coronavirus_support_eap.pdf > Accessed: 15 July 2020.

146

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countries. The virus revealed the vulnerabilities within Ukraine because oligarchs could not overcome the crisis, and highlighted its still existing dependency on Russia. Russians continue to interfere in the matters of Abkhazia and the Tskhinvali Region (so-called South Ossetia), and the chaos created by the pandemic helped Russian services kidnap opposition figures and supersede the situation little by little. Georgians also fear a possible Russian meddling in the upcoming elections. The potential drop in domestic support for Putin could be a problem for Eastern Partnership countries as we might witness a more aggressive Russian foreign policy as a result. The same fears arose in Moldova, which was badly affected by the virus – the death numbers are fifteen times higher than in Georgia. In the meantime, pro-Russian political parties were looking for a loan agreement with Russia to finance liquidity problems. The Constitutional Court declared the loan invalid, partly because of its appendix referring to Gazprom demands on gas consumption in Transnistria and Russia’s idea to finance it with Moldovan public money. The upcoming elections in Moldova will be critical both for Moscow and Brussels. The margins are only about five to ten per cent: public opinion on the Russian loan deal and Transnistria’s with Moldovan passports will probably decide the fate147 of the next government. COVID-19 in itself will not change anything in the region, but it can facilitate existing processes in every single EaP country. Therefore, the EU shall be fully conscious of maintaining good relations and remain a strong and credible partner of the Eastern neighbours by supporting their economic recovery.

Oksana Syroid–Nicu Popescu–Tengzi Pkhaladze: Uncertainty in the Time of COVID-19: The Future of Eastern Partnership Countries. Virtual Event organized by CEPA. <https://www.cepa.org/uncertainty-in-thetime-of-covid-19 > Accessed: 15 July 2020.

147

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FAILING STATES IN LATIN AMERICA: POWER VACUUM AND EXCESS OF POWER148 ZSOMBOR SZABOLCS PÁL

After registering the first infected at the end of February, Latin America has turned into one of the biggest hotbeds of the coronavirus, and its cases now surpass European figures.149 However, beyond the most direct threat it poses to human life, in societies with historically unstable states, the pandemic also presents a many-sided challenge to administrations and governability across the region, bringing up several questions that might become crucial in the coming months or years. One of the most obvious challenges is that the high rates of infections and death tolls are seen as the responsibility of governments and the consequence of their overly lax measures to stop the virus’s spread. People in Brazil, for example, protested in March, finding President Jair Bolsonaro’s steps insufficient to counter the infection,150 and the same also happened in Columbia.151 If Latin American governments fail to convince their citizens they have done everything in their power to avert the catastrophe, these tensions could intensify and hamstring governability—particularly if they increase political polarisation just as it happened in Brazil, where there has already been a backlash against demonstrations calling for more stringent action from the president.152 That means many stand up for the president protesting against demonstrations against Bolsonaro, which clearly shows how politicised the question is. Troubles can get even worse if politicians do not bother to mitigate conflicts, seeking to benefit from them in the short term. Proper measures are also needed to abate social tensions, since, beyond political antagonisms, the already high inequalities may also increase because of the pandemic and, leading to discontent, have their repercussions in the political spheres of the countries in question. Protests that started in the pre-COVID period in, e. g., Chile or Columbia can continue or even exacerbate while new ones could emerge in other neighbouring countries

Text submitted on 24 July 2020.

148

Shea Lawrence: Latin America and the Caribbean surpass Europe’s number of coronavirus cases. Euronews. Last updated: 4 July 2020. <https://www.euronews.com/2020/07/04/latin-america-and-the-caribbeansurpass-europe-s-number-of-coronavirus-case > Accessed: 7 July 2020.

149

Cidades registram panelaços contra Bolsonaro durante e depois de pronunciamento. G1. 18 March 2020. <https://g1.globo.com/politica/noticia/2020/03/18/sao-paulo-rio-recife-belo-horizonte-e-fortaleza-registrampanelacos-durante-pronunciamento-de-jair-bolsonaro.ghtml > Accessed: 7 July 2020. 150

Con cacerolazo, bogotanos piden medidas drásticas por covid-19. El Tiempo. 18 March 2020. <https:// www.eltiempo.com/bogota/con-cacerolazo-bogotanos-piden-medidas-drasticas-por-covid-19-474592 > Accessed: 18 July 2020. 151

152 SP terá hoje atos pró e contra Bolsonaro, em diferentes pontos da cidade. UOL Notícias. 14 June 2020. <https://noticias.uol.com.br/politica/ultimas-noticias/2020/06/14/sp-tera-atos-contra-e-pro-bolsonarodomingo-em-diferentes-pontos-da-cidade.amp.htm > Accessed: 7 July 2020.

Antall József Knowledge Centre of Political and Social Sciences

as the cost of living is rising.153 That is why social measures with already stretched budgets, steps to protect regional economies showing low growth rates, and lockdown or reopening in societies of significant informal employment and poverty must be carefully balanced, as, otherwise, they will add to political instability.154 Inadequate measures can, therefore, seriously hit governability and state authorities’ leeway across the subcontinent. As mentioned, discontent in a few countries came to the surface months before the coronavirus outbreak at the beginning of this year. There were social protests in Chile fighting against poverty and inequality and calling for a reform of the Constitution, a legacy of the Pinochet dictatorship. The government promised reforms and to hold a referendum in April but won a respite with the pandemic, so it could postpone the public vote while the unrest ebbed because people could not gather. Meanwhile, in Bolivia, after former president Evo Morales was ousted in October last year, the temporary government chose to reschedule new elections which were due this May, and the interim president seems to use this extension to build political muscle while restraining her contenders.155 Postponing important political events or elections and using the virus to concentrate more power may erode people’s trust in the elite and, thus, undermine political stability. There are many other examples of how political leaders try to reap benefit from the epidemic, weakening democratic institutions. In El Salvador, President Nayib Bukele issues decrees in his tweets after having earlier annulled the legislature’s powers, going against democratic norms and disrespecting democratic rights.156 There are several further concerning tokens of antidemocratic moves across the subcontinent with the rationale of fighting the virus.157 In Colombia, President Iván Duque closed the congress and started to exercise power by decrees.158 There are also signs to watch in Peru, where people’s rights were limited and security forces got excessive authorisation to use their firearms159 while the president can use the pandemic in Venezuela as an excuse to reduce the authority of

Matthew Malinowski–Matthew Bristow: Costlier Food Hits Latin America’s Poor and Adds to Unrest Risk. Bloomberg. 8 May 2020. <https://www.bloomberg.com/news/articles/2020-05-08/costlier-food-hits-latinamerica-s-poor-and-adds-to-unrest-risk > Accessed: 15 July 2020. 153

Joe Parkin Daniels: Latin America’s Wave of Protests Was Historic—Then the Pandemic Arrived. Foreign Policy. 25 June 2020. <https://foreignpolicy.com/2020/06/25/latin-america-protest-pandemic-informaleconomy/ > Accessed: 14 July 2020.

154

155 Emiliano Guanella: Il coronavirus e la democrazia sospesa in America Latina. Instituto per gli studi di politica internacionale. 11 May 2020. <https://www.ispionline.it/it/pubblicazione/il-coronavirus-e-lademocrazia-sospesa-america-latina-26058 > Accessed: 3 July 2020.

Óscar Martínez: Bukele, el autoritario. The New York Times. 20 April 2020. <https://www.nytimes.com/ es/2020/04/20/espanol/opinion/bukele-el-salvador-virus.html > Accessed: 15 July 2020.

156

Geografía política del coronavirus en América Latina. CELAG. 11 April 2020. <https://www.celag.org/ geografia-politica-de-coronavirus-en-america-latina/ > Accessed: 2 July 2020.

157

María Jimena Duzán: Coronavirus por decreto. Semana. 30 May 2020. <https://www.semana.com/opinion/articulo/ coronavirus-por-decreto-el-gobierno-de-ivan-duque-por-maria-jimena-duzan/675093 > Accessed: 15 July 2020.

158

El Estado de Emergencia Nacional en el Perú. Enfoque Derecho. 16 March 2020. <https://www. enfoquederecho.com/2020/03/16/el-estado-de-emergencia-nacional-en-el-peru/ > Accessed: 16 July 2020.; Geografía política del coronavirus en América Latina.

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the parliament, a bulwark of his opposition.160 As democratic backsliding threatens almost all major Latin American countries because of the coronavirus,161 it will be very difficult to return to good governance and restore public trust after the crisis comes to rest. Peru is not the only example of the abuse of power by security forces, as there are also such examples in Puerto Rico, Mexico, the Dominican Republic, and Honduras.162 However, not just police officers enjoy excessive powers against the background of the pandemic and the measures induced by it but the military, too, as many governments across the subcontinent resorted to their armies so that they provide security, logistics, manufacturing capacity, and capable manpower.163 As part of the securitisation of the pandemic, the military was also given extraconstitutional powers to maintain order in El Salvador, and other countries have also heavily drawn on their armed forces. Moreover, in Brazil, there are people demanding military intervention while the president could use the contagion to increase the number of army officers occupying civil offices,164 which also means that he is becoming growingly dependent on the armed forces to retain power.165 These tendencies are remarkable in a region having a history flooded with the army’s meddling in politics, as military men that boast being the most able and organised force in their countries during the crisis evidently have the potential to increase their influence on their states and the way they function today. Aside from the potentially broken relationship between ordinary people and their government, another problem that might continue to afflict some Latin American countries in the virus’s aftermath is the divergence inside governing bodies over the necessary measures. Central governments’ decisions were called into question and defied by local governments and mayors in Brazil. Their defiance was also reinforced by the Supreme Federal Court, which ruled that steps by governors and prefects cannot be annulled by the central government, while disagreements also crept into the federal government, which became most notably manifest in the resignation of Health Minister Luiz Henrique Mandetta. These frictions might lead to an overhaul of the political system—at least, some expect

Emiliano Guanella: Il coronavirus e la democrazia sospesa in America Latina. Instituto per gli studi di politica internacionale. 11 May 2020. <https://www.ispionline.it/it/pubblicazione/il-coronavirus-e-lademocrazia-sospesa-america-latina-26058 > Accessed: 3 July 2020. 160

Anna Lührmann–Amanda B. Edgell–Seraphine F. Maerz: Pandemic Backsliding: Does Covid-19 Put Democracy at Risk? V-Dem Institute Policy Brief. 2020/23. 1. <https://www.v-dem.net/media/filer_public/52/ eb/52eb913a-b1ad-4e55-9b4b-3710ff70d1bf/pb_23.pdf > Accessed: 15 July 2020.

161

Francisco J. Verdes-Montenegro: Excepcionalidad y COVID-19: Un test democrático para América Latina. Análisis Carolina. 2020/34. 3. <https://www.fundacioncarolina.es/wp-content/uploads/2020/06/AC-34.-2020. pdf > Accessed: 16 July 2020. 162

Kristina Mani: ‘The Soldier Is Here to Defend You.’ Latin America’s Militarized Response to COVID-19. World Politics Review. 21 April 2020. <https://www.worldpoliticsreview.com/articles/28700/from-peru-to-venezuelamilitary-forces-take-the-lead-in-coronavirus-responses > Accessed: 4 July 2020.

163

Verdes-Montenegro, 4–9.

164

Günther Maihold: Das Virus des Autoritarismus breitet sich in Lateinamerika aus. Stiftung Wissenschaft und Politik. May 2020. <https://www.swp-berlin.org/publikation/das-virus-des-autoritarismus-breitet-sich-inlateinamerika-aus/ > Accessed: 1 July 2020.

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the weakening of the present strong presidential positions in wielding power.166 Something similar can be observed in Colombia, where there is a clash between local authorities— and, particularly, the opposition-led capital—and the central government over the actions required,167 and in Mexico, too.168 Although it is unsure whether old political pacts can be broken because of these tensions, it is certainly worth watching whether these strains will eventually end up in a reshuffle of power—for example, in the present distribution of power between central and local governments—and to what degree. Finally, as states are mostly focussed on handling the crisis, their traditional challengers, the different regional criminal groups, are ready to step in and fill the power vacuum. In Brazil’s favelas, lockdown measures were forced by gangs169 just as in El Salvador or Colombia.170 In many places across the subcontinent, criminal groups also undertake other duties that would normally belong to states or NGOs: they provide the poor, the needy, and other people under their control with food and other basic necessities,171 trying to increase their clout and popularity.172 In the meantime, as security forces need to concentrate their energies on other issues, there have been new outbreaks of violence, especially in Brazil, Colombia, and Mexico.173 The latter must have even registered record-high homicide rates

Daniel Pereira–Laryssa Borges: O semipresidencialismo: quem ocupa espaços no vácuo deixado por Bolsonaro. Veja. 10 April 2020. <https://veja.abril.com.br/politica/o-semipresidencialismo-quem-ocupaespacos-no-vacuo-deixado-por-bolsonaro/ > Accessed: 12 July 2020.; Raniel Fernandes de Ávila–Lúcio Moreira Andrade: O Brasil pode ter sequelas institucionais após crise da COVID-19. Justificando. 23 April 2020. <http://www.justificando.com/2020/04/23/o-brasil-pode-ter-sequelas-institucionais-apos-crise-da-covid-19/ > Accessed: 10 June 2020. 166

Colombia: choque entre Gobierno y autoridades regionales por medidas para contener el Covid-19. France24. 19 March 2020. <https://www.france24.com/es/20200319-colombia-ivan-duque-covid19-saludbogota > Accessed: 13 July 2020.; Colombia: tensión entre Iván Duque y alcaldes por estrategias para enfrentar al coronavirus. NODAL. 1 April 2020. <https://www.nodal.am/2020/04/colombia-tension-entre-ivanduque-y-alcaldes-por-estrategias-para-enfrentar-al-coronavirus/ > Accessed: 13 July 2020.

167

Alberto Nájar: Coronavirus en México: ¿por qué AMLO enfrenta una rebelión de gobernadores en la etapa crítica de la pandemia de covid-19? BBC. 3 June 2020. <https://www.bbc.com/mundo/noticias-americalatina-52900134 > Accessed: 12 July 2020.

168

Andres Schipani–Bryan Harris: Drug gangs in Brazil’s favelas enforce coronavirus lockdown. Financial Times. 27 March 2020. <https://www.ft.com/content/aaef1591-2fc5-4e6f-ab84-0e83b5a146ca > Accessed: 16 July 2020.

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Vanessa Sarmiento: El coronavirus no detiene el crimen en Latinoamerica. Connectas. <https://www. connectas.org/analisis/el-coronavirus-no-detiene-el-crimen-en-latinoamerica/ > Accessed: 14 July 2020.

170

Robert Muggah: The Pandemic is Disrupting Organized Crime, But Not Necessarily for the Better. The Dialogue. 26 June 2020. <https://www.thedialogue.org/analysis/the-pandemic-is-disrupting-organizedcrime-but-not-necessarily-for-the-better/?fbclid=IwAR1rlI6PEhoWiOFiy2uNTVnoEbDNQk3kXOzT_ vNsb63w4SgoMiGs4vb7ves > Accessed: 16 July 2020.

171

EP 37—Los Cárteles de México se Disfrazan de ONG. El Teléfono Rojo on Spotify. 22 May 2020. <https:// open.spotify.com/episode/2O4HLpZbdkEUElf92bLy3R?si=UcPsKarQRBCwxRI9YTPxsA > Accessed: 20 June 2020.; Alberto Mesas: ‘Narcosolidaridad’ en México: los cárteles aprovechan el coronavirus para disfrazarse de ONG. El Salto. 10 May 2020. <https://www.elsaltodiario.com/coronavirus/narcosolidaridad-en-mexico-loscarteles-aprovechan-el-coronavirus-para-disfrazarse-de-ong > Accessed: 15 July 2020. 172

Muggah.

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in the first months of 2020.174 This upsurge, evidently, does not help build citizen’s trust in a government whose president promised to pacify the country.175 As global drug supply chains continue to be disrupted, gang wars likely become fiercer while organised crime might want to find alternative sources and, thus, extend its activities to make up for its losses.176 With governments giving special authorities or even carte blanche to security forces, ramping up violence by gangs, and a desperate population losing their means of subsistence, the situation can easily spiral out of state control. Many of the above phenomena—militarisation, inequality, state leaders not sticking to the rule of law and meddling with checks and balances, and criminal groups or outlaws challenging states—reflect historical patterns that have many times in history been recurring threats to stable states in Latin America. The coronavirus, therefore, has mostly intensified that has long been present in the region and has not produced something brand new. It will be interesting to see, though, what earlier motifs will prevail in its wake during the coming months or years.

Homicidios en México alcanzan niveles récord en primeros cuatro meses 2020. El Economista. 20 May 2020. <https://www.eleconomista.com.mx/politica/Homicidios-en-Mexico-alcanzan-niveles-record-en-primeroscuatro-meses-2020-20200520-0039.html > Accessed: 16 July 2020. 174

Sugeyry Romina Gándara: La gran promesa de AMLO en 2018 fue reducir el crimen y pacificar México. A 2 años, sigue pendiente. SinEmbargo. 2 July 2020. <https://www.sinembargo.mx/02-07-2020/3814365 > Accessed: 16 July 2020. 175

176 José Luis Pardo Veiras–Alejandra Sánchez Inzunza: Los gobiernos hablan, el crimen dispone. The New York Times. 22 June 2020. <https://www.nytimes.com/es/2020/06/22/espanol/opinion/crimen-organizadocoronavirus.html > Accessed: 16 July 2020.

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PANDEMIC-INFUSED POLITICAL POWER PLAY— THE CASE OF THE WESTERN BALKANS177 PÉTER DOBROWIECKI

The global COVID-19 pandemic arrived in a politically turbulent period in the Western Balkan region.178 While, following last year’s disappointing postponement, the official opening of accession talks with Albania and North Macedonia and the inauguration of a new mechanism by the Von der Leyen commission to strengthen the accession process brought some muchneeded positive news to the region in the first months of the year,179 the rapid spread of COVID-19 through Europe left little room for celebration. Ongoing domestic political strife, affecting to some degree all Western Balkan countries, was only fuelled by the new crisis that has no foreseeable end date in sight. Resurging infection numbers combined with prolonged political disputes currently make the Western Balkan region’s political landscape a particularly hard terrain to navigate for EU and US officials alike. Representatives of the two parties share some fundamental common goals, most prominently the revitalisation of the Belgrade–Pristina dialogue (with the sights on a final agreement), limiting the influence of Moscow and Beijing, and promoting increased stability in the region. Despite these overlapping objectives, the EU and the US are at times seemingly competing and not working together when it comes to kickstarting anew the negotiations between Serbia and Kosovo.180 US efforts to rush an agreement between the two sides were thwarted when the planned White House meeting on 27 June between Serbian President Aleksandar Vučić and Kosovar President Hashim Thaçi fell through, following the latter’s indictment by the Kosovo Specialist Chambers and the Specialist Prosecutor’s Office in the Hague. This initial setback was seemingly overcome with the signing of the White House-brokered Serbia– Kosovo economic normalisation agreement on 4 September in Washington.181 However, the

Text submitted 23 September 2020.

177

This paper focusses on the so-called Western Balkan Six (WB6) states, namely: Albania, Bosnia and Herzegovina, Kosovo, Serbia, North Macedonia, and Montenegro.

178

Dobrowiecki Péter–Németh Ferenc–Orosz Anna–Ördögh Tibor: KKI 4:1. Mi várható az Európai Tanács nyugatbalkáni bővítéssel kapcsolatos 2020. márciusi döntései után? Institute of Foreign Affairs and Trade. 2020/12. <https://kki.hu/wp-content/uploads/2020/04/4_1_2020_12_WB_Eit.pdf > Accessed: 21 July 2020. 179

EU officials openly criticised the rushing US negotiating strategy led by the special envoy for Kosovo and Serbia negotiations, Ambassador Richard Grenell. They indicated that American efforts, possibly including a controversial land swap between the two countries as part of the deal, might be politically motivated in order to achieve a foreign political success for the Trump administration before the presidential elections in November. See Leon Hartwell: What ‘Twiplomacy’ reveals about the Serbia–Kosovo dialogue. New Eastern Europe. 9 July 2020. <https://neweasterneurope.eu/2020/07/09/what-twiplomacy-reveals-about-the-serbiakosovo-dialogue/ > Accessed: 21 July 2020. 180

181 Keida Kostreci: US-Brokered Serbia–Kosovo Deal a ‘Step Forward’ But Challenges Remain. Voice of America. 5 September 2020. <https://www.voanews.com/europe/us-brokered-serbia-kosovo-deal-step-forwardchallenges-remain > Accessed: 6 September 2020.

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agreement—hailed as a breakthrough success by the US administration and presented as an acceptable arrangement by the Serbian and Kosovar political leadership—offers little to nothing that would solve the most pressing disputes hindering the conclusion of the Belgrade–Pristina dialogue.182 The EU, meanwhile, remains committed to its negotiating framework that defines a political agreement as the first and foremost priority. Under the auspices of Germany and France, the EU has gradually rebuilt the political will behind its efforts, aiming to negotiate a final compromise, acceptable for both parties, that would lead to the signing of a legally binding document.183 Under the operative guidance of Miroslav Lajčák, the EU’s Special Representative for the Belgrade–Pristina dialogue, a new negotiating roadmap was agreed upon, and three-party talks resumed in July.184 While often cited as a basic precondition for Serbia’s future EU accession and Kosovo’s full-fledged acceptance on the international arena, the contradictory domestic and foreign political goals of Belgrade and Pristina make a breakthrough in the foreseeable future highly unlikely—even with the talks resumed.185 Political instability was further increased with the spread of COVID-19 to the Western Balkans. Strict initial response seemingly slowed down the pandemic in the region; however, case numbers and fatalities have since also dramatically risen in the region, with Serbia and Bosnia and Hercegovina being the two most affected countries.186 Governmental response in some countries was strongly criticised by opposition parties which accused the administration of mishandling the crisis or even using it as a pretext to manipulate upcoming legislative elections.187 In the case of Serbia, the opposition’s decision to boycott the parliamentary elections held in June resulted in a landslide victory for Vučić, who now has complete legislative power to negotiate an agreement—should he wish to do so. In Kosovo, Prime Minister Avdullah Hoti assumed office in June following the resignation of Albin Kurti, whose strife with President Hashim Thaçi led to a non-confidence vote against his government following just five months in power. PM Hoti’s position, however, is already under strain, as constant disputes within the coalition threaten its stability. The prolonged effect of the COVID-19 pandemic will greatly affect the struggling

Aidan Hehir–Donika Emini: The Farce of a Deal. BiEPAG. 10 September 2020. <https://biepag.eu/the-farceof-a-deal/?fbclid=IwAR2BTEPU5Bw5YpMYVCgOgDtX1688IdDeoXNiMCGw6IlhpZjEa8ZJUBND0oc > Accessed: 6 September 2020. 182

Alexandra Brzozowski: France, Germany seek to unfreeze stalled Kosovo–Serbia talks. Euractiv. 6 July 2020. <https://www.euractiv.com/section/enlargement/news/france-germany-seek-to-unfreeze-stalled-kosovoserbia-talks/ > Accessed: 21 July 2020. 183

Talks were put on hold in November 2018 after Kosovo had imposed a 100% tariff on imports from Serbia and Bosnia and Herzegovina. Kosovo lifted these measures (fully for Bosnia and Herzegovina and gradually for Serbia) in April 2020. 184

Margarita Assenova: Serbia and Kosovo Restart Dialogue After 18-Month Pause. The Jamestown Foundation, Eurasia Daily Monitor. 2020/104. 16 July 2020. <https://jamestown.org/program/serbia-andkosovo-restart-dialogue-after-18-month-pause/ > Accessed: 21 July 2020.

185

Coronavirus Resource Centre. John Hopkins University School of Medicine. <https://coronavirus.jhu.edu/ map.html > Accessed: 10 September 2020.

186

Valerie Hopkins: Public anger rises across Balkans as coronavirus toll grows. Financial Times. 12 July 2020. <https://www.ft.com/content/103377cd-9cfb-41e3-8030-65aac20762dc > Accessed: 21 July 2020. 187

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economies of the region, with small- and middle-sized enterprises bearing the biggest brunt of the economic recession.188 The EU has to remain fully committed to its Western Balkan financial support package (with an estimated worth of 3.3 billion euros) if it wishes to avoid that the region repeat the political backlash it faced in the initial phase of the pandemic in March 2020.189 The EU’s measured response in March enabled Moscow and especially China to make further political inroads into the region by providing some highly publicised help to Western Balkan states (most notably Serbia).190 Increased Chinese economic presence in the Western Balkans, combined with Russia’s traditionally close political ties with a number of Serbian, Montenegrin, and Bosnian Serb politicians and parties, continues to be a major thorn in the side of the EU and the US, as well. Chinese investments in strategic infrastructure and key industries are perceived by many as a challenge and potential danger to the Western Balkan states’ EU integration. While the region’s states prioritise EU membership, the long and winding road towards their eventual accession makes the business opportunities offered by Beijing all too tempting.191 Therefore, the EU should take steps to tackle the negative effects of Chinese influence by offering viable alternatives for local governments, maintaining a constant engagement and assisting financial presence in the Western Balkans.192 The current US administration, on the other hand, being engaged in a global trade war with China, is more outspoken in this regard, using any opportunity at hand to curb Chines presence—especially when it comes to 5G technology. This was clearly visible during the negotiations leading up to the US-brokered Serbia–Kosovo economic agreement. In the agreement, both Belgrade and Pristina committed to refrain from the use of equipment supplied by “untrusted vendors” in their telecommunications networks—an unwritten, but clear reference to Chinese telecommunications giant Huawei that, in the past, established a strong foothold in the region.193 Whether the parties will follow through with the points of the agreement is a completely different matter.194

The COVID-19 crisis in the Western Balkans. OECD. 6 May 2020. <http://www.oecd.org/south-east-europe/ COVID-19-Crisis-Response-Western-Balkans.pdf > Accessed: 21 July 2020.

188

Infographic—COVID-19: €3.3 billion EU package for the Western Balkans. European Council. 23 June 2020. <https:// www.consilium.europa.eu/en/infographics/economic-support-to-western-balkans/ > Accessed: 21 July 2020.

189

190 Stefan Vladisavljev: Serbia the focal point of Chinese ‘’mask diplomacy’’ in the Western Balkans. European Western Balkans. 30 April 2020. <https://europeanwesternbalkans.com/2020/04/30/serbia-the-focal-point-ofchinese-mask-diplomacy-in-the-western-balkans/ > Accessed: 21 July 2020. 191 Jacob Mardell: China’s Economic Footprint in the Western Balkans. Bertelsmann Stiftung. 23 September 2020. <https://www.bertelsmann-stiftung.de/en/our-projects/germany-and-asia/news/asia-policy-brief-chinaseconomic-footprint-in-the-western-balkans > Accessed: 23 September 2020.

Wouter Zweers [et al.]: China and the EU in the Western Balkans. Clingendael Report. August 2020. <https:// www.clingendael.org/pub/2020/china-and-the-eu-in-the-western-balkans/ > Accessed: 23 September 2020.

192

Milica Stojanovic–Ivana Jeremic: BIRN Fact-check: Is the Kosovo-Serbia ‘Deal’ Worth the Paper It’s Written On? Balkan Insight. 10 September 2020. <https://balkaninsight.com/2020/09/10/birn-fact-check-is-thekosovo-serbia-deal-worth-the-paper-its-written-on/ > Accessed: 23 September 2020.

193

194 Majda Ruge–Stefan Vladisavljev: Serbia’s 5G deal with Washington: The art of muddling through. European Council on Foreign Relations. 23 September 2020. <https://www.ecfr.eu/article/commentary_serbias_5g_deal_ with_washington_the_art_of_muddling_through > Accessed: 23 September 2020.

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HOW THE CEE COUNTRIES MAY NAVIGATE THE POST-COVID ECONOMIC ORDER?195 ZSOLT CSEPREGI

The COVID-19 crisis had a devastating effect on the world economy, making all previous projections for the year 2020 irrelevant. In just a few short weeks the global supply chains—previously thought to be highly resilient—halted to a grind. Even if we overlook the devastating but temporary quarterly economic figures, the yearly GDP reduction in the Eurozone is expected to be around 8.7%.196 The COVID-19 crisis is an unprecedented dual—demand and supply—shock, as people in quarantine do not produce and neither do they consume as they usually do. This crisis is not only significant for its short-term effects, but also as a catalyst for medium- and long-term structural readjustment in the global economic system. With the current crisis and untangling of previous structures a window of opportunity has nonetheless been opened to create a global economic system which is more resilient. And as with all change there will be winners and losers, even if not in absolute but relative terms. Our universal morality demands absolute benefits and damage mitigation for all mankind. Our national interests demand security, resilience and relative gains for our country and our European Union. The crisis found a global economic structure eroded by systemic political challenges and an ineffective patchwork of multilateral economic governance institutions. They are too complex, with too many overlaps, but at the same time also suffer from significant authority gaps. It is important to highlight that, regardless of all the discussion on the future of global economic governance—this paper included—the underlying problem is political and not merely economic, and definitely not technocratic or bureaucratic. The political problem—or, in more neutral terms, phenomenon—is the disintegration of the unipolar world order due to the emergence of rising powers.197 This shift in the world order results in many symptoms, such as the current US–China trade war and the so-called “decoupling” of the two major powers and the erosion of the multilateral institutional framework.198 The truth is that all powers are struggling with shaping their new role in Text submitted 20 July 2020.

195

Christine Lagarde: Press Conference. European Central Bank. 4 June 2020. <https://www.ecb.europa.eu/ press/pressconf/2020/html/ecb.is200604~b479b8cfff.en.html > Accessed: 22 June 2020.

196

Baiyi Wu: Rethinking the Driving Forces and Conditions Affecting the Evolution of the International Order. China–CEE Institute. Working Paper 2020 No 17. 30 April 2020. < https://china-cee.eu/wp-content/ uploads/2020/04/Working_paper-202017-by-Wu-Baiyi.pdf > Accessed: 22 June 2020. 3-4.

197

Ian Bremmer and Cliff Kupchan: Risk 2: The Great Decoupling. Top Risks 2020: Coronavirus Edition. Eurasia Group. 19 March 2020 <https://www.eurasiagroup.net/live-post/risk-2-great-decoupling > Accessed: 22 June 2020. 198

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the coming and ever-changing world order. In the European Union we ourselves are also debating our own future: should we be a “Europe of nations”, a confederation, or a fullfledged federation. All of these discussions revolve around the level of European solidarity and strategic autonomy we aim to achieve for our Union. It was our fragile world that was shocked by the coronavirus pandemic, and the question is how do we move forward. The coronavirus crisis is far from over, and it is too early to take account of the exact economic toll, but we do know that it will be enormous. Six to nine trillion US dollars’ worth of economic output might be obliterated,199 and most countries will experience an economic recession in 2020 with meagre hopes for 2021 recovery recuperating current losses. While the exact figures are unknown some overarching major trends are clear, which will be discussed in detail in this paper. The first one is the acceleration of the USChina decoupling, the second is a paradigm shift in the EU economic policy, and the third is the uncertain future of the global macroeconomic governance system.

THE FUTURE OF US–CHINA ECONOMIC RELATIONS The issue of US–China decoupling has entered into policy discourse because it poses a serious question regarding the future of the world order. Is it foreshadowing a new Cold War and a competition for hegemony in the long run? The first notion is an oversimplification, the second is a daring conclusion. The US–China relationship is nothing like the US–USSR competition was. The former pair’s security interests, business, tourism, and education sectors are entangled so deeply that it would be impossible to untangle them without breaking the countries and the global system itself. What the experts do note is an ongoing decoupling in selected security-related sectors, such as electronics, communications, and now medicine. The best example of the decoupling is the issue of the 5G networks and the US ban on certain Chinese manufacturers, combined with Washington’s efforts at convincing its allies to follow the same path. Regardless, the majority of economic activity between the US and China will continue—the question is in what form and against what obstacles. An additional difference from the US–USSR analogy will be that other countries will and should not choose one side in this contest. The relationship between the actors will be much more fluid and issue-based than it was during the Cold War. As the US will aim to counterbalance Chinese influence in certain regions there will be much more opportunity for strategic US investments for allied and like-minded nations.200 the US will be interested, for example, in funding infrastructure connectivity in Central Eastern Europe through the Three Seas Initiative Fund to the amount of one billion dollars.201 On the other hand,

BBC: Coronavirus 'could cost global economy $8.8tn' says ADB. 15 May 2020. <https://www.bbc.com/ news/business-52671992 > Accessed: 22 June 2020.

199

Robert M. Gates: The Overmilitarization of American Foreign Policy. Foreign Affairs. July/August 2020. <https://www.foreignaffairs.com/articles/united-states/2020-06-02/robert-gates-overmilitarization-americanforeign-policy > Accessed: 22 June 2020. 200

201 Atlantic Council: US commits $1 billion dollars to develop Central European infrastructure. Press Release. 15 February 2020. <https://www.atlanticcouncil.org/news/press-releases/us-commits-1-billion-dollars-todevelop-central-european-infrastructure/ > Accessed: 22 June 2020.

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Washington will reportedly reign in even traditional allies like Israel if they stray too far into Beijing’s orbit. This can be triggered by handing over strategic assets to Chinese owners, like sensitive technologies, ports, or other critical infrastructure—essentially anything capable of promoting espionage or the obstruction of US forces.202 Even in these cases the US cannot demand a complete severing of relations with China (as the US itself is not doing this), only a considerate distance-keeping in sensitive areas.203 The main issue is whether this competition will play out in a constructive multilateral framework, which would mitigate the damage, or if it will break the international system. Escalation may come from either side, to the detriment of lesser powers and smaller states, as so eloquently explained recently by the Prime Minister of the strategically located Republic of Singapore.204

STRATEGIC RECALCULATION IN THE EUROPEAN UNION Europe was one of the worst-hit areas in the COVID-19 pandemic, both in terms of public health and economic output. The dual shock on demand and supply was aggravated by the plight of our Southern region, which is much more reliant on tourism.205 As mentioned before, according to European Central Bank chief Christine Lagarde’s prediction, the rate of the financial meltdown in the Eurozone might reach close to nine percent this year. The European Union, or at least the Eurozone, was almost crushed by the sovereign debt crisis after the 2008 global financial crisis (GFC), with Greece serving as a potential Achilles’ heel of the integration. Thanks to enormous aid packages, diplomatic and economic pressure, and the conclusion of a decade of sacrifices by the Greeks, this fate was avoided. The EU learned from the near-catastrophic experience of the 2010s and reacted much more swiftly to the COVID-19 crisis than it had to the GFC.206 Alongside the defensive measures and the accompanying lockdown, EU institutions in Brussels were (and at the moment still are) in intensive dialogue with the Member States on how to allocate the necessary funds for restarting the European economy. Even though the exact details are still unclear, we can already see that trillions of euros will be allocated in the form of grants and loans to aid the reconstruction and restructuring of the economy. While the swiftness and robustness of European action for recovery are commendable, this paper puts greater emphasis on the underlying calculation for a strategically autonomous European Union for the post-COVID world. The European Union has arguably shown a principled, yet to a certain degree naïve

202 Lahav Harkov: US asking Israel to eliminate China ties in sensitive areas. Jerusalem Post. 20 May 2020 <https://www.jpost.com/israel-news/israel-requested-indemnity-after-us-requested-cuts-on-trade-withchina-628530 > Accessed: 22 June 2020.

James Jay Carafano: The Great U.S.-China Divorce Has Arrived. The Heritage Foundation. Commentary. 22 April 2020. <https://www.heritage.org/asia/commentary/the-great-us-china-divorce-has-arrived > Accessed: 22 June 2020. 203

Lee Hsien Loong: The Endangered Asian Century. Foreign Affairs. July/August 2020. <https://www.foreignaffairs. com/articles/asia/2020-06-04/lee-hsien-loong-endangered-asian-century > Accessed: 22 June 2020. 204

see Alessandro D’Onofrio’s chapter on tourism

205

Chun Ding: COVID-19 in Europe: Economic Policy and Prospects. China-CEE Institute. Working Paper 2020/19. 28 May 2020. <https://china-cee.eu/wp-content/uploads/2020/05/Working_paper-202019-by-DINGChun.pdf > Accessed: 22 June 2020. 12. 206

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attitude to global economic governance. The EU depended on the US playing by the WTO’s rules, refraining from tariffs. It also hoped that China would converge to common macroeconomic guidelines if it were accepted into the regulating flagship organisations and institutions.207 By 2020 this strategic calculus had collapsed, and the two most powerful states are currently engaged in a trade war. The US is threatening tariffs against any who are deemed to be hurting US citizens’ and businesses’ interests. China is building a parallel network of global institutions attached to its Belt and Road Initiative. In 2019 the EU already named China a “strategic competitor,”208 and gradual moves towards investment screening in recent years show an EU much more wary in the global economic sphere of potential exploitation.209 Unlike the US, the EU is not working towards decoupling but gradual diversification in certain strategic economic sectors.210 This is a crucial distinction as it does not threaten a blanket or hasty and/or politically motivated use of protectionist measures like the US and China regularly do, but a principled strategy to protect key EU interests. Diversification will lead to the reestablishment of the strategic role of the state, leading to greater self-reliance in the health sector, and shorter supply chains.211 We also see from the way the currently-debated aid funds would be allocated that the EU is also aiming for greater self-reliance in sensitive communications technologies in order to avoid the international diplomatic scandals similar to the introduction of 5G in Europe by Huawei.212 As part of this strategic recalculation, not only the EU’s internal resilience but its position as a foreign policy actor also has to be strengthened according to the current plans. In order to reduce the length of the complex supply chains which were established to reduce the cost of goods, Brussels plans to re-shore production inside the EU and its neighbourhood.213 The Western Balkans, the Eastern Partnership states and the Middle East and North African countries may very well benefit enormously from the newfound interest in the neighbourhood, pivoting away from East, South, and Southeast Asia. It is important to highlight that the above does not mean that the EU is becoming a protectionist power but rather a mature global actor. The EU is looking for a new balance between security and prosperity, and building the

Marc Leonard: The end of Europe’s Chinese dream. ASPI Strategist. 27 May 2020. <https://www. aspistrategist.org.au/the-end-of-europes-chinese-dream/ > Accessed: 22 June 2020 207

208 European Commission: EU-China – A strategic outlook. High Representative for Foreign Affairs and Security Policy. 12 March 2019. <https://ec.europa.eu/commission/sites/beta-political/files/communication-eu-china-astrategic-outlook.pdf > Accessed: 22 June 2020. 209 Zsolt Csepregi: For the Money, the Power or Glory? AJRC Analysis 2019E03. Antall József Knowledge Centre. 28 November 2019. <https://ajtk.hu/en/research/ajrc-analyses/for-the-money-the-power-or-glory > Accessed: 22 June 2020 12-14.

Andrew Small: The meaning of systemic rivalry: Europe and China beyond the pandemic. European Council on Foreign Relations. 13 May 2020. <https://www.ecfr.eu/publications/summary/the_meaning_of_systemic_ rivalry_europe_and_china_beyond_the_pandemic > Accessed: 22 June 2020 10. 210

Joseph Borrell: The post-coronavirus world is already here. European Council on Foreign Relations. 30 April 2020. <https://www.ecfr.eu/publications/summary/the_post_coronavirus_world_is_already_here > Accessed: 22 June 2020. 10. 211

212 John Seaman: Covid–19 and Europe–China Relations. French Institute for International Relations. 29 April 2020. <https://www.ifri.org/sites/default/files/atoms/files/etnc_special_report_covid-19_china_ europe_2020.pdf > Accessed: 22 June 2020. 6.

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necessary capabilities to withstand another shock like the COVID-19 crisis and reduce its reliance on other actors. The cooperation on the remaining, much larger part of international trade and investment will be of enormous interest to all parties and produce lucrative opportunities. But we must be clear on the EU’s intent to shield some sectors, so we can continue deepening globalization in the remaining, liberalised economic areas.

MACROECONOMIC GOVERNANCE SYSTEM An issue closely related to the US-China decoupling and the EU’s strategic recalculation is the conduct of the global macroeconomic governing institutions. Global governance in general has suffered in recent years from the great powers having conflicting visions—or worse, none at all— for global cooperation. Platforms such as the G20 and G7, financial and trade-related institutions like the WTO, IMF, and the World Bank continue to serve as zero-sum battlegrounds between the great powers. The initial phase of the COVID-19 crisis has shown that these organisations are capable of mobilising swiftly to avoid global catastrophe, but their agenda has been overburdened by issues which do not belong there, such as strictly public health-related questions. In particular, the G20 has to be the coordination forum where a strong and cohesive EU has the will and ability to make the effort necessary for ensuring conditions for strong, sustainable, and more inclusive global economic growth in the long-run.214 The EU cannot do this alone—internal strength is only a prerequisite—but it must also coordinate with likeminded middle-tier states (like Japan and the UK) to uphold the rules-based multilateral coordination mechanisms.215 Chinese experts for years have been promoting the idea of a “coalition of the willing” in moving globalisation and effective multilateral macroeconomic governance forward, even if the US opts for more protectionist measures.216 Oftentimes these days this call-to-arms is mentioned in reference to the upcoming US Presidential Elections, but we must note that the potential election of Joe Biden might not make any substantial difference in US trade policy, as he also panders to the blue-collar US voters.217 The “collation of the willing” idea for a rules based world order in terms of trade and economy supporting an effective global macroeconomic governance is a plan we in the EU should seriously promote, with or without China. This is not to say that the EU’s global policy should be (again) naïve and rely solely on these multilateral organisations. Brussels must work on all (bilateral, micro-, and multilateral) levels to be successful the post-COVID world order.218 214 Marco Buti: The New Global Economic Governance: Can Europe Help Win the Peace? DG ECFIN, European Commission. 6 June 2017. <https://ec.europa.eu/info/sites/info/files/economy-finance/marco-buti-the-newglobal-economic-governance.pdf > Accessed: 22 June 2020. 11-13. 215 Zsolt Csepregi: Globális Nagy–Britannia. In: Peter Dobrowiecki (Ed.): Az Egyesült Királyság nemzeti, európai és globális jövője a brexit után. AJRC Analysis 2020E06. Antall József Knowledge Centre. 4 May 2020. <https:// ajtk.hu/hu/kutatas/ajrc-elemzes/az-egyesult-kiralysag-nemzeti-europai-es-globalis-jovoje-a-brexit-utan > Accessed: 22 June 2020. 32-34. 216 Simon Denyer: China slams Trump’s ‘reckless’ and ‘arrogant’ tariffs, warns of retaliation. The Washington Post. 23 March 2018. <https://www.washingtonpost.com/world/asia-markets-slump-as-fears-of-trade-warmount/2018/03/23/f641e906-2e0b-11e8-8dc9-3b51e028b845_story.html > Accessed: 22 June 2020. 217 Zsolt Pálmai: The 2020 US Elections – Some Solid Ground in a Shifting Landscape. AJRC Analysis 2020E08. Antall József Knowledge Centre. 7 May 2020. <https://ajtk.hu/en/research/ajrc-analyses/the-2020us-elections-some-solid-ground-in-a-shifting-landscape > Accessed: 22 June 2020. 7-8.

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HOW HUNGARY MAY BENEFIT FROM THESE ECONOMIC PROCESSES? There are ample opportunities for a small and open economy such as Hungary, but we also have enormous responsibility as a member state of the EU. Budapest (together the other CEE states as well of course) has to react to the three trends outlined above, closely following the EU institutions’ strategies, but not blindly mimicking them. Instead, we must manoeuvre where it can benefit us and mitigate clashes between the global powers. CEE member states must find policy options in their globalising efforts219 which satisfy our global, Euro-Atlantic, and national interests at the same time. This will on occasion seem like an impossible task, but that is the nature of ambitious goals. In the US–China struggle we must use our position in the EU to shield ourselves from overt criticism, pointing out that Hungary is not the only European state which is interested in furthering cooperation with China. Ample opportunities will be opened if and when the US decides to put its money where its mouth is. Budapest, along with its regional allies, can utilise the coming world order as a framework to firmly argue for infrastructural investments benefiting the CEE region, from the Baltics to Greece. The Three Seas Initiative provides a good opportunity for such a Euro-Atlantic scheme, which greatly promote the core interests of the Visegrad countries if we can shape it in the right way. In the EU’s strategic realignment, Hungary has to stand for measured rebalancing of security and prosperity when it comes to trade with and investment from China. The EU must not be an actor promoting de-globalisation or indiscriminate protectionism. Only core security interests must be enforced, while all other economic strategy must be guided by job creation in the most value-added sectors. Hungary stands to benefit from these efforts as it has a vibrant scientific community in advanced electronics and medicine, two key strategic sectors in the post-COVID world. Hungary’s interests are served not only by jobs created domestically. The re-shoring to Eastern Partnership countries and the MENA region also provides better markets for our goods and services, while greater stability in those regions further support our security. Thirdly, while Hungary itself is not a major actor in multilateral institutions and global macroeconomic governance forums, it can support the efforts of the EU to be a responsible and effective actor. Hungary cannot set the rules of the coming world order itself, and therefore it relies on other small and middle-tier states and the leadership of the EU to balance and limit Chinese and US unilateral actions. These three key trends require a measured Hungarian foreign policy strategy in the post-COVID world, with a careful balance between promoting national, EU, and global interests in the global economic chessboard.

Bence Kocsev: Central Europe Goes Global. AJRC Analysis 2020E20. Antall József Tudásközpont. 29 June 2020. <https://ajtk.hu/hu/kutatas/ajrc-elemzes/central-europe-goes-global > Accessed: 29 June 2020. 4. 219

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FASHION VS. THE PANDEMIC: COVID-19 AND ITS EFFECTS ON THE CLOTHING INDUSTRY220 DALMA BODOLAY

The coronavirus epidemic has provoked an unprecedented crisis worldwide with disastrous effects on many sectors of the economy but on few of them the impact was visible already in the early stage of the outbreak. One of these more vulnerable sectors, which suffered huge losses already immediately since the beginning of the pandemic, is undoubtedly the fashion industry and the apparel market. All the tiers belonging to the clothing industry, from fast fashion to luxury goods, as well as small and big businesses of designers experienced a sudden financial shock as a result of the lockdown and other measures of control put into effect in many countries. In fact, while it might go undetected, the limitation of movement imposed on citizens during the health crisis, had an immediate effect of the fashion industry, both on the offer and the demand side. In fact, with people locked inside their houses the demand of new clothes has drastically reduced, with direct consequences not only on the fast fashion but also on luxury fashion. As known, fast fashion is that part of the fashion industry which is connected with the mass production of more affordable pieces of collection. Usually collections change very often, even every two weeks, so in this branch of the fashion industry, not only the demand but also the supply trends underwent important changes, which will be described below after discussing the demand side. According to early 2020 predictions, so before the virus spread worldwide, the value of the global apparel market was expected to increase reaching USD 1.5 trillion in the course of the year, a steady growth for a sector which in 2015 was worth USD 1.3 trillion.221 As expected, the positive development of this market sector has been completely reversed by the outbreak of the coronavirus worldwide. As a consequence of the two-month-long forced closure of European and North American stores the financial hardship deriving is expected to have deep consequences for more than 80% of fashion companies.222 According to preliminary statistics, the incomes of all these companies will not be sufficient to cover the expenses even of 2018. Therefore, considering the effects of the coronavirus epidemic— which is still ongoing—, many of them are likely to go bankrupt in the next year and a half.223 Particularly unfortunate for the fashion industry was also the direction that the virus has

Text submitted 22 July 2020.

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Liam O'Connell: Global Apparel Market - Statistics & Facts. Statista. 21 January 2020. <https://www.statista. com/topics/5091/apparel-market-worldwide/ > Accessed: 8 July 2020. 221

222 Business of Fashion: The State of Fashion 2020. Coronavirus update. Business of Fashion. 11. <http://cdn.businessoffashion.com/reports/The_State_of_Fashion_2020_Coronavirus_Update.pdf?int_ source=article2&int_medium=download-cta&int_campaign=sof-cv19 > Accessed: 18 June 2020.

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taken during its outbreak. In fact, the Covid-19 generated in China, the biggest manufacturing county in the world, and then reached Europe hitting at first the Italian region of Lombardy, where Milan is, which together with Paris, London and New York is one of the world fashion capitals. This situation caused irreversible damage to the industry and it will take long time before this sector will recover from the crisis. The stop of the production as well as the decline in demand have fundamentally changed the fashion world making the future of the trillionaire business completely uncertain in just a few weeks. As already mentioned, the clothing industry represents a very vulnerable sector of the economy, susceptible to every single shock, as this sector is labour-intensive, seasonal and offers no-essential products that become redundant in the event of a crisis. Predictions for a possible downturn were already advanced at the end of 2019.224 The already cloudy situation has been exacerbated by the coronavirus epidemic which could force revenues to plunge between 27% and 30% this year while positive growth of 2% to 4% is expected only from 2021.225 This is not only true for luxury items from famous designers but also for fast fashion which represent an important segment of the whole industry these days. Furthermore, the blow struck by the coronavirus hit the fashion industry harder than an average recession, as millions of people have been forced to work from home and, as a result, there has been a contraction of the overall demand for clothing collections with huge losses for the 2020 spring production and even for the summer one. In fact, since the products relative to these seasons have already been manufactured in advance the absence of demand forced the clothing companies to stockpile huge quantities of unsold clothes which not only represent a loss in profit but even additional costs for the companies.226 As a result, many clothing chains have tried various off-season sales to increase trades as it was particularly the case for large companies such as the Swedish H&M, which tried to encourage shopping-mood with free shipping and a 100-day free return option. Eventually H&M’s online sales increased by 36%, but nonetheless, the Swedish company’s overall revenue fell by 50%—or Swedish Krona 28.7 billion—from March 2020 until end of May and the chain was even forced close some of its stores.227 In fact, the Swedish apparel chain is preparing to close up to 170 stores worldwide causing thousands of workers to lose their jobs.228 Business of Fashion. 6.

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Imrad Amed – Achim Berg: The State of Fashion 2020: Coronavirus Update — It's Time to Rewire the Fashion Industry. Business of Fashion. 8 April 2020. <https://www.businessoffashion.com/articles/ intelligence/the-state-of-fashion-2020-coronavirus-update-bof-mckinsey-report-release-download> Accessed: 19 June 2020. 225

Patricia Nilsson – Emiko Terazono: Can fast fashion’s $2.5tn supply chain be stitched back together? Financial Times. 17 May 2020. <https://www.ft.com/content/62dc687e-d15f-46e7-96df-ed7d00f8ca55 > Accessed: 10 July 2020. 226

Portfolio: Az üzletek nagy része zárva volt, felére esett a H&M bevétele. Portfolio. 15 June 2020. <https:// www.portfolio.hu/uzlet/20200615/az-uzletek-nagy-resze-zarva-volt-felere-esett-a-hm-bevetele-437028# > Accessed: 7 July 2020. 227

228 Tom Pyman: H&M plans to axe 170 stores worldwide this year putting hundreds of jobs at risk after sales plummet by 50 per cent due to coronavirus. Dailymail. 7 July 2020. <https://www.dailymail.co.uk/news/article8497425/H-M-announces-plans-axe-170-stores-Europe-year-sales-hit-coronavirus.html > Accessed: 7 July 2020.

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But the coronavirus epidemic not only had direct effects on big companies but also on consumer habits which are also undergoing major changes. Closing the stores for months might have encouraged many to shop online, which is expected to become a most viable solution in the future, as many will want to buy clothing without personal contact or the use of cloakrooms because of the fear of the pandemic. However, surveys so far show that while this option is available for many retail chains, there has been a general decline in online sales in the months following the outbreak of the pandemic. This decline is between 5 and 20 % in Europe, 30-40% in America, and 15-25% in China.229 Today, 80% of sales are still made in stores with personal purchases, so the fall in online purchases is more likely explained considering the general financial uncertainty at the global level.230 In order to address their customers’ new needs, several clothing companies channelled part of their production to loungewear. In fact, since many people were forced to work from home and spend a lot of time in their apartments clothing companies decided to vary their offers focusing on these new circumstances. Only in this particular segment of the market there has been a consistent increase in demand in the recent period (the Browns in London reported a 70 % increase in loungewear sales), even if this is cannot be considered really significant for the fashion industry as a whole. 231 The decline of the demand worldwide has been also reflected in a collapse in the demand for luxury goods such as luxury clothing, accessories, luxury watches and jewellery. Experts predicted that this niche sector—but crucial for the clothing industry as a whole—might suffer losses be between 35% and 39% of its value overall, and a slight increase between 1% and 4% would occur only next year.232 The size of this sector was estimated at USD 66.9 billion in 2018,233 compared to USD 35 billion for fast fashion in the same year.234 However, the reopening of stores as the epidemic eases does not mean that the demand is going back to its the pre-epidemic sales levels. The experience with the reopening of clothing stores in China is that sales are still 50 to 60 % lower than before the epidemic.235 Most boutiques and not well-known designers and tailors are likely to be even more negatively affected by these long lasting—and often unforeseeable—closures than larger clothing companies, as smaller businesses do not have enough capital at disposal to survive to these shocks. As a result, many of them were forced to exit the market or to change their business strategies. A similar situation was also visible in Hungary where

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Steven McIntosh: Coronavirus: Why the fashion industry faces an 'existential crisis'. BBC News. 30 April 2020 <https://www.bbc.com/news/entertainment-arts-52394504 > Accessed: 2 July 2020. 230

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Statista: Luxury Apparel. Statista. <https://www.statista.com/outlook/21030100/100/luxury-apparel/ worldwide#market-revenue > Accessed: 20 July 2020. 233

234 Liam O'Connell: Fast fashion market value forecast worldwide in 2008 and 2018, with a forecast for 2028 (in billion U.S. dollars). Statista. 2019. május 17. <https://www.statista.com/statistics/1008241/fast-fashionmarket-value-forecast-worldwide/ > Accessed: 30 July 2020.

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these smaller businesses tried to retain their customers offering new services, such as designing and selling masks, and they had the opportunity to keep their shoppers' attention alive only through the use of social media. A very interesting aspect of the interconnectivity of the fashion industry with other economic segments of the economy is represented by the link with the big events industry, i.e. the soknown “fashion weeks” as well as weddings. In fact, as a result of the pandemic, the future of fashion shows and international fashion weeks, has also become questionable. Among these events, that attracts tens of thousands of participants from all over the world, the ones that were not cancelled were eventually held online. However, this does not only represent a big change for the fashion market, but hit hard also many other services connected. In fact, hotels and entertainment venues reserved for such purposes also experienced huge losses due to the cancellation of these big events. One relevant example of these big shows is the Milan Fashion Week, scheduled for February, that was completely cancelled due to the outbreak of the virus in Italy, and Giorgio Armani, one of the main fashion stylist in the world, unveiled his autumn collection in February in front of an empty theatre.236 The same happened for the Shanghai and Moscow Fashion Weeks that took place online in April and May, as did London Fashion Week in June, after that Caroline Rush, Executive Director of the British Fashion Council, said in advance that cancelling the Fashion Week was never an option for London.237 When we talk about events which contribute in a very significant way to the growth of the fashion industry a special place must be reserved to weddings. In fact, the wedding dress production—whose size was estimated in 2019 at USD 36.5 billion238—, and all the other activities connected to this sector have been extremely damaged by the pandemic. China plays a leading role in the production of wedding dresses sold in Western countries, as 80% of the dresses are manufactured there.239 As China had to shut down production following the outbreak of the coronavirus, several wedding wholesalers such as Mon Cheri Bridals in the US tried to order and stock far more wedding dresses in February in addition to pre-orders to avoid as the seasons starts that brides stay without a dress.240 “It can take up to 100 hours of manual and meticulous work to make a garment,” as stated by James Marcum, CEO of Davids’ Bridal, “so stopping the production, the curfew and the stoppage of work made completely impossible to manufacture.”241

Layla Ilchi: The Fashion Weeks and Major Events Disrupted Because of Coronavirus. WWD. 13 March 2020. <https://wwd.com/fashion-news/fashion-scoops/fashion-week-cancellations-coronavirus-1203538824/ > Accessed: 3 July 2020. 236

Christina Okello: London Fashion Week opens online as coronavirus shakes up industry. rfi. 12 June 2020. <http://www.rfi.fr/en/europe/20200612-london-fashion-week-opens-online-covid-19-shakes-up-industrysustainable-gender-neutral > Accessed: 3 July 2020. 237

238 Liam O'Connell: Global wedding dress market value from 2017 to 2022. Statista. 4 March 2019. <https:// www.statista.com/statistics/976471/bridal-gown-market-size-worldwide/ > Accessed: 29. July 2020. 239 Parija Kavilanz: Bridal gowns could be in short supply for wedding season because of coronavirus. CNN Business. 22 February 2020 <https://edition.cnn.com/2020/02/21/business/wedding-gowns-coronavirus/ index.html > Accessed: 8 July 2020.

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Unfortunately, by the start of the wedding season, there were still ban on holding events in many countries in Europe and in the United States, so not only the wedding dress industry but the entire wedding sector was plunged into crisis. In Italy alone, a country which relies heavily on the wedding industry, the companies operating in the sector reported a loss of EUR 26 billion, bringing the total insolvency of many small and medium-sized businesses, such as florists and photographers, with the cancellation or postponement of more than 100,000 weddings.242 If the recovery of the clothing industry, as well as of many other businesses, is of vital importance for the economy as a whole, it is also true that a “business-as-usual” scenario might not be possible and, actually, neither welcomed. In fact, the growing awareness on environmental issues raised the question, mostly following the pandemic, of the necessity to change drastically the consumption habits and the production system of a market— especially fast fashion—which contributes to the production of a huge amount of plastic wastes globally. Recently the demand is shifting towards a more sustainable, targeted and less wasteful direction, which is an issue already raised many times in the fashion industry in recent years.243 The epidemic has also shown that over-buying and irresponsible business policies have no future and a supply that changes every few months, or even every two weeks in the case of fast fashion, has become redundant. In this sense many people are reconsidering their shopping habits, not only because of underutilization of clothing but also because of the general saving attitude due to economic uncertainty. According to surveys, currently 15 % of U.S. and European shoppers would prefer a more sustainable fashion and buy environmental-friendly products.244 This is also a sign that shoppers might start favour higher quality and natural fabrics clothes in the future to quantity. This could also encourage a more sustainable and responsible clothing production which will become increasingly popular in the future by making use of innovative solutions. While the abovementioned factors have the potential to change the fashion industry in the mediumlong term, they do it mainly from the demand side. However, the coronavirus pandemic also opened up major issues about the offer side. In fact, from this point of view, the spread of the COVID-19 in the biggest manufacturing countries like India, Bangladesh, Pakistan and so on, are slowing down and making it impossible to produce more and more collections for example for the fast fashion. These countries offer a significant share of cheap labor, but COVID-19 has made the situation very unpredictable also in this part of the world. In fact, next to those workers who have already lost their jobs in recent months due to falling demand worldwide, the health conditions of the still active workers might be not rightly safeguarded against the emergence of further coronavirus hotspots in their countries, and this is exacerbated by bad working conditions and by the lack of cleaning or effective

Katy Dartford: Coronavirus: Dress shops and florists left at the altar as COVID-19 hits weddings. euronews. 13 May 2020. <https://www.euronews.com/2020/05/13/coronavirus-dress-shops-and-florists-left-at-the-altaras-covid-19-hits-weddings > Accessed: 8 July 2020. 242

Global Wellness Summit: Trend: Well Fashion. Global Wellness Summit. 9 December 2019. <https://www. globalwellnesssummit.com/trendium/the-next-fashion-chapter/ > Accessed: 19 June 2020. 243

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disinfection as well. The fact that workers in the fashion production are employed in these countries on starvation wages and inhumane conditions, as shown by the fate of more than a thousand victims who died in Bangladesh 6 years ago as a result of the collapse of the Rana Plaza factory, raises further moral questions if clothing production can continue in the same way once the epidemic is over.245 The fashion industry today is one of the most polluting industries in the world, which may lose its title one day after the epidemic if the changing customer needs and sustainability will be kept in mind. The pandemic has affected consumer habits in many ways, as evidenced by the development of demand, which has fallen not only due to financial uncertainty but also due to the revaluation of customer needs. The question in this situation is how conscious the purchase of clothing will be in the long run, and by which extent larger companies in the clothing industry, especially those selling fast fashion, are willing to change their business policy and production trend with innovative solutions. The global disruption of several production processes also raised the issue that a complete dislocation of the manufacture may not be sustainable in the long run. For this reason, a solution for the future may be shifting part of our apparel shopping, where possible, towards smaller local producers, who design and manufacture clothes entirely locally, heading in this way towards more conscious consumption practices which in turn may help smaller and potentially more sustainable companies to resist sudden crisis which otherwise risk to wipe them out from the market.

THE OUTLOOK OF THE CHINESE ECONOMY AFTER THE PANDEMIC 246 VIKTÓRIA ANNA PAPP

The COVID-19 pandemic has not only been having devastating health impacts worldwide but it also caused a significant slowdown in the global economy. China managed to control the first wave of infections having reported zero domestically transmitted cases at the end of May, but it recently has been fighting to avoid an outbreak of a large-scale second wave which started in Beijing, while the novel coronavirus has been rapidly spreading in other parts of the world with the total number of infections reaching over 14 million globally by mid-July. The COVID-19 virus that first appeared in Wuhan caused a serious downturn of business and economic activity in China, the world second largest economy, which is expected to deal with the negative economic consequences of the pandemic in the coming year if not longer.

245 Jim Yardley: Report on Deadly Factory Collapse in Bangladesh Finds Widespread Blame. The New York Times. 22 May 2013 <https://www.nytimes.com/2013/05/23/world/asia/report-on-bangladesh-buildingcollapse-finds-widespread-blame.html > Accessed: 7 July 2020.

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2020 was supposed to be an important year when China would reach the goal of transforming into xiaokang shehui (小康社会) that is a moderately prosperous society. By large this goal means that the country’s GDP and disposable income would be doubled in ten years and no Chinese citizen would live under the national poverty line. The prospects of achieving this goal seemed ambitious but achievable before the Lunar New Year, however, now it is overshadowed by the current pandemic.247 As for economic consequences of the pandemic, it has become clear quite early on that the novel coronavirus is not only going to be a supply-side shock for China, but it was going to be a shock for global demand as well as for the interconnected global supply chains. First of all, China has experienced its first quarterly decline in decades, as economic activity sharply decreased due to mandatory lockdown and travel restriction of workers in February.248 The first industries to be hit by the economic shutdown were recreation, transportation and trade and communication services by an estimated 5.9%, 2.3% and 2.1%, respectively.249 As lockdown measures were slowly eased in early March most of the industrial and manufacturing enterprises have restarted their activity, but for small and medium enterprises it took more time to resume operation if they managed to survive. Some industries such as tourism will recover even slower or not at all until a vaccine for COVID-19 is developed. Moreover, Chinese domestic demand and consumer habits were also affected—retail sales falling by 20.5% in the first two months this year— as more people opted to reduce their spending due to unemployment, bankruptcies or in preparation for future lockdowns, which are further crippling the economy. Consumption is regarded as the most important driver for economic growth in China accounting for approximately 58% of GDP growth in 2019, especially since the country continues to shift away from an export- and infrastructure-driven economy.250 In spite of the dreary economic picture, China’s official unemployment rate only increased by 0.7% from 5.3% in January to 6% in early June.251 That is due to fact that it does not include the approximately 170 million rural migrant workers who are among the most vulnerable members of the working population and were the most severely affected

247 Montijn Huisman: After COVID-19, Can China Still Become ‘Moderately Prosperous’?. The Diplomat. 9 June 2020. <https://thediplomat.com/2020/06/after-covid-19-can-china-still-become-moderately-prosperous/ > Accessed: 9 July 2020.

Instant View: China's first-quarter GDP posts first decline on record as virus shuts down economy. Reuters. 17 April 2020. <https://www.reuters.com/article/us-china-economy-gdp-instantview-idUSKBN21Z09O > Accessed: 13 July 2020. 248

Estimated percentage point change in economic industries caused by the outbreak of coronavirus COVID-19 in China in 2020. Statista. <https://www.statista.com/statistics/1103062/china-estimatedcoronavirus-covid-19-impact-on-economic-growth-by-sector/ > Accessed: 16 July 2020. 249

Jane Li: How coronavirus is changing what Chinese consumers buy. World Economic Forum. 15 April 2020. <https://www.weforum.org/agenda/2020/04/china-economics-consumer-habits-spending-covid19coronavirus/ > Accessed: 13 July 2020. 250

251 Chao Deng – Jonathan Cheng: Some Economists Question Strength of China’s Labor Market. The Wall Street Journal. 7 June 2020. <https://www.wsj.com/articles/chinas-jobs-rebound-doesnt-appear-as-robust-asthe-government-claims-11591551390 > Accessed: July 14 2020.

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by the pandemic, as many of them are excluded from unemployment insurance.252 Second, even though shops and factories started to reopen in many provinces and the initial supply side shock caused by the lockdown seemed to settle, as a consequence of the epicentre of infections moving outside of China and more and more countries introducing travel restrictions and quarantine protocols, many of China’s most important trade partners had to shut down various economic activities, stall or slow down production. This meant that many foreign markets for Chinese products were shrinking or closing completely, which in turn caused a grave problem in demand. China’s exports—which comprise about 18% of its GDP—contracted by 17.2% in January and February from last year and its trade with the EU and US basically collapsed. Chinese exports to the EU shrunk by 29.9%, while imports from the EU fell by 18.9% and exports to and imports from the US declined by 27% and 8% respectively.253 The Chinese leadership pledged to provide a historical 4 trillion yuan worth of rescue package for the country’s worst-hit businesses with the focus on helping market entities, ensuring employment and people’s livelihoods.254 This is in contrast to the stimulus package that was issued in response to the global financial crisis in 2008, which focused on government spending supplied by loans and left China in a huge amount of debt. The government’s stimulus measures seem to be working as China recorded a 3.2% year-onyear GDP growth in the second quarter with the recovery of the production side being slightly faster than the consumption side as consumer spending remains to be well under pre-COVID levels.255 So, even with the provision of massive financial support, the pace of economic recovery in China is expected to be modest. China’s real GDP growth is estimated to reach only 1.1% this year according to IMF’s forecast, while it accounted for 6.1% in 2019.256 Delivering the government’s work report at the National People’s Congress at the end of May, Li Keqiang underlined the aim to continue building a moderately prosperous society this year, however, did not mention a specific GDP growth target for 2020, which signals that Beijing is uncertain of the turnout of events.257

Scott Rozelle – Heather Rahimi – Huan Wang – Eve Dill: Lockdowns are protecting China’s rural families from COVID-19, but the economic burden is heavy. IFPRI Blog. 30 March 2020.<https://www.ifpri.org/blog/ lockdowns-are-protecting-chinas-rural-families-covid-19-economic-burden-heavy > Accessed: 14 July 2020. 252

253 Finbarr Bermingham: Coronavirus: China’s exports and imports plummet in January and February. South China Morning Post. 7 March 2020. <https://www.scmp.com/economy/china-economy/article/3074060/ coronavirus-chinas-exports-and-imports-plummeted-january-and > Accessed: 14 July 2020.

Frank Tang – Jun Mai – Sarah Zheng: China pledges largest-ever economic rescue package to save jobs and livelihoods amid coronavirus. South China Morning Post. 28 May 2020. <https://www.scmp.com/ economy/china-economy/article/3086569/china-pledges-largest-ever-economic-rescue-package-save-jobs > Accessed: 9 July 2020. 254

255 Mariko Oi: Coronavirus: Chinese economy bounces back into growth. BBC. 16 July 2020.<https://www.bbc. com/news/business-53399999 > Accessed: 16 July 2020.

Growth rate of real gross domestic product (GDP) in China from 2011 to 2019 with forecasts until 2021. Statista. <https://www.statista.com/statistics/263616/gross-domestic-product-gdp-growth-rate-in-china/ > Accessed: 10 July 2020. 256

China firm on achieving development goals of 2020, though setting no specific growth target. Xinhua. 22 May 2020. <http://www.xinhuanet.com/english/2020-05/22/c_139078608.htm > Accessed: 10 July 2020. 257

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Third, the pandemic also disrupted global supply chains creating a serious global economic downturn and took a toll not only on the Chinese but on many major economies as well, which have become highly interconnected in the past few decades. The COVID-19 pandemic also highlighted how reliant American and European supply chains among others have become on production in China, in particular when it came to strategically important industries such as medical equipment at current times. Therefore, a call for a form of rebalancing away from China and for the “shortening” of global supply chains have become stronger, which has already begun due to rising costs and tariff pressures in the East Asian country anyway. The pandemic and its economic consequences left Europe seriously afflicted as well, while its increasingly complicated relations with China have been on full display. On the one hand, cooperation concerning medical equipment and experts between China and European countries have become invigorated as there has been a mutual crisis assistance between them in the past months. As the epicentre of the coronavirus moved to the European continent and several countries introduced travel bans and export restrictions, though, many European countries found that maintaining pragmatic cooperation with China in order to secure medical supplies became crucial. On the other hand, EU-China relations became strained amid the pandemic mainly due to China’s public policy campaigns about its handling of the outbreak and so-called mask diplomacy, which have definitely backfired as the EU has increasingly seen China’s propaganda efforts as overly aggressive. Concerns emerged that China will further enlarge its economic power and emerge newly empowered after the crisis, but considering the short to medium-term effects of the two-sided economic crisis the pandemic to China, the assumption seems a bit far-fetched. Although, the EU leaders have avoided to criticise China as harshly as the Trump administration, Beijing’s recent assertiveness and its lack of willingness to deliver results on the Comprehensive Agreement on Investment, for example, are pushing the EU towards a more forceful approach to China, which was visible at the latest online EU-China Summit.258 Some argue that regardless of the initial shock of the pandemic, supply-chains are likely to be restored by the main stakeholders and trends of globalisation will soon restart as they have been progressing in the past decades as the consequence of global supply and demand.259 While other experts suggest that given the severe disruption in the global value chains and investments caused by the pandemic as well as a harsher call for “economic sovereignty” in many states, a more serious shakeup of globalisation cannot be avoided.260 Either way, it will be crucial for China, which has been benefitting greatly from globalisation, though, how and with what modifications will this process continue. Production in some

Brian Bridges: EU-China summit showcases Europe’s growing disillusionment with Beijing. South China Morning Post. 27 June 2020. <https://www.scmp.com/comment/opinion/article/3090465/eu-china-summitshowcases-europes-growing-disillusionment-beijing > Accessed: 13 July 2020. 258

Gergely Salát: What impact will the COVID-19 pandemic have on the global role of China?. KKI 4:1. Institute of Foreign Affairs and Trade. 2020/14. <https://kki.hu/wp-content/uploads/2020/05/4_1_2020_14_china_covid.pdf > Accessed: 13 July 2020. 259

260 Jun Du, Agelos Delis, Mustapha Douch and Oleksandr Shepotylo: Lessons from China: This is how COVID-19 could affect globalization. World Economic Forum. 25 May 2020. <https://www.weforum.org/ agenda/2020/05/coronavirus-globalisation-shakeup-is-inevitable/ > Accessed: 14 July 2020.

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sectors of national and security interests, such as medical equipment, will probably be moved back from abroad despite the increased costs, but that is not likely to affect major tendencies and the principle of efficiency of the global market. For the Chinese leadership one if not many lessons should be drawn from the epidemic. A large-scale outbreak of any virus would have caught many countries unprepared, however, China should put more emphasis on its health care system and social safety net, which has been lagging behind. This would help reduce the traditionally high savings rate and encourage people to spend more, which could help the economic recovery in turn. Although the more drastic measures have been withdrawn in the country, some public health control measures have become institutionalised such as testing, neighbourhood-monitoring and social distancing since there have been smaller-scale upsurges of infections and are definitely here to stay until a vaccine COVID-19 is developed.261 In order to handle situations of alike, streamlining the flow of information in the political and administrative system would be key to improve early responses to emergency even at the lowest level of administration.262 A likely trend that will accelerate after the pandemic is the development of AI technologies, digitisation and robotics, which is representative of a broader shift towards people-less companies in the country. The Chinese economy has been going though “a great robotic leap forward” and as the world’s (former) workshop it has an advantage and incentive in leading this change in the future.263 China will also continue to shift its economy from being export-oriented to one that focuses more on consumption and domestic market.

Rowan Callick: The prospects for China’s post–Covid-19 economy. The Interpreter. 5 May 2020. <https:// www.lowyinstitute.org/the-interpreter/prospects-china-s-post-covid-19-economy > Accessed: 14 July 2020. 261

Salát: What impact will the COVID-19 pandemic have on the global role of China?.

262

Kai-Fu Lee on how covid spurs China’s great robotic leap forward. The Economist. 25 June 2020. https://www. economist.com/by-invitation/2020/06/25/kai-fu-lee-on-how-covid-spurs-chinas-great-robotic-leap-forward > Accessed: 13 July 2020. 263

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