Past policies cannot solve future problems

Better late than never. After weeks of neglect, the global spotlight is finally on the novel coronavirus pandemic’s devastating social and economic impact on the world’s most vulnerable. Statements of support, promises of help, and plans for quick aid and debt relief, albeit piecemeal, are welcome.

But yesterday’s policies won’t solve tomorrow’s problems.

The current focus on the immediate emergency is correct. But it must go hand in hand with preparations for even tougher days ahead.

Outbreak could nullify years of hard work

In some developing countries, the pandemic risks wiping out years of hard work and an impressive steady rise in incomes. Global supply chains have been disrupted. The result: Trade is slowing. Remittances are declining. Tourism is a memory. And a post-crisis recovery will take time, money and effort.

In the short term, almost everywhere in Asia, Africa and Latin America, creaking healthcare systems need to be shored up and urgently needed test kits — ventilators and personal protective equipment and medical gear — provided. As more and more developing countries go into lockdown, factories screech to a standstill and jobs disappear, cash transfers must be made quickly to the poorest to prevent famine and hunger.

Many governments are already increasing domestic spending to help the poor, requiring the maintenance of financial systems’ liquidity to keep money flowing into households and small businesses.

There are demands — and promises — of debt relief. Ethiopia’s Prime Minister and Nobel Peace Prize winner Abiy Ahmed wants an emergency package worth $150 billion for Africa to boost spending on healthcare, shore up foreign reserves and patch up social safety nets. If the virus is not defeated in Africa, “it will only bounce back to the rest of the world”, Ahmed has warned.

The International Monetary FundWorld Bank meeting scheduled for April 17 will seek a coordinated international response to these and other demands. And the European Commission is readying its own initiative for African countries. This is welcome. But with the economic fall-out from the coronavirus pandemic expected to cause the loss of up to 25 million jobs — many in the developing world — it’s equally urgent to put in place, by the end of this year, policies to tackle an even grimmer future.

Rebooting the economies of most developing nations — even those described as middle-income countries — won’t be easy. Old-fashioned aid and trade policies will need a radical rethink. Tired conversations and outdated, often transactional, interactions between rich and poor nations will have to be refreshed.

The European Union, with its expanding network of partners in developing countries, can spearhead the transformation. But to do so, European institutions, national governments and policymakers will have to look beyond today’s challenges, short-term victories, petty rivalries and self-absorbed reflexes. Here are some compelling realities that must stay center stage in EU reflections:

EU policy reflects changing mindset

* The shift in Europe’s narratives on aid and development, especially on Africa must be accelerated. The EU’s recent Africa strategy with its focus on a “partnership of equals” is evidence of a changing policy mindset — at least in Brussels. For too many people, however, helping Africa is still about being charitable.

Public support for stronger financial assistance, including debt forgiveness for African and other developing countries will only be forthcoming if EU leaders demonstrate that our economic future hinges on the prosperity of others. And that includes through migration.

* Traditional aid policies will have to include a big financial effort to support the poorest people, often in the informal sector, who have now been rendered jobless. Providing “free money” or basic income for those in poor countries — as well as in rich ones — will become imperative. As studies show, money given to people with no strings attached and no administrative hassle is usually well spent, decreases poverty, improves health and allows children from under-privileged families to perform better at school.

The financial costs of such an initiative could be as high as 10 percent of GDP. But extraordinary times demand extraordinary measures.

As recommended by Joseph Stiglitz, Economics Nobel Prize winner and former chief economist of the World Bank, full use can be made of the International Monetary Fund’s Special Drawing Rights to help the neediest without having a big impact on government budgets.

Health should become key feature of EU deals

* Health must become a key feature of EU strategic partnerships and cooperation agreements. Long after the novel coronavirus becomes history, pandemics and health emergencies will continue to challenge global health infrastructure, especially in developing countries. Investments in national healthcare capacity along with longer-term preparedness must remain at the top of the agenda.

While defense expenditure is often high, spending on health is still depressingly low in many developing countries. So EU “health partnerships” must ensure assistance to bring an end to governments’ chronic underfunding of healthcare systems. And financing for the World Health Organization, also woefully inadequate, must be increased to give it both financial and political heft.

* Reform of tax governance and of an already fragilized multilateral trading system must be accelerated. Governments can no longer keep stalling on decisions needed to combat illicit financial flows, tax evasions, money laundering and corruption. With dramatic supply and demand shocks in the world economy triggering major trade disruptions, including in services, long-delayed World Trade Organization reforms have become even more urgent.

And as European buyers cancel their orders, for instance, Asia’s textile exporters and workers, especially women, are being hardest hit. They will need financial help but also special “corona trade preferences” through a revamp of the EU’s Generalized System of Preferences. Negotiations on free trade agreements, new and ongoing, too, must adapt to the emergency.

Abandoning geopolitics, EU must work across ideologies

Europe’s current obsession with geopolitical competition must be replaced with an effort to work together across ideological barriers. The EU’s recent barbs against so-called “politics of generosity”, targeting China, Russia, Turkey and others, may sound cool but are unworthy and unhelpful when all hands are needed on deck.

The European Union is more credible — and more in line with its values of solidarity — when it speaks of mutual support in containing the coronavirus outbreak, cooperation in developing a vaccine and an end to long-running conflicts.

The agenda is ambitious. In a world dominated by “my nation first” policies, there will certainly be resistance by many. But a pandemic that knows no borders requires global solutions, international cooperation and help-thy-neighbor policies.

It’s a simple matter of self-interest. Building a strong post-pandemic world requires changing yesterday’s policies to tackle tomorrow’s tough problems.