Coronavirus an "Unthinkable" event? A global view from India

I wrote my last blog “Thinking the Unthinkable - A new world beckons us” on January 22. I had just read warnings in the book of the same name by former BBC World News presenter Nik Gowing and Chris Langdon.

I could never have conceived that the prophecy of the thought would so quickly be proved true through the global crisis of the coronavirus.

Nik and Chris warn how unpredictable developments are unthinkable and unpalatable. They ask: why do leaders not think about them? The answer: conformity stops them.

Now with COVID-19 those unthinkables confront leaders with full force.

Rather than normal black swan events, Nik and Chris aptly warn about black Jellyfish events. These lurk with their poisons in the sidelines without catching anybody’s attention. Then they attack and explode suddenly. The coronavirus is a black jellyfish event.

Nik and Chris write that what impedes a proper response to black jellyfish events are the inabilities of present-day leadership to first conceive of, then to handle such events. Most leaders lack the innovative tools and frameworks to pro-actively address these events effectively.

On top of this, I argue that egos and silo-minded thinking of present day leaderships have compounded the woes in fighting the virus attack.

Leadership failures – China, Saudi Arabia, USA, Russia, Europe

China experienced the first signs of the deadly coronavirus in December 2019. Top leadership refused to accept publicly the seriousness of the issue. They kept it under wraps.

Only when the Chinese faced a huge number of cases during the mass movements of 500 million people over the Lunar New year did the government act decisively. One can only guess whether the numbers and facts that emerged from China have been completely true.

The government didn’t allow World Health Organisation officials to enter China until late February. Had they allowed this earlier they could have helped the WHO alert other global governments about the seriousness of Covid-19.

The response of developed western nations also been inadequate. It adds credibility to the Thinking the Unthinkable theory.

US president, Donald Trump shouted loudly in late February that the USA will not be affected much. He said that his government was in control of the situation. A month later, the US has the highest number of virus cases and the government is desperately short of medical supplies.

Trump has publicly and frequently been seen at odds with one his top medical advisors Dr Anthony Fauci, a globally-renowned infectious diseases expert. Facing an election in nine months, Trump put the US economic and prosperity agenda ahead of the nation’s health. He claimed that the country’s businesses could start off again at full steam by Easter in mid-April. Did he really have any evidence that the virus would die off by then? Certainly Dr Fauci didn’t believe so.

Politicians and leaders fight while people suffer

Despite huge movements of people inbound from China, Italy and Spain didn’t see a need to take any preventive actions. Unthinkable?

They have paid the price with the highest fatality rates. The European Union hardly came to their rescue at the most needed time. This confirmed the scale of growing frictions within the Union. Left to fend for themselves, these countries had to decide on their own lockdowns and take their own actions.

Then came a financial market rout which was compounded by the collapse in oil prices due to the ego hassles between the Saudis, Russia and the US. Each wants to kill off the others’ oil reliant businesses. The USA needs its shale oil producers to survive and be less dependent on the Middle East for oil. The Saudis and Russians want to crush the US shale oil business.

To support oil prices after COVID-19, the Saudis approached Russia to cut oil production. Russia rebuffed Riyadh. Russia wanted low oil prices to hurt the US shale oil business.

The scrap has backfired. Both the Russians and Saudis need oil prices to be above $60/bbl to sustain their social spending costs. Now the oil price is at $24 and falling. If there is no truce in the oil wars, social spending will be cut in both countries. This will lead to more suffering for their people and a decline in the US shale oil business will lead to more job losses.

I am sure that the global economic and geo-political scenario will undergo huge changes once the world recovers from this pandemic. It will be very similar to the two post-world war scenarios. But the challenges will be different this time, especially for the political and business leaders. How will they confront the new unthinkables?

Who carries the blame?

Will the devil’s advocate theory be proved that China fabricated this virus to weaken other countries? Many leaders continue to make indirect references to China as the culprit.

Unlike Germany which was the aggressor in World War Two, China can always claim that it too was affected and has helped in the other countries efforts to fight the virus. Countries will find it hard to ignore or blame the PRC. China is an economic powerhouse and is now getting back on its feet as other countries continue to struggle.

Will firms with high dependence on Chinese supply chains develop a “China de-risking strategy”? This is a big topic of discussion especially in pharma and automobile companies which have been badly hit.

I sincerely hope that as a part of their de-risking strategy firms embark on a China de-risking strategy. No other country today can match the manufacturing base of China. So the room for manoeuvre of global firms is very limited. Business leaders will have to focus on business recovery and positive short-term results to stay solvent. But tough decisions to move away from China will not come for a year or two.

Will Donald Trump focus on health rather than economy? The US president was planning to run his re-election campaign on a booming economy. That has been adversely affected now. Will he focus more on getting the virus under control rather than the economy? Will the US people vote now for a socialist-leaning candidate in this election who will focus on health spending?

What big questions do global leaders face now?

Will governments focus more on health infrastructure to help fight pandemics in the future? Will countries like Italy who signed up for China’s Belt and Road Initiative quietly back off now? Will the Indian government move fast to bring in structural reforms and seize this opportunity to make an India a better alternative to China for manufacturing?

Finally, how will global leadership come together to address the gigantic costs of this pandemic, especially the economy shutdown due to the lockdowns?

At a time when their reputations had become ever weaker, will the roles of the UN, IMF and World Bank – all established after World War Two to stabilise the world order - be enhanced?

To conclude, once recovery from the global ravages of Covid-19 is in sight, global leaders will face a gigantic task. New political and economic order will have to be established. So will new frameworks. None will be like those we have all grown up to be familiar with.

Gowing and Langdon’s Thinking the Unthinkable warnings and prophecy have been proved right by the super fast arrival and devastating impact of Covid-19. I hope that leaders will be able to address the core issues with enlightened vision, while putting aside their partisan interests.

Until then: Stay healthy, stay safe. It will be an anxious wait.

Ram Narayanan, a London Business School graduate, works as a corporate professional in a leading Fortune 200 company. He is based in Mumbai, India. He has worked across the globe in various capacities. He is an avid marathon runner and trekker. He regularly blogs under the name PenOrama. This is an edited version of his original blog.