Stay informed. Our Insights Newsletter highlights the latest news and analysis on global strategy, policy and risk. Subscribe to Insights
As 2021 enters its waning months, a somewhat return to normalcy seems to be within reach. For the past one and a half years international borders have shuttered and reopened, travelers struggled with diverse quarantine policies, and the international transfer of goods was delayed due to pandemic-influenced supply chain disruptions. Numerous landmark events have left an indelible mark on the world; military conflicts, 911, the 2008 global economic crises, but the COVID-19 pandemic was unique given its sudden and widespread impact on virtually every human being on the planet.
Situational awareness is a term closely associated with the military, yet the global population could afford to take a page from military operating procedures as countries begin a march towards normalcy. Being aware of one’s surroundings is one aspect of situational awareness, yet being aware of your neighbor’s surroundings is equally as important. The ongoing debate over “vaccine haves vs have nots’, those countries having quick and easy access to COVID-19 vaccines and those who continue to struggle, has introduced the term vaccine nationalism to the global lexicon and the global conscience. Beyond simply vaccines, nationalistic views, or commonly called protectionism, has complicated many aspects of global cooperation and the trend shows no signs of slowing.
Looking towards 2022 and beyond, the narrative surrounding the new normal post-pandemic must change from protectionism, to global cooperation. This means that a large, all-encompassing global alliance must be realized given the increased severity and occurrence of emerging risks such as climate change, cyber-attacks, and pandemics. This does not suggest that current global alliances, such as the 28-member North Atlantic Treaty Organization (NATO), be dismantled. Rather, a much larger alliance be formed whose mission underpins these emerging risks impacting all nations regardless of geopolitical status. This alliance must supersede current conflicts, such as when rivals India and Pakistan conducted joint military anti-terrorism exercises in 2018 in the name of diplomacy and protection for all citizens.
Similar to cyber, supply chain risk does not respect international borders and also requires a coordinated response from all nations. The global pandemic, the mid-February Texas Freeze, and the Ever Given morass forced companies to rethink supply chain resiliency and work with their suppliers to keep “buffer” inventory of critical parts in stock. While it is costlier for the global supply chain to keep inventories higher than usual, which is in stark contrast to the just-in-time methodology made popular by Toyota, it is expected that more companies will follow suit. To ease stress on the rising costs associated with buffer inventories and raw materials, governments should intervene with diplomacy that lessens any trading friction. This means revisiting past trade disputes like increased steel and aluminum tariffs imposed by the U.S. and the pandemic-driven increase in Chinese tariffs on Australian imports. While hundreds of trade disputes exist between nations, the goal in a post-pandemic world is not to eliminate all of them but for nations to sit down with one another and revisit certain onerous trading terms for the good of the global supply chain. Revisiting supply chain strategies also involves companies rethinking their use of “low cost regions” exclusively; low cost cannot be the main driver in determining how companies choose their supplier relationships given the global emerging risk profile.
Perhaps the most glaring, yet overlooked, economic issue exposed by the pandemic is the global plight of women. Supporting women locally is directly proportional to global prosperity, and communicating this to nations around the world is paramount. McKinsey estimates that improving gender equity could add $13 trillion to the global economy, and the pandemic exposed just how critical women are to humanity and global economies. President Biden included caregivers, 87% of whom are women, in his infrastructure proposal showing a commitment to this important link in the economic supply chain. Caregiving allows a vast number of women to return to work because they are freed from caring for members of their family, hence the narrative of caregiving being a critical aspect of U.S. infrastructure.
Given that approximately 150 million global citizens are expected to fall into poverty by the end of 2021, the need for protectionism must be met with the fierce reality that each nation is inextricably linked to one another. As each nation rebuilds locally, a commitment must be made to communicate openly and often with other nations because while a rising tide may lift all boats, a lowering tide can similarly sink an entire fleet.