The launch of vaccination programmes across the US, the UK and the EU in recent days signals the first steps toward the end of the global COVID-19 pandemic. Many countries have also started alternative programmes based on their own vaccine, such as Russia and China.
The next steps will see the easing of restrictions as vaccination rates increase, and as such there is an expectation of economic recovery as countries open back up. However, in many countries the positive impact may be limited. The vaccination process is likely to be quite challenging and complex for many countries as they struggle to achieve the target vaccination rates in line with larger and more organised countries. This will lead to comparative economic disadvantage and open the door to a black market for the vaccine leveraged by criminal groups, as some governments do not have the underlying infrastructure to efficiently roll out the vaccine.
It will also reshape international relations and alliances based on the capacity of countries to afford enough of the vaccine, particularly amongst those who are already economically and politically dependent on their allies and global aid. Logistical and production delays will hinder many countries, and could lead to security crises, and potential protests due to opposition to mandatory vaccination.
There is also a range of political risks that need to be closely monitored in the coming year. COVID-19 crisis has generated all types of political risks, including stability, law and order, integrity and governance risks, and businesses must expect these risks to further intensify as the pandemic resumes and governments should act with efficient short-term national interests in mind.
International solidarity is also not in the best shape, this was clear from the outset of the pandemic, as national interests took priority. As such, vaccination programs are likely to see the same nationalistic approach. Governments have shown modest support for the COVAX multilateral initiative to support vaccination in low-income countries. China and the United States have decided not to fund the initiative in favor of negotiating bilateral vaccine agreements with developing countries. As a result, we can expect that nationalism will also shape investment and trade policy at least in the short term and businesses should expect close scrutiny in the coming months.
The risks and challenges of internal stability are high in these situations, as countries adopt a welfare approach toward their citizens to face and contain the miserable economic conditions that the Pandemic has generated. This will not be limited to countries that lack natural resources but also countries with large oil reserves will suffer from low oil prices and have to face fragile fiscal circumstances.
Protests, riots and strikes have been limited during the pandemic, but we should expect this to change in 2021. This could lead to political turmoil linked directly or indirectly to COVID-19. The recovery process will be long and difficult. Countries might face serious risks if they fail to guarantee vaccines to their citizens regardless whether the reason for the failure is financial, diplomatic or even strategic.
The economic and political risks generated by the crisis are likely to be felt more during the vaccination phase in some countries as the recovery could intensify social tensions. This will require careful management by businesses and governments. Therefore, it is important to start thinking about how to manage the vaccination carefully and independently of support. This requires a more efficient approach to tackling the problems, and must include a trust-building communication strategy capable of influencing public opinion to raise awareness, create a sense of reasonableness and contain the political and economic frustration that the difficult conditions might cause.
Dr.Amer Al Sabaileh