Coronavirus: What Comes Next?


To gain insights on longer-term issues tied to the coronavirus pandemic, RCW Editor-at-Large and BGR Senior International Advisor Kurt Volker spoke with former Swedish Prime Minister Carl Bildt. A full transcript follows:


Kurt Volker:  So Carl:  You have been Prime Minister, you have been Foreign Minister, you're a senior European statesman, and I just thought it would be interesting for people on this side of the Atlantic to get a perspective on what you're seeing.   


What is it like in Sweden now?  It has been in the news a lot.  Some people here are saying, Oh, Sweden is doing this herd immunity thing, and that’s the right thing, because it has kept the economy going.  Others have said, “No, no, no they're going to get higher deaths now. and it's going to be worse.  How do you see it living there, and stepping out from there, how do you see Sweden comparing with the rest of Europe?  


Carl BildtThat remains to be seen, of course. We are fairly closed down as well, but not as closed down as some other countries.  The economy is at a standstill.   It is a completely integrated European, Nordic, global economy.  So, if there is a standstill in one place, there is a standstill everywhere.  What is different is that restaurants are open, but there is hardly anyone there – except perhaps on a sunny day you can catch some people in outdoor cafés or something like that.   


How are we doing as compared with other European countries The only thing that I think you can measure is deaths.  We are significantly worse than the other Nordic countries.  We are significantly better than a country like Belgium, which is really bad, and the same size, roughly.  We are significantly worse than Austria, same size.  It is difficult to draw any sort of conclusion.  


Kurt Volker:  Do you have any idea why Why worse than the other Nordics? Why better than Belgium?  


Carl BildtYeah, it's difficult to know. I mean, the others have closed down more, the other Nordic countries.  Belgium has also closed down more, but is worse.  


There are lots of factors as to what could have happened: Structure of the population, density…  Belgium is a fairly dense country.  Stockholm is a big place by European standards.  Elsewhere, the population is fairly dispersed.  We had most of the cases in Stockholm, needless to say.   

So it is difficult to draw any absolutely clear conclusions as of yet.  We all were trying to find the best strategy in order to not overwhelm the health system.  So far, that hasn't happened  But it is a difficult time, no question about it.  


Kurt Volker:  You were talking a little bit ago about restarting Volvo car production, and nobody is buying cars.  And there is already three months of stock.  So when you look at restarting the economy that is what's on everybody's mind here – what are the challenges and what do you think will work?


Carl Bildt:  Well, there is a challenge in terms of industrial production of that sort.  The automotive [industry], which is big in Europe, notably in Germany, notably Sweden, but also very big in some of the Eastern European, Central European countries.  Aerospace is another sector.   We can restart production of those, so to a certain extent that is happening.  But where is the demand?  Who is going to buy the cars? Who is going to buy the aircraft?


So when production is slowly restarting, I think after a while, they would say, “Ugh – can we produce more?  What would we have in stocks?”   And that speaks for the economic downturn, which is significantly worse than the global financial crisis, being perhaps more prolonged than most people are aware of.  I fear. 


The big headache, and it must be the same with you, is sort of small and medium size – the restaurants, the small shops that we have all around for retail.   Horrible, horrible. 


Kurt Volker:  Well, this is one thing where I think if we look at what Europe has done, Sweden is a good example. Germany is a good example. They've kept people on payrolls.  The government is subsidizing the businesses and the businesses are paying the people. We've had some effort to do the same thing through these Small Business Administration loans, which are forgiven if people show that they used the loan in order to keep people on payroll.  But it hasn't had the same effectI think we've seen claims for unemployment spike in the US -- over 20 million people now -- whereas in Germany, I think the statistic I saw, is that they're still citing 5 percent unemployment.  

So when you do open up the economy fully again, it seems like that's a situation where people are employed, maybe not the big industrial goods, but at least retail and commercial, restaurants, shopping, clothing, normal sorts of consumer demand are going to be resuming pretty quickly.  


Carl Bildt:  To some extent… that's the hope, but it's somewhat dependent on how long it lasts.I think one of the problems is that it is easy to reach the big companies and to program for them, to retain people they have on short term or part time or whatever. And as you say, I think even if unemployment figures are going to be fairly dramatic in Europe, they're going to be less dramatic than what you see on your side of the pond It is somewhat difficult to design the program that really reaches the small ones or the retail or whatever.  So it's going to be tough, no question about that.  The question is, what’s going to be the shape of the economy when we come out of it?  When we come out of it.   It’s very much going to depend on the length of the downturn, and the shape.


Kurt Volker:  I know you're not a doctor, but do you have a gut feeling as to when people are going to be opening up?  


Carl BildtWell, I think it's going to be efforts in a few European countries – you see that already – to open up carefully, and coordinated.  It is not going to be a big opening up, it’s going to be a gradual one.  One conclusion coming out of that, is that the economic downturn is going to take a longer time, that we're going to be beat back.   “Back to business, happy days are here again…”  forget about that.  Not going to happen.  


Kurt Volker:  What does it mean for Schengen? 


Carl Bildt:   For Schengen It means at the moment, there is not much of a Schengen as a matter of fact.   We don’t have any restrictions in Sweden; we have the EU restrictions for people outside of the EU coming in.    We have a recommendation for EU citizens not to travel around.  You can come into Sweden.  Some other countries have restrictions also.  Germany still has them as a matter of fact.  It's been loosening up somewhat, but not much so far.  And travelling also is naturally very, very limited.


Kurt Volker:  I was reading something that Ian Bremmer wrote, and he always has some good observations.  And this one was just a simple pointthat often times, a result of major crises like this, it reinforces and accelerates pre-existing trends.  So, we were heading towards nationalism, populism, greater immigration controls, more national champions in industry, more trade wars and more national champions that way..  I guess that seems to be true, at least so far.  Is that an observation you would make?  


Carl BildtI fundamentally agree with that. I think that is where we are heading short-term.  But my hope and, I think, probably my belief, is that when people start to look at the consequences of that, they will step back from that particular approach.   


I mean, we have a situation where we have a virus that is global.  We can't fight a global challenge if we don't have a global answer Our economies are all highly integrated.   If we refuse to have global cooperation against the virus, if we close down our economies, we go back into conflict – and publicly – fairly quickly.  And my hope is that political leaders at some point understand that and act accordingly 


Kurt  Volker I agree with you, to a point, but then at the same time I think, “Is China going to be part of a global solution?  Or are we really shaping different ways of thinking about the world?  


Carl BildtI mean China would like to be part of a global solution, no question about that. But their credibility has been somewhat dented – no question about that.  We treat it with somewhat more suspicion.


But if we're going to have a global solution for the sort of, say, economic recovery, it’s the second biggest economy in the world.   So demand in China is important for the U.S. economy and for the European economy.  And clearly, there are lessons to be drawn from how they have handled the virus. Some good, and some distinctly bad.


I think we need access to that kind of experience.  With China, needless to say, it’s going to be more tricky. Their credibility is dented, but it is the second most significant economy in the world, and you can’t disregard it.    


Kurt Volker:  Well, it's a huge economy And I agree with you that there is no getting around it being part of a global economy. But I'm thinking about what you're saying about global solutions to the disease, to economic systems You still have a situation today where China is blocking people from doing research about the coronavirus in China, and how it started.  


Carl Bildt:  Well, they are blocking internationals from doing that.  Yes, quite.  But this is not going to be the last pandemic we are going to face.  In my opinion, we need to discuss, with everyone around the table, to set up a system that is more robust when it comes to detecting the next one.   


And acting faster than what was done here.  We had the same experience with the Middle East syndrome a couple of years ago, and the same issue with SARS some years ago  


There has to be an international system that is robust, that is faster, that is more credible, and that should ultimately be in the interests of China as well.  And then we need to find a way around all sorts of political problems – be that Taiwan, or be that Iran, which is blocked by the U.S., and Taiwan is blocked by Beijing.   Because these viruses could pop up anywhere.  Ebola was in West Africa.  The Middle East thing was coming from Saudi Arabia…  


Kurt Volker:  I'm still stuck on this. I'm sorry.  But I do see differing instinctive reactions from a Western, democratic, law-abiding mindset, versus a control-oriented, authoritarian, and regional power mindset.  And I almost feel like we will see this again – and an Ian Bremmer point – this competition was growing before the coronavirus, it may be that we crash into this coming out of it.  


Carl BildtNo, it is true. I mean we have the competition increasing, all over there is big power competition or big power rivalry, however you phrase it.   But I think when it comes to fighting the viruses, we should have at least a cease fire on elemental cooperation.   


Kurt Volker:  No – that would make sense.   Is the virus the most important thing?  If you say, “OK, we get out of this, we restart our economies, we have dented growth for a year, but then we have accelerating growth.”  Are we back then to the Nine-Dash-Line in the South China Sea and Iranian nuclear weapons and so on?  


Carl BildtWe might be back to all of that, no question about that.  And some of these conflicts and some other conflicts might have been aggravated during this economic downturn.  But, as said, we need to set up a more robust system for early detection of the next pandemic.  We can’t have a repeat of this, in my view.  And then we want to have that as inclusive and as effective as possible, and then the sort of disputes about the Nine-Dash-Line, or about human rights, as important as that is, or nuclear suspicions, whatever… that must be set aside for that particular purpose. Because a virus can come anywhere, any timeWe know that you're going to hit us all everywhere 


Kurt Volker:  So if you were Dean Acheson sitting around in 1946 and thinking what do we do now? And then coming up with things like the Bretton Woods institutions and the U.N. and NATO and all that, what sort of steps should we be designing now to build the right post-coronavirus world?


Carl Bildt Well, that's fairly ambitious. But what I would do, perhaps… it is fairly obvious that we need to take global health issues more seriously.  Perhaps I would call a global health summit.  

Perhaps I would look at the discussions about the World Health Organization. We clearly need that body. We need a version of it, no question.  But to reform that?  How to make it more inclusive, how to make it more effective?  That could also be a way to restore, rescue, some element of multilateralism at an age, or at a time, where that is under threat. That does not sort out the Nine-Dash-Line, does not sort out Ukraine.  It does not sort out the controversy over Iran.  But it does something.  


Remember, it wasn't too long ago we had the Ebola crisis, and the fear that that was going to go completely...   


Kurt Volker:  I remember Jimmy Kolker, whom you know as well…  Jimmy joked during the Ebola crisis, there were about 14 patients in the U.S. at the peak of it.  And it was in 2015. He said you are at a greater risk of being a Republican presidential candidate than you are of having the Ebola virus.


Carl Bildt:   Well, yes… But I was I remember that time. There was a serious risk of that wiping out a lot of West Africa.  But there was a very significant effort undertaken by the international community, not least by the United States.  Remember, the U.S. deployed military forces to West Africa to handle things… 


Kurt Volker:  I forgot about that. That's right.  


Carl Bildt:  It worked.  It worked. 


Kurt Volker:   It did work.  Well that's interesting. One of the things that I think is interesting, too, is when you look at the effect of the coronavirus on political processes.  Because even before, we were going through some fairly significant changesMerkel declining in power, handing off or trying to hand off, not going so well.  Boris Johnson, Brexit, who then comes down with the virus, and comes back Macron reaching out to Putin.  Here, we're going through a presidential election campaign, which seems like it is in a frozen state at the moment because no one can pay any attention to it. Joe Biden has locked up the nomination, but the actual convention that actually nominates and probably won't be for another four months and then the campaign begins again. And then what will happen if this virus has a second wave? There will be a lot of contests about do people go in person to the polls? Do you do mail in ballots more extensively?  Is that fair? And do the courts weigh in on this and how it's it's amazing how this is going to affect the politics of it. And I should add to that President Trump is on television every day talking about this and it has boosted his popularity.  

Carl BildtYeah, that's what we're seeing across Europe. Every single leader that we have in Europe, whether impressive or somewhat less impressive, has been gaining stature. So opinion polls are going up for every Prime Minister or President in sight.  There is a rally around the flag effect. Another effect is that what we feared some years ago, the populists the xenophobics, whatever…  they’re declining.    


For a large period of time, the agenda of politics was immigration and crime and things like that.  And they were seen as relevant – rightly or wrongly.   That is completely gone.  And they are losing relevance, and people are going back to… 


Kurt Volker:  Is it too much to say that the measures that people are taking to fight the virus are the measures that those parties wanted to take to fight immigration anyway? 


Carl BildtCould well be in certain cases. But they are parties that I think would to a large extent support it because it was one issue.  Now people understand that there are quite a number of other issues.  And they are less confident in those particular parties being sort of competent to handle a crisis situation like this. So that is the trend, even in Italy where Salvini is running.  Even has been declining in support.  


Kurt Volker:  Where does this support go?   To the existing governments then, is that what you're saying, to the existing parties?   


Carl Bildt:  I think you saw this in the increase in support for President Trump, for example.  You see, that was an opinion poll out in Germany, today.  The CDU is riding high in the opinion polls, under Angela Merkel.  Significant increases.  Boris Johnson is a national hero.    So every single leader is gaining from this. And people want to believe their leaders, because they believe that the leaders who are there are the ones that can protect them.   


Kurt Volker:  Or that they have the instruments of power and they're using them, so give him a chance.  That makes sense.

We have had a very fraught U.S.-EU relationship for the last several years, including the risk of really heading to a trade war.

If you could make a couple of recommendations to both the EU and to the U.S. about the future, what would you recommend?


Carl BildtWell first, it is worth noting that to my knowledge, there hasn't been a single high-level U.S. or White House - Brussels contact during this entire crisis.  There have been sort of indirectly, in the G-20 and G-7.  But apart from that, the transatlantic dialogue is non-existent.   


Kurt Volker:  There have been two NATO meetings.  We had a NATO foreign ministers and a NATO defense ministers...


Carl BildtTrue, in multilateral settings of that sort.  But the telephone call between the White House and London, Berlin, Paris hasn’t happened, hasn’t happened.  Or Brussels.  And that's pretty remarkable and says something about some of the priorities and the nature of the dispute.


As you said, we were fearing trade disputes breaking out. I was fairly certain that we're going to have a storm over the Atlantic this year. That seems to be less likely, at least prior to November Whatever is after November is highly speculative. But I don't think anyone should be too keen on starting a new trade war at the moment. But the dangers thereafter are still there.


Kurt Volker:  You know, we haven't talked about Russia at all either.  I think that there's a couple of things that I'm seeing. Putin of course, in the midst of this, was trying to extend his mandate to 2036.  


It was going to go through and will probably still go through, but he has delayed that a little bit. Coronavirus, I think, has had a bigger impact in Russia than they've publicly acknowledged. You hear anecdotes that pneumonia deaths are way, way up, but not coronavirus.  So well, what's really going on here?  And you haven't seen any real change in Russia's effort to position itself to take advantage of, for instance, Ukraine or Georgia or its position in the Middle East, Iran and so forth.  So this looks in a way as though Russia's just taking the blow, but will not really change.


Carl BildtWell, of course, they entered into an oil price war with the Saudis 


Kurt Volker:  And they had to back down on that. 


Carl Bildt:  They backed down on that one.  And I think they would have difficulty in the Kremlin trying to explain that that was a big gain for them. It was a loss for them.  It was loss for everyone involved, by the way, but primarily for Russia.  Then I think is worth noting that this attempt he made to sort of change the constitution so that he could stand for a further eight.. whatever.. it backfired slightly. If you look at the opinion polls, public opinion is sort of 50/50 – fairly split on that. That's significantly less support than he would have thought I think it has been noticeable that Putin has been fairly absent during this particular crisis, delegating to Sobyanin in Moscow and to some others. So the Kremlin doesn't feel that well.  


Kurt Volker:  What do you think is going on with him being less visible?


Carl Bildt:  It might well be that he finds it convenient to delegate responsibility for this to the regional authorities.  Because he has a point in a sense, that, much like in Sweden, the problem is in Stockholm, not up north.  The problem is in Moscow, not necessarily that big in Siberia.  So regional responsibility might make sense.  It might be also stepping back, evading responsibility, and seeing what happens. 


Kurt Volker:  There does seem to have been a pattern of wanting to blame people for problems and take credit for wins – and every leader does that.  


Carl Bildt But on foreign policy, as you point out, not very much happening. The ceasefire in Idlib is holding.  So you keep Assad under control for the time being. See how long that lasts. We had a small prisoner exchange in Donbass yesterday.  But nothing else that seems to be moving on that particular front. So it's a fairly passive attitude from the Russians now.  


Kurt Volker:  Yeah, I would agree. I was following some of the stuff with Ukraine. The most important thing for them, I think, is passing the banking legislation which will free up the IMF funding. They've also had a pretty significant outbreak of coronavirus. They shut down everything in Kyiv. They're now onto Orthodox Easter. They're telling people not to go to churches, which I think is the right call for this Easter. Unlike in Georgia, where the clergy is telling people go to church.  The government is not.   


Some clergy did that in Kyiv as well – at the Lavra, you know the place.  It is of the Moscow Patriarchate, by the way. They told people to go to church and hug each other. And they've had a significant outbreak of coronaviru

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