Michael Morell is a CBS News senior national security contributor and former acting director of the Central Intelligence Agency.
In this bonus episode of Intelligence Matters, host Michael Morell offers an in-depth analysis of seven potential national security consequences of the COVID-19 pandemic. He describes, among other factors, the possible effects of a prolonged financial crisis, of growing political instability, of escalating conflict in global hotspots, of the threat of a reconstitution of ISIS, and of the consequences of sustained tension in the US-China relationship. He also discusses the role of the U.S. in navigating an expected period of global turbulence.
COVID-19, the disease caused by the virus SARS-COV-2, poses not only significant risks to our public health and to our economy; it also poses substantial risks to our national security. If we do not manage these risks effectively – that is, if we do not marshal the right policy responses – the damage to our national security could turn out to be every bit as severe as the public health and economic consequences of the disease. And, in some cases, those consequences could be longer lasting.
A caveat — this analysis assumes that COVID-19 will be with us for some time – perhaps 18-24 months (which is the current opinion of many medical experts), barring a breakthrough with either a vaccine or an anti-viral. If we get such a breakthrough soon, which is unlikely, these national security issues would be of less concern.
At this point, I see at least seven potential national security consequences of COVID. The last one is the most important. I put it last because it builds on the some of the ones that come before.
(1) A financial crisis in emerging markets
The longer the COVID crisis goes on, the higher the probability of a significant financial/debt/currency crisis in emerging markets (EMs). This is important because with their high growth rates and their high trade dependency, these economies have an oversized influence on the global economy and because much of the money they owe is owed to western governments and western financial institutions.
Going into the COVID crisis, EM economies were not as healthy as they could have been – economic growth was already slowing (largely due to an economic slowdown in China pre-crisis), and they were highly leveraged. What does highly leveraged mean? Lots of debt. Public and private debt in EMs at the end of 2019 was 165-170% of GDP, up from 70% in 2007.
In the initial weeks of the global outbreak of COVID, capital quickly began to flee EMs, as investors looked for safety in dollar-denominated assets. A net $90 billion left EMs in the first quarter of this year, almost all of it in March alone. That is more than double the amount of capital flight in any single quarter of the Great Recession.
At the same time, as the U.S. dollar strengthens, the dollar-denominated debts of EMs require more local currency to service. So, that means the EM debt burden is rising. The IMF has already provided significant funding, some $15 billion, to a number of countries, but all of those have been among the poorest in the world. The money has not gone to EMs.
What is going to happen in EMs? Economic growth there is taking — and will take — a big hit from a COVID-induced domestic economic slowdown in those countries and from the dramatic slowdown in the world economy (look for reduced exports from EMs, less tourism to them, and less remittances to them). In addition, EMs will not be able to deal with the public health aspects of the virus in their own populations, and the vast majority of them have limited fiscal and monetary tools to deal with an economic crisis at home. The result will be that many will not be able to service their debts.
The result will be a line at the IMF and the World Bank as these countries look for bailouts. Who is most at risk? The overlap between three sets: (1) EMs where the virus is raging; (2) EMs with large debt burdens that require external financing; and EMs with the greatest trade dependencies. Combining all these, the countries of most concern to me are Mexico, South Africa, Colombia, Indonesia, Turkey, and Ukraine.
(2) Growing political instability
The longer COVID lasts, the more likely we are to see a surge in political instability around the world. Think Arab Spring-style or a Color Revolution-style movement – just in many more countries and across a greater swath of the globe. In the short-term, the disease is a strong disincentive to popular protests, but as time goes by, politics will become more dangerous for many leaders.
Populations around the globe are already angry – and will become angrier – with the performance of their governments with regard to both their response to the public health crisis and to the economic crisis. Some of these populations will demand change. And, some of that anger could well turn into political violence.
Why does this matter? Because political instability is not healthy for the world economy, not healthy for the eventual economic recovery from the pandemic. In addition, instability can cause the movement of people across borders, it can create ungoverned territory where extremists can take root, and it can potentially significantly undermine our strategic interests. On this last point, think about Jordan looking like Syria or think about political chaos in Pakistan that results in the emergence of an extremist government there – one with nuclear weapons. Both would be significantly damaging to our national security interests.
There are already early signs of such political instability – from developed countries like Italy to less developed ones like the Ukraine, Venezuela, Brazil, Italy, Colombia, and Peru. This list is going to grow in the weeks and months ahead.
(3) A crisis in conflict zones
Conflict zones are areas where war is raging or areas just in the aftermath of war. These areas, from a COVID-19 perspective, are at significant risk.
Many people in these countries are living in refugee camps, living in very close proximity to each other, living in unsanitary conditions, where water, food, and medical care in short supply. The governments or pseudo governments in these areas are simply not able to deal with a health crisis that is at their doorstep. The result will be taking an already existing humanitarian crisis and making it much worse. Many will die, and some will go on the move and will try to cross borders to get to where they believe to be a better place. In a worst-case scenario, one can imagine people being shot as they try to cross borders or getting through borders and increasing the health risk to their new homes.
Which conflict zones deserve the most attention now? It is the overlap between conflict states with an outbreak of the disease and conflict states where migration could put us or our allies and partners at risk. Today, that list would include Iraq, Syria, and Libya, with Europe being the place where refugees would want to go; Afghanistan, with Pakistan being the go-to-place; Somalia, with Kenya the desired destination; and Yemen, with Saudi Arabia or Oman as the place to go.
I would add one more country to this crisis list, although it does not meet the strict definition of a conflict state because it is not at war now and was not at war recently, but it does meet the spirit of the definition – and that is Venezuela, with Colombia the destination for refugees. There are already nearly two million Venezuelan refugees in Colombia.
(4) Reinforcing the already-existing trend to authoritarianism
There are two dynamics at play here. The first is a perception (and the word "perception" is important) that authoritarian governments have been better able to deal with the crisis than have democracies. This perception opens publics to anti-democratic moves by their governments. And, second, anti-democratic leaders will try to take advantage of the crisis to accrue power. They will claim they need power in their hands to protect their populations, but they will have the objective of long-term control in mind.
We are already seeing this play out in Hungary and the Philippines (where both legislatures have granted extraordinary powers to the executive) and in Bolivia and Sri Lanka (where elections have been cancelled). Many more will follow.
One more point here: The perception that authoritarian governments are better able to handle the crisis is a myth created largely by authoritarians. And it is not supported by the facts. One only has to look at how poorly Iran has performed with regard to the virus and at how well New Zealand, South Korea, and Taiwan have done to know that the authoritarians' argument does not hold water.
(5) A boost to ISIS
Before COVID-19, ISIS was reconstituting in Iraq and Syria, both because the pressure on it had been reduced and because of political problems in Iraq that reinforced Sunni concerns about their interests being protected by Baghdad. This has always been a dynamic that had made them more open to working with extremists.
Now, add COVID-19 to the mix, which has reduced the strength of the Iraqi security forces by half (as they social distance and try to keep the virus from spreading through their ranks).
ISIS attacks are up. The latest was in Samarra, just 80 miles north of Baghdad. And the arrest of four ISIS operatives in Germany a few weeks ago suggests the group is beginning to re-establish its western reach.
(6) Iran —the wildcard
Many have asked me whether Iran, Russia, or North Korea might try to take advantage of the COVID crisis.
I am not particularly worried about North Korea because I do not believe Kim Jong Un would order the two things that would put his relationship with President Trump at risk – test a nuclear weapon or test an ICBM. Kim still hopes to use his relationship with the president to get a nuclear deal that is advantageous to the North — a deal where he gives up a little of his strategic weapons program in exchange for significant sanctions relief. I doubt the United States would do that, but I think Kim still thinks it might.
Likewise, I am not too worried about Russia because, while Putin always has eye open for opportunities to strengthen his position or weaken ours and while the Russians are using anti-western COVID-related themes in their propaganda around the world, Putin is becoming more inwardly focused every day, as his COVID-19 cases reach critical mass.
Iran, though, may be a different story. Iran, through its proxies, continues to harass the U.S. presence in Iraq, and as COVID has taken hold, Iran is now back to harassing shipping in the Persian Gulf. It has also taken other provocative steps, such as launching a "military" satellite, clearly designed to send a message that they are making progress on the development of an ICBM.
Iran may have multiple objectives here: First, to deepen the divide between the U.S. and Europe over their respective policies toward Iran; it is interesting that our allies in Europe have not criticized Iran for its recent activities; second, to unify a population at home that is restive and unhappy with the government; and third, possibly, to convince us to leave Iraq once and for all, through pressure on our presence there at a time when we are so inwardly focused.
Iran's recent behavior risks putting us right back where we were several months ago – with significantly heightened tensions and with a significantly increased risk of war.
(7) A major inflection point in the U.S.-China strategic rivalry
One of China's primary foreign policy objectives is obtaining significant international influence – primarily in East Asia but also globally.
Why does this matter to us? Because to the extent that China obtains this influence, it will use it primarily for China's economic advantage. It will write the rules and standards in its favor; it will pressure other countries to make decisions in its favor – and a good bit of the time this will be to our disadvantage.
So, what is happening as a result of COVID? Beijing sees the current situation as a massive opportunity to take a major step forward in acquiring global influence.
What is Beijing doing? Through old-fashioned diplomacy and international aid and through a growing information operations campaign, the Chinese are portraying themselves as the provider of last resort for global health and contrasting that with the West's inability to play that role. As my recent guest on the show– one of our country's leading China experts said – said, the Chinese are trying to change the narrative from the country where COVID-19 began and where it got its legs in part through early policy mismanagement to the country that has best managed the disease and the country best able to help others.
So, specifically what are the Chinese doing?
On diplomacy: While our leaders are hunkered down, looking inward, China's top leaders are making multiple phone calls a day to foreign leaders, checking in with them and asking them how they are doing, asking if they need anything. Beijing is also proposing a number of initiatives in the G-20 context (none of them particularly serious proposals), trying to appear to be a responsible global leader.
On international aid: China is now providing medical supplies, trained medical personnel, and advice on handling the disease to 120 countries on five continents. Beijing provides such support to any country that asks.
On information/propaganda: China's effort is aggressive, and it encompasses both an overt and a covert piece. This is a significant change for China. Beijing has long been focused on censuring certain information from reaching its population and on messaging particular themes internally. They have now added to that a significant external propaganda program.
The overt message is one of solidarity between China and the world. For example, one of the most popular tweets in Italy in early April was one put out by the Chinese Embassy in Rome. It had a pair of drawings. The first depicted Italian support to China during a devastating Chinese earthquake in 2008; the second was a drawing of Chinese support to Italy today on COVID-19. The text of the tweet said "You may have forgotten but we will remember forever. Now, it is up to us to help you." This is a powerful message, particularly when coupled with the provision of critically needed aid.
The covert messaging employs some of the same tools the Russians used in interfering in the 2016 election. These messages include that the coronavirus is a U.S. biological weapon gone wrong; the United States is not capable of handling the crisis in its own country; and the United States, NATO and the EU are not capable of helping other countries. Another Chinese theme is the one we discussed earlier – authoritarian governments get this right, democracies don't. Chinese messaging has also started to amplify some of Russia's anti-western themes, given Moscow's messaging even wider dissemination.
As Johnson told me on the podcast, all this messaging does not seem aimed at the U.S. population; rather, it seems aimed at third countries.
I think Beijing will take additional steps in the weeks and months ahead to drive home the concept of "China to the rescue." This is most likely to play out in two ways – both on economics.
One would be stimulating demand in China once supply chains start to loosen up there (indeed, this could be one of the major policy outcomes of the coming legislative session that Chinese President Xi Jinping just called). Stimulating demand would be a change to recent Chinese macroeconomic policy, which has been designed to reduce debt, but a stimulus program would make sense, as it would boost not only the Chinese economy but also those of China's main trading partners as well, thereby creating additional diplomatic and messaging opportunities.
And, the second would be playing the role of lender of last resort role to EMs who will be in need of financial assistance, building even more influence with those countries and most likely taking greater control of the IMF and World Bank in the process.
To sum up, the COVID crisis is creating numerous risks on the national security, and the United States is going to have to manage these at the same time as it manages the health and economic crisis at home.