Weakened resilience with preexisting conditions

As elsewhere, the pandemic has left its mark on the region of Asia and Oceania. Its impact, however, has varied widely across the region. Whereas highly advanced transformation countries. such as South Korea and Taiwan, as well as authoritarian governments of China, Singapore and Vietnam have so far emerged from the crisis relatively unscathed, residents of the region’s populist-governed states are suffering. South Asian countries - Bangladesh, India and Nepal – are at a particularly high risk of pandemic-induced poverty.

Asia and Oceania was the first region in the world to be affected by the coronavirus pandemic, which, as elsewhere, accelerated negative trends that were already underway. More and more democracies are losing ground in terms of the democratic quality of their political institutions and processes, while autocracies are hardening. The coronavirus crisis has also provided governments across the region with new opportunities and justifications for restricting civil liberties, political rights and accountability mechanisms. In contrast, Taiwan, South Korea, Bhutan and Timor-Leste serve as examples of democratic resilience.

The crisis is having a particularly severe impact on economies and societies in South Asia. Estimates published by the International Labour Organization (ILO) before the 2021 wave of infections suggest that the pandemic could push up to 400 million Indians back into poverty. The Philippines and Thailand also saw their economies slump, while China, Taiwan and Vietnam managed to achieve modest growth. Economic recovery, which already began in 2020, is particularly strong in East Asia.

It is worth noting that there was only a weak correlation between governance performance and a country’s classification as a democracy or autocracy during the first year of the pandemic. Democratic governments in Bhutan, South Korea and Taiwan, as well as the autocratic governments in China (after a delayed start), Singapore and Vietnam demonstrated rather good governance. In contrast, the crisis management and overall governance of populist governments in India, Indonesia, Pakistan, the Philippines and Sri Lanka proved rather ineffectual.

Political transformation

Democracies with weakened immune systems

The populists’ abysmal record is also being driven by the dramatic erosion of democratic standards, which began long before the pandemic and is inextricably linked to populist leaders’ claims to power. Prime Minister Narendra Modi in India, President Rodrigo Duterte in the Philippines and Mahinda and Gotabaya Rajapaksa in Sri Lanka all have a similar autocratic style of leadership. Their approach is geared toward personalizing executive powers, eliminating judicial independence and legislative oversight, and marginalizing the political opposition and civil society. Duterte, whose term as president is limited, though his daughter is slated to run as vice president in the 2022 elections, is a prototypical advocate of “punitive populism”. His law-and-order policies are reflected in a securitized, anti-science management of the COVID-19 pandemic, though he does not vocally promote ethnonationalism like his fellow populists in India and Sri Lanka. The decline in Malaysia’s democratization score (–0.55 points) is primarily a reflection of the coalition turmoil, ethnic polarization and reconfiguration of the political system after the United Malays National Organization (UMNO), which had ruled the country for more than 60 years, was voted out of office in 2018.

Illiberal and anti-democratic forces in political systems with “preexisting conditions,” whose democratic “immune systems” had already been weakened before the crisis by polarization, populism and autocratization, have seized the opportunity to dismantle democratic structures. This is reflected in the BTI indicators associated with political participation, the rule of law and the performance of democratic institutions. In Sri Lanka (-0.40), the authorities arrested journalists and civil society activists for allegedly spreading fake news related to COVID-19, although the country’s Human Rights Commission declared this to be unconstitutional. In the Philippines (-0.35), the Heal as One Act criminalizes the spread of fake news, and Congress passed a vaguely worded anti-terrorism bill in July 2020. In India (- 0.95), the central government enacted regulations giving authorities additional powers to ban political and other public gatherings as well as to restrict citizens’ rights to publish information on COVID-19.

Electronic surveillance technologies have also been introduced or enhanced in more liberal democracies, such as South Korea and Taiwan. Nonetheless, norms, institutions and an alert public opinion have had a corrective effect in these countries. On the other hand, hard-line autocracies, such as China and Vietnam, have been able to bolster their surveillance capabilities and control structures without hindrance.

Nonetheless, there are also some positive developments regarding the quality of elections and the slight increase recorded in the regional average score for social capital. For example, Thailand held multiparty elections in March 2019, which ended direct military rule. While the monarchy and the military remain the dominant forces, the wave of protests led by university and high school students in late 2020 demonstrate the still existing potential for diagonal accountability.

Economic transformation

Widening economic gap between China and India

Not surprisingly, the nationwide shutdowns and lockdowns had far-reaching economic consequences. The region’s average economic transformation score has reached the lowest level recorded by the BTI in the last 20 years. Economic performance (-1.09 points) was the most affected, but monetary and fiscal stability (-0.23) and the level of socioeconomic development (-0.18) also show significant losses.

A comparison of the region’s two economic heavyweights shows just how large the differences can get at the country level. Although China’s economic growth fell by more than 60% year-on-year in 2020, its economy still grew by 2.3%, according to the Asian Development Bank (ADB). The government reduced taxes, eased access to credit, and increased investment in infrastructure. The total cost of these measures is estimated at $500 billion. The country’s economic recovery also had a lot to do with the fact that, at least according to official reports, China was not hit by another wave of infections after March 2020.

Things look quite different in India. At the onset of the pandemic, economic growth in the subcontinent was already slowing down. In 2020, the country’s GDP declined by 8%. A nationwide lockdown despite a very low incidence was the key factor behind this contraction. Millions of migrant workers were suddenly without income and often had to return to their home villages on foot, sometimes covering distances in excess of hundreds of kilometers. In a country where about 90% of the labor force is informally employed, the government felt compelled to lift its restrictions at a time when infection rates were on the rise. As of July 2021, the number of pandemic-related deaths relative to population size was nearly a hundred times higher in India than in China.

In addition, India’s government faces the daunting challenge of creating at least 1 million jobs per month in order to integrate the country’s growing youth population into the labor market. The Make in India initiative launched by Modi after becoming prime minister in 2014, which aims to simplify production conditions in order to attract investment and create jobs, has yet to prove successful.

Papua New Guinea and Sri Lanka (-0.68 points each) also lost ground across the board. While the main drivers of the negative trends in Laos (-0.50) are monetary and fiscal stability, those in the Philippines (-0.64) are socioeconomic barriers and a lack of environmental standards. In both countries, weak economic performance is another factor behind the negative developments. Here and elsewhere, poverty is spreading, and we see losses in the level of human development. For Bangladesh, estimates suggest that the share of the population living below the national poverty line could double to 40% in the next few years.

Social safety nets is the only indicator showing slight improvement across the region as a whole which is also linked to the pandemic. In April 2020, the royal government of Bhutan established the Druk Gyalpo’s Relief Kidu. In September 2020, the government of Laos adopted the ambitious National Social Protection Strategy (NSPS), which aims to ensure comprehensive access to health insurance and social welfare by 2030. In 2020, Pakistan launched Ehsaas, a social safety nets and poverty alleviation program whose unconditional cash transfers have reportedly reached 15 million families across the country. The island nation of Timor-Leste has disbursed $100 per month to most households since April 2020 and began distributing baskets of goods to those in need in November 2020.

Governance

Populists in power: The worst of all worlds?

The aforementioned social policy responses prove that government action can make a tangible difference, particularly in times of crisis. A government’s steering capability is the most important factor in this regard. The assessments for this BTI criterion show that governments with strengths in prioritization, implementation and adaptive learning have proved quite successful at mitigating the effects of sluggish economic growth. Taiwan was even able to increase its GDP growth. Governments with weak steering capabilities, such as India and the Philippines, have struggled to counteract the fallout of the pandemic.

There is also a link between the steering capabilities of governments and their ability to contain the spread of the virus (“transmission management”). While being careful about causal claims, we do see a positive correlation here. Whereas Singapore was particularly successful at containing the virus, Cambodia did an exceptionally poor job of it.

As a rule, a country’s democracy status and its government’s ability to govern are correlated – in other words, the more democratic, the better. However, three autocracies stand out as exceptions in this regard. China, Singapore and Vietnam each have high to very high capacities to govern and to steer their societies, though the level of democracy is low in each of them. Despite some shortcomings, such as the Chinese government’s delayed response during the early phase of the pandemic or Singapore’s neglect of the risk of local infection among foreign workers, the governments of these countries demonstrated effective pandemic management through January 2021. They are also willing and able to deliver public goods, such as education, health care, economic development and public safety to large segments of their populations.

However, such policies are also driven by the necessity to preserve the existing political order, which involves more (China, Vietnam) or less (Singapore) coercion to enforce social compliance. All three countries demonstrate the deficiencies that are characteristic of autocracies in the areas of consensus-building and – with the exception of Singapore – the efficient use of resources, anti-corruption efforts and policy coordination.

At the same time, the pandemic has made it abundantly clear that a democracy ruled by populists perhaps the worst of all possible worlds. In India, Indonesia, the Philippines and Sri Lanka, where a characteristic feature of politics involves demonstrating an aversion to expertise and “established” authorities, leaders in these countries have prioritized their own political calculus over public health. This has resulted in incoherent policies that were formulated without the relevant input from health experts and stakeholders, implemented hastily or with delays, fraught with contradictions in their communication, and dubious in terms of their impact. Moreover, in these countries, as in Malaysia, there is a particularly worrisome tendency to instrumentalize the crisis in order to push through policies that have been on the agenda for some time but had been blocked due to pushback from institutional or social forces. This is how one, if not the distinctive advantage of democratic governance – the ability to build consensus – is lost.

Outlook

Between failure and fortitude

The coronavirus pandemic will continue to dominate politics and economies in Asia and Oceania, if only as a result of more infectious virus variants and the sluggish vaccination campaign observed in many places through the summer of 2021. There are also other transformative setbacks that took place in 2021 but have little to do with the pandemic. For example, on February 1, 2021, the military in Myanmar staged a coup d’état against the elected government of State Counselor Aung San Suu Kyi. The collapse of the military-led liberalization that had been launched in 2011 comes at high humanitarian costs. And in August 2021, the Taliban took control of Afghanistan, which has resulted in a collapse of Western aid and will most likely lead to a humanitarian disaster.

In consolidating democracies such as South Korea and Taiwan, where pandemic policy relies heavily on voluntary compliance, transparent communication and social responsiveness, the role of civil society actors as a corrective to state action seems to be on the rise. But political and economic “preexisting conditions” have severely weakened other societies. In Bangladesh, India and Nepal, in particular, there are signs of a massive increase in poverty.

Nevertheless, the pandemic has also been a stressor for autocratic systems, although there has so far been little evidence that their leaders’ claim to power is seriously threatened by it. In fact, autocracies seem to have adapted to the pandemic in a way that, at least in the short term, supports, if not strengthens, their legitimacy. New technologies are opening up new monitoring opportunities for countries such as China and Pakistan. A process of “securitization,” in which the state frames specific issues in terms of an existential threat, can be observed in the Philippines and Sri Lanka, where the role of the military has increased significantly.