A Conversation with former Swedish Prime Minister Carl Bildt and Ambassador Kurt Volker.
As the world still struggles with the immediate impacts of COVID-19, it is important to think through the longer-term consequences, and how to address them. To gain insights on these longer-term issues, RCW Editor-at-Large and BGR Senior International Advisor Kurt Volker spoke with former Swedish Prime Minister Carl Bildt. Following are key excerpts of their conversation. The full transcript and a video of their conversation is here.
Kurt Volker: So Carl, you have been prime minister, you have been foreign minister, you're a senior European statesman. I 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? Some people are saying, “Sweden is doing this herd immunity thing, and that’s right, because it has kept the economy going.” Others have said, “No… they're going to get higher deaths now, and it's going to be worse.” How do you see it, and how do you see Sweden comparing with the rest of Europe?
Carl Bildt: It remains to be seen, of course. We are fairly closed down, 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.
As compared with other European countries? The only thing you can measure is deaths. We are significantly worse than 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. So it is difficult to draw any sort of conclusion.
Kurt Volker: You were talking a little bit ago about restarting Volvo car production, but nobody is buying cars, and there is already three months’ stock. When you look at restarting the economy, what are the challenges and what do you think will work?
Carl Bildt: There is a challenge in terms of industrial production of that sort. The automotive industry is big in Europe, notably in Germany, Sweden, and some Central European countries. Aerospace is another sector. We can restart production, but where is the demand? Who is going to buy the cars? Who is going to buy the aircraft? The economic downturn will perhaps be more prolonged than most people assume.
Kurt Volker: There is one area where Sweden and Germany are good examples: They've kept people on payrolls. The government is subsidizing the businesses and the businesses are paying the people. We've tried to do the same thing through Small Business Administration loans, which are forgiven if they are used to keep people on payroll, but it hasn't had the same effect. Claims for unemployment have spiked in the U.S. -- over 20 million people -- whereas in Germany, they are still citing 5 percent unemployment.
Kurt Volker: Major crises like this often reinforce and accelerate pre-existing trends. So if we were already heading toward nationalism, populism, greater immigration controls, more national champions in industry, more trade wars … will these now accelerate?
Carl Bildt: I agree with that. I think that is where we are heading short-term. But my hope is that when people start to look at the consequences, they will step back. We have a virus that is global. We can't fight a global challenge if we don't have a global answer
Kurt Volker: Is China going to be part of a global solution? You have a situation today where China is blocking people from doing research about the coronavirus, and how it started.
Carl Bildt: China would like to be part of a global solution, but its credibility has been dented. We treat it with more suspicion. But it’s the second-biggest economy in the world. You can’t disregard it.
Kurt Volker: I see differing instinctive reactions from a Western, democratic, law-abiding mindset, versus a control-oriented, authoritarian, and regional-power mindset. Once we get out of this and restart our economies, are we back then to the Nine-Dash-Line in the South China Sea and Iranian nuclear weapons and so on?
Carl Bildt: We 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.
Kurt Volker: 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, the U.N. and NATO, what steps should we be designing now to build the right post-coronavirus world?
Carl Bildt: Well, that's fairly ambitious. 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, but to reform it. That could also be a way to restore some element of multilateralism at a time, when it is under threat. That does not sort out the Nine-Dash-Line, but it does something.
Kurt Volker: One interesting thing is the effect of the coronavirus on political processes.
We’re going through a presidential election campaign which seems frozen because no one can pay attention to it. Joe Biden has locked up the nomination, but the convention that nominates him won't be for four months. What will happen if this virus has a second wave? Will people go to the polls in person? Do you use mail in ballots more extensively? Is that fair? Do the courts weigh in?And in the meantime, President Trump is on television every day talking about this, and it has boosted his popularity.
Carl Bildt: Yeah, that's what we're seeing across Europe. Every single leader we have in Europe, whether impressive or somewhat less impressive, has been gaining stature. 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 the populists, the xenophobics, they’re declining.
Kurt Volker: Is it too much to say that the measures that people are taking to fight the virus are the measures that those nationalists wanted to take to fight immigration anyway?
Carl Bildt: Could well be in certain cases. But now people understand that there are quite a number of other issues. And they are less confident in those particular parties being competent to handle a crisis situation like this.
Kurt Volker: We have had a very fraught U.S.-EU relationship for the last several years, including the risk of a trade war. What would you recommend to the U.S. and the EU?
Carl Bildt: Well first, to my knowledge, there hasn't been a single high-level U.S. or White House-Brussels contact during this entire crisis. Indirectly, in the G-20 and G-7, but apart from that, the transatlantic dialogue is non-existent.
Kurt Volker: There have been NATO foreign ministers and NATO defense ministers...
Carl Bildt: True, in multilateral settings of that sort. But the telephone call between the White House and London, Berlin, Paris hasn’t happened. Or Brussels. And that's pretty remarkable.
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.
Kurt Volker: About Russia: Putin, of course, was trying to extend his mandate to 2036. It was going to go through, and probably still will, but he has delayed that. Coronavirus has had a bigger impact in Russia than publicly acknowledged. You hear anecdotes that pneumonia deaths are way up, but not coronavirus. Yet you haven't seen any change in Russia's positioning on Ukraine or Georgia or the Middle East, Iran and so forth. So it looks as though Russia is just taking the blow, but will not really change.
Carl Bildt: 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, but primarily for Russia. This attempt he made to change the constitution backfired slightly. Opinion polls are 50/50 – fairly split. That's significantly less support than he would have thought. Putin has also 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 be that he finds it convenient to delegate responsibility to regional authorities. 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. But on foreign policy, not very much happening.
Kurt Volker: Turning to Africa and the developing world, we haven't seen much outbreak of coronavirus and impact there. Do you think that's coming? Or do you think that because of a more youthful population, because of the climate, because the developed countries are somehow more vulnerable, that we just may not see it there?
Carl Bildt: We might not even see it when it happens. They have fairly rudimentary health systems in some countries. In Uganda, they have more members of the government than they have intensive care beds at the hospitals. If you take a country like Ethiopia or Nigeria we might have a big thing happening before we detect it. Egypt is a place worth watching, 100 million people. They have been reporting very low numbers, but they have quite a number of high-level people that have disappeared, for pneumonia or whatever. And that's an indication, of course, that it is far more widespread what they are prepared to acknowledge.
Kurt Volker: One of the things in the U.S. news these days is the origin of the virus. There seems to be an intelligence-community theory that the virus may have been under research in Wuhan, in a virology laboratory, and then somehow leaked out into the general population. Do you have any insight into any of this?
Carl Bildt: None. The experts that I've read are saying that what they see of the details of the virus doesn’t look like that.
Kurt Volker: There are two different things. One is whether the virus was engineered. Everything I've seen says it is not an engineered virus. It’s a natural virus. A different question is whether it was naturally introduced to the population or whether it was somehow in a laboratory being researched. That is very hard to know. The fact that China is clamping down on research into origins is causing this speculation about what might be.
Carl Bildt: Those are things that will have to be cleared up one way or the other.
Kurt Volker: It will be a long time before we return to having a really dynamic and connected global economy. But I also don't see that there's any other way to go. We just have to be patient and persistent about it. Carl, thank you so much!
Kurt Volker was U.S. Ambassador to NATO in 2008-2009, and U.S. Special Representative for Ukraine Negotiations in 2017-2019. He is Editor-at-Large at Real Clear World, and co-Chairs BGR Group’s Advisory Board, where he helps BGR clients develop and execute strategies to achieve success in key foreign markets, and to navigate the complex business, government, think tank, media and public policy environment in Washington.
