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The diplomacy of business

January 01, 2016 01:17 am | Updated September 22, 2016 08:55 pm IST

The brouhaha over a news report that Indian businessman Sajjan Jindal may have acted as an intermediary between the Prime Ministers of India and Pakistan, Narendra Modi and Nawaz Sharif, in the context of Mr. Modi’s visit to Pakistan on December 25, took an amusing turn with a Congress Party spokesperson, who ought to have known better as a former Union Minister handling commerce, industry and even external affairs, claiming that the Prime Minister seemed to value business interest above national interest. Quite apart from the question whether domestic business interests ought not to be regarded as national interest by the government — more on that later — the spuriousness of this protest derives from the fact that there is nothing new in business leaders acting as intermediaries between heads of government.

Businessmen as intermediaries

The link between the business of diplomacy and the diplomacy of business is as old as the link between trade and flag. More recent diplomatic history is replete with examples of businessmen building bridges between leaders of adversarial nations. Be it David Rockefeller carrying messages between the U.S. government and Chinese Premier Zhou Enlai, or German and Russian businessmen trying to narrow differences between Vladimir Putin and Angela Merkel, business has helped oil the wheels of diplomacy, just as diplomacy seeks to oil those of commerce.

To be sure, individual business interest is not always the only motive for business involvement in diplomacy. Such informal outreach has value for politicians in power because of its deniability. Businessmen know how to keep secrets and so are often better non-official interlocutors than other professionals. Which is one reason why the most effective way in which business can promote diplomacy would be when it is below the radar. Indeed, Mr. Jindal may have erred by tweeting his participation in the Sharif family wedding celebrations weeks after an Indian journalist, Barkha Dutt, wrote about his alleged role in setting up an earlier meeting between the South Asian leaders. Discretion ought to have been the better part of valour.

The Indian diplomatic and political community has, of course, always been uncomfortable dealing with the delicate relationship between government and business for a variety of reasons, ranging from the fear of those in government being accused of granting favours to business for a price, to concerns about protocol and official secrecy.

Quite apart from the fact that a large part of diplomacy has always been about promoting national business interests — “trade follows the flag” — in the modern era of globalisation, national interest has often been promoted by business — “flag follows trade”.

My favourite example of the latter phenomenon is that of the role Hyundai played in getting South Korean nationals out of Kuwait in 1990, when Saddam Hussein’s forces invaded that country. A couple of hundred Korean nationals were holed up in the South Korean embassy in Kuwait and had to be transported to the airport to be flown out on a couple of Korean airliners waiting on the tarmac. The Kuwaiti government could not assure their security. A Hyundai executive decided that everyone would be transported on buses flying the company flag, confident that invading Iraqi soldiers would not fire at a bus sporting a Hyundai company flag. They made it. A company flag was safer than a national one, under the circumstances.

Western practice, Indian inhibition

There are two very different kinds of role that business can play in the cause of diplomacy. It can be purely altruistic and expect no monetary reward in return, but hope to empower its corporate image and brand equity; or, it can seek pecuniary benefit. Neither is illegitimate. Heads of government do feel it is sometimes their duty to help their national firms.

Much was made in India in 2006 during the visit of French President Jacques Chirac about whether or not Prime Minister Manmohan Singh had taken up the issue of official French reticence to Indian businessman Ratan Tata’s attempt to buy the steel company Corus. While some of Dr. Singh’s advisers felt it would be wrong for the government to express a view on the matter, he had no inhibition letting the media know that he did in fact raise the matter with Mr. Chirac.

Western leaders rarely feel inhibited promoting the interests of their businesses. For example, at a luncheon hosted by the Prime Minister of Finland for the visiting Indian Prime Minister in October 2006, the Finnish guest seated to the immediate right of the host was none other than the president and CEO of the Finnish company, Nokia. Through most of the luncheon, the conversation across the table was between Nokia’s chief and the Indian Prime Minister.

Apart from individual businessmen playing their part in promoting bilateral relations, business associations have come to play an increasingly important role in foreign affairs. Impressed by the role that the World Economic Forum has been able to play as a facilitator of business-government contact through its annual Davos Forum in Switzerland, the Chinese launched their Boao Forum for Asia. Closer home, business associations like the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII) have hosted events at which leaders of business and government interact, both formally and informally.

Successive governments have used individual businessmen and business lobbies to promote Indian national interest around the world. During the debate in the United States Congress on the U.S.-India civil nuclear energy agreement, several business leaders and Non-Resident Indian businesspersons in the U.S. actively lobbied American Congressmen and women. In countries as diverse as China, Russia and Japan, business leaders have become an active constituency who woo and get wooed by foreign governments.

India’s point men abroad

Part of the reason why public opinion is often suspicious of such intimacy between business and government is because of the concern with cronyism and corruption. There is that risk at all times. This is at least one reason why politicians in office always deny any such contact, and politicians out of office are critical of such contact. However, not all such contact is suspect.

Going beyond the role of diplomatic facilitators, many Indian business leaders have emerged as de facto “national ambassadors” given their growing global footprint and the access they enjoy in foreign capitals. Some Indian business leaders find it easier to meet heads of government in countries where the Indian ambassador has to often wait longer to secure an audience.

An interesting consequence of this role of globalised business leaders is that large firms with a global footprint invest in securing information on geopolitical trends and risks. Indeed, some have even invested in crafting what may be called “corporate foreign policy” based on an independent assessment of developments in countries they are invested in.

Several Western think tanks now offer geopolitical risk consultancy to corporate leaders. This is as yet a nascent discipline in India. Some Indian business leaders have set up their own global advisory groups manned by geopolitical and geo-economic analysts who keep them abreast of economic, political and diplomatic developments in countries of interest to the firm concerned.

So, while the Indian government may deny reports about Mr. Jindal’s role in Mr. Modi’s meetings with Mr. Sharif, there would be nothing new or alarming about such intermediation, if it were true. Of course, really successful business diplomacy is one where a businessman operates below the media radar, not on Twitter. The more a businessman claims proximity to a political leader, the more of a political liability he can become.

If Indian business has a complaint, it is about the attitude of the bureaucracy. While happy to use business influence and outreach in diplomacy, the Indian bureaucracy is notoriously protocol-conscious and would rarely offer official recognition to business leaders. At the Prime Minister’s official banquets in New Delhi’s Hyderabad House, business leaders are seated several places away from the host and his principal guest. A long-standing grouse of business leaders is that while they are invited to travel to foreign capitals to be in attendance when the Prime Minister or other senior ministers travel, the government will never acknowledge that the delegation of business leaders is “accompanying” them. The myth is that they just happen to be around in the right place at the right time!

(Sanjaya Baru is honorary senior fellow, Centre for Policy Research, New Delhi.)

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