Corporate diplomacy in Africa: austerity and downturn

The effects of the current era of budget austerity on the capacity of state foreign diplomatic services raises interesting questions and dilemmas about corporate diplomacy.

I here mean firms, mainly in the extractive industries, engaging directly with their host governments on major public policy, reform and governance issues -- traditionally the remit of bilateral diplomacy or aid bodies -- and acting (or being perceived) as 'ambassadors' for their home country.*

The issues are ones both for public policymakers and for corporate strategists.

They are by no means new issues, and the idea (or rather fact) of major corporations acting to some extent as foreign policy organs of their home state attracts controversy about the notion of 'private empire' or improper influence, and questions about the proper extent of private authority. It is a topic I covered extensively in doctoral work, but is also closer to the heart: I was born in a country (Zimbabwe) established by a private crown-chartered shareholder company in the late 19th century...

So while the issues are not new, two events in the last week in countries I follow prompted this post:

* Zambia Local mineworkers caused the death of a Chinese supervisor during minimum wage disputes. If only in symbolic terms, this is a significant development in a country where the role of Chinese firms and businesspeople has created diplomatic difficulties for Beijing, with Zambia being seen as something of a 'test case' on the 'China in Africa' debate.

* The Sudans Last week too, news of the intended resumption of South Sudan's oil production (a key sticking point in tense relations with Sudan) came a day after Hillary Clinton's inaugural visit there.

The latter is interesting because while public diplomacy (Clinton, Thabo Mbeki and others) might appear to have broken the oil deadlock, it is equally plausible that this resulted also from pressure from firms invested or interested in the sector. Now in the Sudans these are principally Chinese firms, and distinguishing between public and private -- sometimes hard enough, historically, with major global energy firms -- is often difficult if not untenable in such cases.

(Angola's state-owned oil conglomerate Sonangol is a prime, emerging and African example of the seamless and unsurprising fusion of foreign policy with commercial aims).

However, the Zambia example involved a mine privately run by Chinese nationals. Beijing is conscious that many Africans will attribute the conduct of expatriate Chinese nationals to some grand design, whereas it can by no means be assumed that Beijing has interest in or influence or control over everything Chinese nationals do or dig up in Africa. Still, the mine incident shows how -- for better or worse -- private actors' conduct can affect public diplomatic relations.

Of course many former actual ambassadors and foreign service officials work in government relations for multinationals (part of the blur in this area, probably inevitable, and not necessarily problematic) -- but many corporate employees act de facto as ambassadors either by design or by locals attributing them that status.

For many Western countries, the issue arises sharply in light of the effects of current austerity regimes on the capacity of foreign services. My colleague Tom Wales last week published an interesting brief on how, as their global footprint has broadened, Canadian mining industry executives have increasingly been playing the role of de facto Canadian ambassadors in developing countries (eg technical and governance advice) even as austerity is shrinking Canada's formal presence in many of these countries.

Here one potential 'for better' upside to austerity's effects on public diplomatic capacity is that governments such as Canada's can harness the strengths, resources and influence of major firms in support of objectives from conflict prevention to building governance capacity in host developing countries.

Arguably, it makes sense for public policymakers to look for ways both to 'civilise' the conduct abroad of firms associated with the country, and to encourage firms to contribute to foreign policy objectives such as building local regulatory capacity in resource-rich poorer countries.

However, aside from the public policy risks involved in any such 'outsourcing' are the risks for firms: twin events involving fatalities in Guinea this week are revealing:

* In the north-east, locals protested in effect against the operations of a foreign-owned mine, saying it had attracted criminality to the area.
* In the south-east, locals protested in effect in favour of a foreign-owned mine, albeit aggrieved that its opening date had been postponed and hoped-for jobs not realised.

As we probably now enter a downturn in global commodities demand, the latter situation is more likely to be common and may test firms' diplomatic capacities, especially where they lack formal diplomatic assistance, just as provision of social services by firms can create expectations that prove difficult to manage.

Jo

* I would partly distinguish 'corporate diplomacy' from 'corporate foreign policy' -- though clearly related: see previous post here.

I also do not mean 'private diplomacy' (ripe for its own blog post, the now-prevalent role of private individuals and outfits, such as the Centre for Humanitarian Dialogue in Geneva, in attempting to supplement governments, the UN and other bodies by engaging in conflict prevention / resolution mediation and influence, and other forms of so-called third track diplomacy. For one slightly out of date mapping of these bodies, see here).

PS - Days after this post my good friend Dr Jabin Jacob wrote this on whether Indian and Chinese oil firms might lead (and moderate) the way and ways of their governments: here.