Connect with us

Economy

Historical Origins of the French School of Economic Warfare

Published

on

[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] H [/yt_dropcap]istorically speaking, the promotion of intelligence culture in France has been required to clash with both a problematical and controversial linguistic orientation and a much deeper and more influential attitude: France’s inability or unwillingness to reason in terms of power, and therefore take a position on economic warfare one way or another.

This reticence may be explained by the fact that on more than one occasion in its relatively recent past France has had to ally with its enemy, in this way stripping the word “patriotism” of its meaning. Every time a group committed to the conquest of power allied with the enemy, the French lost faith in patriotic ideals. This happened with the succession of Louis XVIII after Napoleon in 1815, with the support given to Bismarck against the Commune Uprising in 1870, and with the collaboration with Nazi Germany during the Second World War. Also the Colonial Wars and the Cold War contributed to creating a certain disillusionment with patriotism, while the concept of power came to be considered purely as an act of domination at the same time. In any case, not betraying the ideals that lie at the basis of the history of the French Republic – from those underlying the French Revolution of 1789 to those of the Nazi-Fascist Resistance of 1945 (these latter inspired by an economic system of Keynesian inspiration), and not forgetting the spirit and dedication of men who, like General De Gaulle, interpreted national power as autonomy while providing prospects for the economy as well – means empowering a nation that is both strategic and a partner to the nation’s most vital parts at the same time. This is what the experts and supporters of business intelligence in France have been trying to accomplish for the last forty years.

The ‘70s: reticence and defensive action

It is not easy to determine the real date of birth of the tradition of French economic warfare. Even if today it might be ranked among the most prominent on the European continent, in fact, the negative connotations attributed by French culture to intelligence operations, which are unjustly associated with spying, the violation of privacy, and deceitful campaigns, conditioned it and limited its development for a long time. The comparison with the public information policies – defined as a “body of laws, regulations, directives, interpretations and sentences of law that direct and orient the information lifecycle, [which] includes the planning and creation, production, collection, distribution, and disclosure of information” – enacted by the United States government after the Second World War undoubtedly provided an important incentive for French public authorities, which towards the end of the ‘70s began to understand the need to fill the gap that risked seriously penalizing France in terms of national (political) independence and strategic autonomy (in the economic field). It would take more than a decade, however, in order for the imperative of competitiveness in global markets, necessary at corporate level, to be fully comprehended also by the public administration and to take form in an evident expansion of the range of action of government intervention. If up until that moment the management of information throughout its entire lifecycle had been finalized exclusively for the internal purposes of the various institutions, starting from the end of the ‘80s it began assuming central importance in defining the government’s economic policy and creating a fundamental “alliance” between the public and private sectors.

The first to realize the importance of the advantage held by the United States in the management of information for social and economic development, around the end of the 70s, were Serge Cacaly, on one hand, and Simon Nora and Alain Minc, on the other. The former, an information and communication science researcher, published two studies in 1977. One, emblematically entitled Le révolution documentaire aux États-Unis, emphasized the importance of recognizing information as the driving force behind progress as closely linked to extraordinary developments in computer science and its increasing advances in qualitatively and quantitatively analyzing documents on the other side of the Atlantic. Information, even if still masked by the skirmishes of the Cold War that preceded military and space research, was becoming the one most important sector on which world supremacy could be based.

In the wake of these studies, in 1978 the high functionary Nora and the younger political advisor Minc presented the President of the French Republic with the report entitled L’informatisation de la société, which for the first time, together with the acknowledgement of the United States’ ambition for world supremacy in science and technology based on information management, revealed the French fear of such domination and its potential impact on society and the control of power. It is symptomatic that this attitude transpires from a document of political orientation and here lies the origin of the French government action to stimulate the activities of collecting, processing, and distributing information. Nora and Minc, in fact, repeatedly emphasized the government’s role as the holder of a power of influence derived directly from the social contract and national unity based on guarantees, a power that must be applied also to the new technologies and the control of the same. Public intervention in the information field is therefore not only fundamental but even necessary for society in order to avoid the risk of domination concretely posed by US supremacy in the field of information. The words that the two authors used to express this concept are strong indeed: “[…] it is the entire future of the French-speaking world and the identity of France that is being placed at risk” . On the other hand, these considerations were supported by constant reference to real data: the number of computers imported (more than 80% of the entire fleet of French information technology equipment was produced by the USA), but above all the control of the reference databases (seven out of eleven databases controlled by the United States) . This latter element, in particular, is crucially important as databases are essential in economic, technical, scientific, and academic activities, because they are sites of conservation of information that can be accessed only under determined conditions and enable research also from far away. Real power does not come from merely knowing data and information but controlling it, with the possibility to manipulate and decide who else can do this as well. The fact that such power was left nearly exclusively in the hands of foreign powers was therefore deemed a highly alarming loss of sovereignty by Nora and Minc. Hence, these two authors proposed that the government take action and develop a vigorous policy in supporting research, forming a national industry in the information field, and developing telecommunications infrastructure, stimulating these activities from both the juridical and financial points of view.

Analyzing the government’s real situation in the moment that these proposals were made, or in other words, which public institutions were effectively involved in managing information, a fairly varied panorama is revealed. First of all, we see the INSEE (National Statistics and Economic Studies Institute), the nearly exclusive producer and distributor of statistical and economic data and the direct heir to a concept that stood at the origin of the modern state itself, when back in the 17th century, “statistics”, in other words “whatever regards the state”, began supplying an indispensible tool for the exercise of government. As regards instead the management of information on the international situation, every single government department handles the task by itself: the Defense Ministry’s Evaluation and Forecast Center, the Foreign Affairs Ministry’s Analysis and Forecast Center, the Ministry of Industry’s Observatory on Industrial Strategy, the General Commission on the Plan, International Information and Forecast Study Center, and the Ministry of the Economy’s Forecast Directorate. In any case, this picture only confirms what had already been confirmed above: a similar structure was destined exclusively to responding to the needs for information and analysis inside the administration. The comparison with the United States, where the distribution of the information collected by public and private organisms working in the sector in favor of the nation’s economic operators was a well-consolidated practice instead, and economic crises such as the oil crisis of the ‘70s would emphasize the need for imperative of competitiveness that the French government would no longer be able to ignore and that would bring it to modify its structures and methods of action in the information field. Information policy, which was still uncertain , consisted of a system that tended to privilege defensive actions more often than offensive actions, even if performed in the logic of national independence and strategic autonomy. The imperative need for competitiveness clearly revealed all the limits of an approach such as this one.

The ‘80s: the first change

The first attempts at a change of direction in government action were made in the ’80s in the system of aids given to companies: instead of interventions that privileged direct subsidies, a system of indirect aid based more on supporting innovation was adopted. Furthermore, whereas previously government aid was concentrated on the larger industrial groups, the new system was characterized by the shifting of importance to small-and-medium sized companies. These new methods of government intervention associated with the introduction in France of new business strategy tools destined to anticipate the changes in the environments finally succeeded in launching the diffusion of information culture, particularly in regard to scientific and technical information, which in the time of a decade would lead to the effective adoption of a business intelligence policy.

The French Ministry’s Evaluation and Forecast Center may be considered the party most responsible for this new partnership between the government and the nation’s businesses and the important stimulus given to information culture. Envisioned at the start of the 80s by the current Minister of Technology and Research on the model of the above-mentioned Defense Ministry’s Evaluation and Forecast Center and initially directed by Thierry Gaudin and Marcel Bayen, the CPE was dedicated to evaluating research, industrial strategies, and forecasts but above all to so-called “technological monitoring”. This term was rendered popular by Jacques Morin, a technology transfer consultant, to indicate a company function in support of real business activities that represented “[…] the testimony of the determination to supervise the technological business environment for strategic purposes and to identify the threats which – if intelligently anticipated – might even be transformed into opportunities for innovation. It also implies that an internal system of appropriate information exists for the exploitation of the results” .

Comparison with the United States, but also with Japan, where the culture of adapting company behavior to changes imposed from the outside is an integral part of the managerial mentality, continued to be in France’s disfavor. The nation’s delay was once again made clear, especially in regard to its scarce use of databases, which were considered merely as archives and not as active instruments of the monitoring function. Hope arose for the assignment of such function to highly specialized managers capable of developing a strategy, at the very least, as well as substantial information science development in the field of documentation. The environmental monitoring approach had already been anticipated by Humbert Lesca . It consisted in a systematic approach to the company’s openness to the regional, national, and international environment with the explicit intention, from the organization’s bottom to its top, of not being caught off guard by change and evolving along with it or even before it in the implementation of a structured device finalized to receiving the signals coming from outside. The monitoring, according to the definition provided by Lesca, would therefore be a “system by means of which the company scrutinizes its own ‘external’ surroundings and anticipates the changes, as far as possible, [transforming] the raw information it has on its environment into a form of business intelligence serving its own future.”

The Evaluation and Forecast Center was therefore actively committed to monitoring activity at national level and gathering information on the international scene regarding questions of scientific and technical interest, technological innovation, and the multinationals. The beneficiaries of this activity were, above all, a number of sectors deemed strategic, such as materials development, information technology, and biotechnologies. In addition to the development of these skills by itself and directly at the service of the Ministry of Research and Technology, this Center was also involved in distributing its studies and analyses in the private sector, especially to the advantage of consulting companies and other public actors. Its objective was to achieve independence, once again, from the US power that appeared threatening also in the context of strategic studies and monitoring operations, thanks to the spread and activities of its own consultancy companies. The institution halfway through the ’80s of the Aditech Association, the nerve center in the development of business intelligence in France, was the work of the Center’s directors for the purpose of facilitating this activity of external diffusion and the signing of contracts with companies in the private sector.

The famous Study No. 100 written by two experts, Bernard Nadoulek and Christian Harbulot, who made important contributions to the business intelligence in France, was published as part of Aditech research activity. The former was a professor of the French Karate Federation who had begun teaching martial arts at Club Montagne Sainte Geneviève in 1971, in addition to being acclaimed for publishing articles and books about the struggle against power and strategy (a subject on which he became a consultant in 1986), such as Du karaté à l’autonomie politique or Désobéissance civile et luttes autonomes. The latter was a close associate of his, a former Maoist militant and member of the same karate club with whom he signed articles entitled Le Conflit gradué and Affrontements de théâtre et verrou panaméricain. In particular, Christian Harbulot, who would fill the role of aggregating the three prevailing models of intelligence at the time – military, diplomatic, and police – establishing the unity of economic patriotism and society’s revolution through the notion of economic warfare for which business intelligence would serve as a vector. On the other hand, the term “economic warfare” is an expression that was often and willingly used also outside the restricted specialized field of business intelligence in those years, particularly by politicians. One example, Lettre à tous les français written by President François Mitterrand in 1988, even contains a section entitled “Le guerre économique mondiale” in which he emphasized the ferocity of competition between companies in the international market.

It is therefore L’intelligence stratégique that marked the real change of pace, at least in intentions, in the context of business intelligence in France, given that the instruments proposed by its two authors referred entirely to military strategy and ideological warfare. A change in terminology was suggested in order for the strategic actions of the companies and the state to be able to finally shift from a defensive position to authentic offensive action thanks to a new approach to competition based on the study of the dynamics of competitive behavior upon which to establish principles of action for company managers. Practically speaking, this study provided a key to interpretation and a functional method for the development of business strategy devised around three matrices directly inspired by combat techniques . The latter were: direct action on the situation and relationships of force, short-term business plan strategy; indirect action on the system, the protagonists, and relations, mid-term strategy that acts on the scenario in which the company seeks partnerships and alliances but also diversification in regard to competitors; taking anticipatory action on the context, on the rules of the game, and on the forces, and long-term strategy that is merely the business plan.

The ‘90s: the definitive consecration

The second half of the ‘80s had already given significant propulsion to the development of business intelligence in France thanks to the re-launching of a national policy in favor of the aforementioned scientific and technical information, which was further increased by the activity of its leading competitor nations: the United States and Japan. It was, however, the radical change of the international scenario , with the fall of communism, the end of the Cold War and the dynamics of the face-off between the two power blocks that had characterized the international – also economic – relations of the past forty years and the consequent dominance of the mechanics of globalization with its questioning of the autonomy and power of the national state, that led to the definitive consecration of business intelligence in France. The Martre Report, drafted by Philippe Baumard, Philippe Clerc and Christian Harbulot, among others, was the milestone. Published in February 1994, the report from the General Commission on the Plan defined business intelligence as follows: “the aggregate of the coordinated actions of research, processing, and distribution of information useful to economic operators for the purpose of capitalizing on the same. These various actions are conducted legally with all the guarantees of protection necessary for the conservation of the nation’s business heritage, in the best conditions of quality, time, and cost. Useful information is deemed that which requires various decision-making levels of in the company and the community for the development and coherent implementation of the strategy and tactics necessary to achieve determined objectives with the purpose of improving their positions in the context of the surrounding competition […]. The notion of business intelligence implies transcending the single actions designated with the terms of documentation, monitoring […], and the defense of the nation’s competitive heritage and influence […]” . In other words, business intelligence was defined as the chain of operations that range from the collection of useful information from open sources to the transmission of material to the governmental decision-makers assigned to the formulation of strategies for national defense and the reinforcement of the nation as a system, actively involving the private sector. Before presenting the tangible processes to be marshaled by the protagonists of business intelligence in France (the state, banks, companies, and other local agencies), the report summarized a number of previous studies that made comparisons with the business intelligence systems of other nations considered as models and that should inspire in certain ways the future French development in this sense. The United Kingdom and Sweden represented the two precursor nations. The former was the home of intelligence also from the lexical point of view, and there it is immediately understandable and its integration in any system political decision-making is natural. The latter, instead, was strong on the basis of a collective effort at national level and favored by its cultural homogeneity, for the construction of strategic information engineering in which public (university) and private (companies) institutions work together.

As regards Germany, Japan, and the United States, while the institution in the modern sense of business intelligence in the first two nations was traced back to the ‘30s and the presentation of the same reflected the content in large measure of the two works cited in the footnote, in the latter the more recent developments after the fall of communism and fervently desired by the Clinton administration were emphasized, and fervently desired by the Clinton administration, which by that point had made such an investment in economic security as to create an organization dedicated expressly to the purpose, the National Economic Council. France now has nothing to envy to these nations in terms of business intelligence, which in its own way benefits from a certain tradition and history. What has been lacking, however, is the passage to a collective and national information system. This has been hindered primarily by two factors mentioned previously but clearly and incontrovertibly illustrated in the report: firstly, the barrier existing between the administration and the companies, and secondly, a certain passivity in the actions of these latter, which were too often limited to technological monitoring in a defensive and protective sense.

The vocabulary adopted by the authors of the report addresses this second point in a decisive way. Based largely on the works of Christian Harbulot, the use of terms such as “offensive action”, “competitive aggression”, and “power relations”, indicates the hoped for and necessary evolution in the context of French business intelligence while shunning the use of the term “renseignement” due to its negative connotation that nearly always evokes dirty police practices. It is however restricted by the use of the concept of monitoring, which evokes an approach that is insufficiently dynamic that for as much as it is indispensible should also be supplemented by offensive actions in the field. As regards an action intended to overcome the limit represented by the first point, the authors themselves contributed to the construction of business intelligence and the formulation of these new elements of language and disclosed them to the public. One important example is a serious discussion dedicated to the theme “Business intelligence: information at the service of competitiveness” organized in Parliament in June, 1994, by ADIT with the presence of various representatives of the group of the General Commission on the Plan responsible for the drafting of the Martre Report, including Henri Martre himself, Jacques Villain, François Jakobiak, and Bruno Martinet .

A fundamental role was also played by the work begun at the end of 1994 by Philippe Caduc at ADIT and Rémy Pautrat at the SGDN (National Defense Secretary General) with the idea of transforming business intelligence into an object of public intervention. Pautrat, in particular, a former director of the Directorate of Territorial Monitoring and Prefect, attempted to effectively implement his vision of an administration at the service of the companies, given that his objective to create a National coordination structure was inspired by the model of operation of the United States National Economic Council. In the opinion of Pautrat, the efficiency of the state as the producer of data, analyses, and strategies depends on the depth of its awareness of the needs of its industries. For such purpose, together with the ADIT Director, he drafted an action plan composed of ten priority actions, ten new proposals to be added to the four made by the General Commission on the Plan , taking into consideration the international scenario and the development of Internet with greater awareness. In addition to re-appropriating a national approach that for various reasons had been neglected, the other actions proposed by the two experts regarded education and training. These included the institution of organizations ad hoc; the already repeatedly invoked creation of national databases to be marshaled against those managed by competitor nations in order to provide French companies with real knowledge of the sectors in which they operate and information on their competitiveness in foreign markets; and the development of skill centers specialized in Internet technologies, in light of its growing importance. They also included the presence of France in the international moments of standardization in this field, with a similar presence through key roles at the most important international organizations and two research efforts – one that recognized the sources available and their methods of diffusion in the United States and Japan, the other a list of foreign experts in the subject who had lived in France – both innovative and strategic in the sense of possibly anticipating the moves of competitor nations, and consequently, offensive and not merely defensive actions. The coordination of this action plan was entrusted to the CCSE (Committee for Economic Security and Competitiveness), an inter-ministerial structure open to qualified external experts so fervently desired by Pautrat and set up with an agreement signed on February 1st, 1995.

It is above all in the world of education and training, a fundamental field of action indicated in both the Martre Report and the CCSE action plan that concrete developments were made in the second half of the 90s. In order to respond to the new need for specialists capable of integrating business intelligence into company administration processes, thus enabling the challenges posed by global competition and the information society to be faced as protagonists, following a period of support provided from training centers more specialized in the organization of seminars, conferences, and specialization courses, as of 1995 many faculties of economy and commerce and polytechnic schools began providing specialization courses in “business intelligence” and graduate courses in Business Economics and Company Administration. One example is the CESD (Strategic Defense Studies Center) instituted at the University of Marne-la-Vallée for the purpose of promoting the study and research in business intelligence and creating a crucible of ideas regarding defense and security in modern society.

This process led to the establishment of a School of Economic Warfare at the Higher School of Applied Business Sciences in Paris by Christian Harbulot and the former director of EIREL (the Inter-force School of Intelligence and Linguistic Studies) in Strasburg, general Jean Pichot-Duclos, in 1997. For Harbulot, the creation of this school filled two specific needs: the study in greater detail and depth of the dynamics underlying the relationships between economic forces, and the civil applications of information warfare, given that the latter notion was absent from the strategic planning of the companies, administrations and local authorities. The people trained by this school, approximately seven-hundred students since its creation, would become “experts in the management of information and power relations”. Parallel to this development in the educational world and as a direct consequence of the same, publications and research on the subject have increased in the last twenty years. In the world of publication, two aspects were manifested at nearly the same time: a notable increase in the production of French business intelligence as of 1995, with the creation of ad hoc series by the nation’s leading publishers (such as the “Culture du renseignement” series published since 1999 by Harmattan) and a decline in the publication of books written by foreigners on the subject. From the academic point of view, in the past twenty years many Master’s/PhD degree theses have been dedicated to a topic that is interdisciplinary by nature because it embraces subjects that range from history to political science, from law to economic science, and naturally, to information technology and communication. The analysis of this academic production reveals the progress of what might be considered, and what we have tried to represent with this contribution, as a truly and specifically French school of business intelligence.

Continue Reading
Comments

Economy

Agriculture Is Creating Higher Income Jobs in Half of EU Member States but Others Are Struggling

MD Staff

Published

on

Half of EU member states have leveraged the Common Agricultural Policy (CAP) to significantly reduce poverty and drive higher incomes in farming, while other countries are still lagging, according to the latest World Bank study.

The ‘Thinking CAP’ report details how new investments and services in farming, reinforced by the EU’s flagship agriculture policy, can drive down poverty and transform agriculture into a sector which can provide higher paying jobs for those who farm.

Hungary, Slovakia, Estonia, Denmark and the Netherlands are all examples of member states that have successfully modernized their agricultural sectors by providing advisory services, roads, secure property rights and access to education and health services in rural areas. Others, such as Bulgaria, Portugal, Romania, Slovenia and Greece, still have some way to go in reducing poverty and ensuring that agricultural work pays. They can do so by improving the basic conditions for a successful agricultural sector, which would improve the results of the financial investments available under the CAP. Other remaining member states fall in between these two categories – achieving a successful transformation or lagging behind.

“Agriculture and poverty in half of the member states of the EU no longer go hand-in-hand. It’s clear that the income gap between agriculture and other sectors is narrowing and in some countries, such as the Netherlands, agricultural work can pay more than jobs in other sectors,” says Arup Banerji, Regional Director for the European Union Countries at the World Bank. “Today, about half of EU member states recognize that farming can boost shared prosperity, while the other half still has some work to do to provide the basic conditions to bring about necessary structural changes.”

The World Bank report shows that the EU CAP is associated with improving employment conditions in farming. Decoupled payments – annual payments based on how much land a farmer uses – and the co-financing of on-farm investments do show clear links with improvements in agriculture. For instance, in the newer member states agricultural labor productivity growth increases from 3.1 percent to 4.7 percent per year with a 10 percent increase in this type of CAP spending. However, there are certain categories of subsidy – known as coupled payments, which reward farmers for producing a particular crop or livestock— for which the report could find no such association. In the past, these coupled payments also led to extreme overproduction and price distortion on global markets.

“Some countries are running before they can walk by issuing payments to farmers who don’t have the necessary infrastructure to effectively bring their products to market or to make the best use of their investment,” said Rogier van den Brink, Lead Economist at the World Bank. “However, the processes the CAP has put in place are impressive. The CAP casts a very wide net and reaches farmers in every far-flung corner of the EU. Because of this, improvements in the CAP along the lines of the recommendations outlined in our report will further strengthen its role as a powerful instrument of structural transformation.”

Going forward, the report says the monitoring of CAP funds should focus on delivering tangible results rather than confusing bureaucratic processes. This would also encourage the co-financing of private investment into CAP-supported projects which are in the public interest such as environmentally sound practices, organic farming and animal welfare.

Continue Reading

Economy

Economic Warfare and Cognitive Warfare

Published

on

Until not long ago, the Western world lived in the conviction that Liberalism was an end in itself, however, the new context of globalization suggests that political economics once again makes more sense, given that power relations in the economic sphere can no longer be ignored and  the idea that world trade is structured on supply and demand appears obsolete.

The world is changing. Situations change, and events and the ways of understanding politics change with them. Instruments change as well: if the aphorism of Clausewitz that war is politics conducted by other means once seemed valid, today we might say that politics (and economics) is war conducted by the means of information.

The threat is no longer limited to what we once thought and conceived in the geographical terms of one superpower attacking another. The threat today is asymmetrical, different, and changes continuously. It travels through the Internet, it is immediate, and above all, it threatens the entire system. It is not aimed at military or political targets but commercial, industrial, scientific, technological, and financial interests instead. This requires intelligence to structure itself around new duties: protect not only the entire system but also the weakest links in the chain of production.

All this requires changes in mentality and in operational processes, as well as continuous updating, especially at a business culture level. Most of all, it requires close interaction between intelligence and the private sector, despite the difficulties this entails.

The crisis we are currently undergoing, together with the industrial and commercial physiognomy characteristic of our era, requires us to consider the idea of “economic warfare” very closely.

It is essentially since the end of the Cold War that the balance of powers has been developed around economic issues: most governments today are no longer interested in occupying territory or dominating other peoples but rather building up technological, industrial and commercial power capable of bringing money and jobs to their own land.

Globalization has transformed competition from “gentle” and “limited” into authentic “economic warfare”.

Although this economic challenge reduces the areas available for military warfare, its ultimate goal of accumulating power and well-being is the same.

The national economic intelligence strategies recently adopted by numerous governments assign their private operatives central roles in maintaining security by providing them with information technology infrastructure and the primary asset in the digital age: data.

The step between protecting private economic activities and protecting national economic interests is a short one indeed.

Economic intelligence consists in coordinating a series of activities: collecting and processing information, monitoring competitors, keeping strategic information secret, and capitalizing knowledge for the purpose of controlling and influencing world economic environment. All this makes it a powerful weapon at the nation’s disposal.

The main players in economic warfare are:

First and foremost, the world’s nations, which remain the most influential regulators on the economic chessboard despite their relative decline in the life of nations and the various restrictions placed over them, such as those imposed by international organizations like the European Union. One important recent change is that now nations must take numerous stakeholders (NGO, international bodies, companies, mass media) into account. At any rate, they uphold the role of arbiter that all the other players only continue to emphasize by regularly imploring their intervention.

The world’s companies, which address the new hyper-competitive geo-economic scenario by using strategic information control as a weapon of competitiveness and economic security.

Civil society: the expansion of discussions on social issues regarding company activities (nutrition and well-being, technological progress and risks to public health industry, and the environment, transport and passenger safety, information technology and individual freedom), the mass use and democratization of Internet, and the growing involvement of the legal system in monitoring business operations, all increase the risks of hacking attacks against companies by hackers from civil society.  Including in the public discussion topics such as risks to the environment, sustainable development, socially responsible investment, and corporate social responsibility brings greater importance to the legitimacy of social questions.

The infosphere, which is not a category of physical persons or legal entities but instead a dynamic, that is the aggregate of interventions and messages spread through media and the worldwide web. The infosphere is a particularly insidious instrument similar to an amplifier that continuously jumbles and blends ideas, emotions, and impulses emitted by an infinite number of people without any real dominant subject and exerts a determinant influence – positive or negative as occurs – on individuals and organizations. When launched in the infosphere, a simple statement has the power to trigger ferocious argument, harsh political reaction, media crises, and damage to company reputations. The infosphere can become a particularly effective weapon of destabilization. We must never forget that a brand’s image and reputation are strategic components of the capital of a company that can affect its commercial and financial activities.

Which forms does economic warfare take?

Economic warfare is often confused with economic espionage, which despite being used as one of economic warfare’s weapons is hard to define both because the companies victimized are reluctant to publicize its incursion and because it is hard to circumscribe in juridical terms and therefore difficult to report.

A more commonly practiced form of economic warfare is the purchasing of companies. This may lead to authentic forms of surrounding the industries in any given territory through operations that reflect motivations of financial, economic and technological nature all at the same time.

Yet another form of economic warfare, which is both particularly widespread and insidious, is lobbying; in other words, an influencing strategy aimed directly at public decision-makers assigned to the drafting of regulations. Our nations are particularly plagued by the proliferation of regulations and one strategically important aspect of lobbying is attending and altering the process of creating, interpreting and/or applying regulations and legislative measures and directly or indirectly influencing public powers in every intervention or decision. International trade is largely based on influence, and therefore gaining closer access to decision-making centers has become an obligatory part of commercial competition.

All the practices above are included in influence strategy: influential communication is also the hardest to identify and oppose because it is perfectly legal. “Information war” is based on the following few simple principles that can wreck havoc when marshaled together:

  • moral argument, that is the possibility to induce a crisis on the basis of an ethical reasoning;
  • offending political correctness by disrupting the day’s cultural and psychological patterns;
  • choosing targets, in the sense that the weaker the legitimacy of the adversary’s capital, the more the information attack will provoke escalation in the media;
  • the degree of celebrity of the players;
  • the criterion of appropriateness or resonance of the environment.

The upheaval of the Western economies’ competitive system is not just a passing thing. A growing number of powers (China, India, Brazil, Turkey, Iran, Russia) is conditioning the rapid shift in international competition. More often than not, the choice of winning dominance in foreign markets prevails over restructuring the nation’s own domestic markets. This demonstrates the extent to which a power strategy can make a decisive difference in the context of economic competition. These new players in international competition hold a different view of the dialectic between power and market, the latter being seen as the primary means to the increment of power. This vision revives the basic principles of political economics, according to which the market is the only path to power and not the other way around that has been demonstrated in numerous cases (such as Russia’s Vladimir Putin’s use of energy resources for coercive bargaining and blackmail in 2009) and illustrates the limits  of the interpretative models of liberal economists whose analyses were focused on the effects of deregulation, mergers, or financial speculation involving gas prices, but fell short of the possible use of gas trade as a weapon.

The process of globalization is irreversible and fairly independent of what governments do.  Globalization is one thing, but the ideology of a global free market that may produce a higher growth rate than any other system but gives no importance to how such growth is distributed is another. The argument that the highest capitalistic growth distributes resources in the best possible way, in fact, was never very convincing. Even Adam Smith thought that there were certain things the market could not do and should not do.

Historically speaking, the balanced evolution of world industry was created not by liberalism but by its opposite. The United States and Germany both became industrial powers in the 19th century because they protected their industries until they were able to compete against the dominant economy of the day: Great Britain. Neo-classical economic theories are now in disfavor because the system has come to be disrupted by scarce control over international financial flows and investment procedures.

Now more than ever, we are witnessing a struggle between the forces of capitalism, which tend to overcome every obstacle, and political forces that operate through nation states and are obliged to regulate these procedures. The laws of capitalist development are simple: maximize expansion, profit, and increase in capital. Governments by nature have different priorities instead, and this generates conflict. Furthermore, the dynamic of the global economy is one that does not ensure the stability of its protagonists.

The nation-state system and the economy system coexist in constant tension and must adapt, but if there were no relative stability among states, the instability of a world organized along the lines of transnational economy would only increase. The real problem is not whether governments can control the international corporations operating inside their borders, but whether they are able to exert global control: when companies and governments clash, the latter must negotiate as if there were another nation seated before them.

Like religions and cultures, globalization is only a simplified answer to today’s conflicts and the challenges to security. Globalization has most certainly reduced the importance of military power since the end of the 20th century, whereas security – internal security in particular – has become a global public asset. In the age of information technology, interdependence, and ”smart goods over heavy goods”, the military force offers less and costs more. Economic, technological, and especially communicative competition is more important and determinant than military strength.

The globalization of information has contributed to changing the nature of warfare by making public opinion decisive. In the short term, geo-information has become more important than geo-economy because its effects are immediate and not always governable. This is also a post-Cold War phenomenon.

In this context, the economy is no longer the mechanism of security as it was during Cold War, but on the contrary, security now serves the economy in creating better conditions for the expansion and protection of globalization. The nature of security depends on the situation prevailing in each nation and varies from one region to another, according to the respective level of globalization.

Consequently, it is the process of globalization that has restored political economics to importance and re-sparked a discussion formerly considered closed, according to which the market is the path to power and not the other way around, as it becomes an instrument of power politics in the globalization of exchange. The accumulation of power through economic expansion is the driving force behind the new emerging nations.

Yet today’s economic context must come to terms with new offensive strategies that undermine the industrial basis of the market economy and draw attention to the predatory policies of what may be defined as authentic economic warfare.

It is in this context that all companies, regardless of size, can be said to suffer damage from the absence of an economic security culture that only the use of intelligence, as a tool in analyzing predatory completion, can provide.

Interpreting the notion of national security including also the safeguarding of national interests requires information and security services to be ready to protect big companies or those of strategic significance, which the French refer to as “companies of national strategic importance” or “national champions”. These companies often – but not always – have their own information or security organizations that help them survive fiercer and fiercer competition.

In any case, in the field of economic intelligence the rules between the services of the various nations are more flexible, and it is easier to refer to others merely as competitors, neither friend nor enemy. This field is currently in the process of development, and European economic intelligence is still in embryonic phase.

The evolution of the information society has profoundly modified the frame of conflict. In the opinion of American analysts like John Arquilla and David Runfeldt, experts in netwar at Rand Corporation, the nation that wins tomorrow’s conflicts will not be the one with the biggest bomb, but the one that tells the best story.

In this sense, Americans have been referring to the key concept of information dominance since 1997. Defined as the control of anything that may be deemed information, this doctrine aspires at the moulding of the world by standardizing international practices and regulations to the American model, with the objective of placing decision-making bodies under control.

These experts note that it is sufficient to observe how American public opinion was mobilized during the invasion of Kuwait by a disinformation process planned at military level, or more precisely, at the level of psychological warfare. Information manipulation processes allow certain facts to be marginalized, and for this reason the domination of information has become a top priority in defining American strategy.

We may consider how the war in Iraq demonstrated the importance that manipulating information has assumed in international relations. The accusations made by G. W. Bush against Saddam Hussein regarding the existence of weapons of mass destruction represent a textbook case in the history of disinformation.

On the other hand, we must be careful of jumping to conclusions about how cognitive warfare is waged: disinformation, or even worse, the manipulation and authentic distortion of information for the purpose of deceiving your adversary or ally is often mistakenly confused with the production of knowledge conceived to orient the rules of conduct.

In this regard, Harbulot emphasized the profoundly innovative role of information war in terms of strategy and its implications for companies.

It was naturally Harbulot’s intention to use cognitive warfare to protect the economic interests of French companies against their American competitors. If, in fact, conflicts ranging from the Gulf War to the War in Kosovo have demonstrated the overwhelming superiority of American military intelligence overseas, what room for maneuver remains open today for the managers of the intelligence service in Western Europe, who are responsible for defending the geo-economic interests of their nations against American interests? Harbulot’s answer is clear: this room for maneuver is constantly eroding, and a situation of near total paralysis has been reached in certain cases.

Closing this gap means modernizing the thought of Sun-Tzu, the Comintern, and Mao Zedong, and especially that of Winston Churchill, the first Western statesman to have orchestrated a plan for information warfare against Nazi Germany (Plan Jaël). In terms of disinformation, he represents British genius in deceiving the enemy on the dates and locations of invasion landings.

Naturally, the lack of legal provisions regarding the manipulation of knowledge raises serious concern for the economic security of European companies, which must consequently arm themselves with techniques capable of strategically managing economic information.

It is precisely in light of American political-military choices that French strategy discerned the need to define just what information war really is in the strictest terms. The expression used in French strategic context is “cognitive warfare”, which is defined as the capacity to utilize knowledge in circumstances of conflict.

In particular, the French School of Economic Warfare acknowledges in cognitive warfare the conflict between different capacities of obtaining, producing, and/or obstructing determined types of knowledge implicit in power relations that can be defined “weak against weak” or inversely, “weak against strong”.

Numerous examples that come from the world of industry testify that innovation in this field is not always necessarily made by the strongest. Naturally, the United States is the primary artifice of “strong against weak” cognitive thinking, such as, for example, in defense of its position as superpower at both military and informational level. This nation’s way of orienting its own and the other nation’s conduct implies its complete acquisition of the importance of cognitive warfare as the ability to have the images of single powers perceived by the world public opinion, a strong argument in the search for legitimacy that every democracy must acquire in national and international context. The United States has always – but especially after September 11 – stoked the legitimacy of its policies by emphasizing the defense of democracy and the need for global security as reasons to combat anti-democratic forces.

In today’s context of intense competition, destabilization plays a fundamental role. Harbulot suggests considering the example, that has become common practice in economic warfare, of a multinational company that decides to stop a competitor from developing a project in an emerging nation.

A cognitive warfare operation might take the following form:

Identification of the competitor’s weak points in the area in question (weaknesses may vary in nature: bribes paid to authorities, environmental pollution, failures to respect human rights). All the information collected must be verifiable and not give rise to fallacious interpretation.

The choice of the information attack procedure: if the cognitive aspect is considered, the following scenario may be imagined. The director assigned orders funds to be paid into a private foundation supported by the company. A trusted person at such foundation then channels this money to a NGO that has posed itself the objective of protecting the environment. The maneuver consists in then making the NGO aware of this dossier by indirectly providing it with verifiable (and therefore non-manipulated) information on the misdeeds of the competitor multinational. Through its Internet site, the NGO then sends negative messages against the competitor’s project. This is how the chain of knowledge is created. The next step required is knowing how to consciously activate it for the purpose of destabilizing the target.

The chief strength of the information attack lies not in deceiving or misinforming but instead in fomenting a pertinent dispute that has been demonstrated by objective facts. The level of conspiracy is limited to setting up and activating the information chain. The more “grounded” the diatribe is, the harder it will be for the adversary to demonstrate conspiracy, even if only in theory.

It is clear that the spread of new information technologies has brought competition exasperated levels and facilitated cognitive warfare, in such way triggering an unprecedented conflict that, in the opinion of the French analysts, exceeds even that of the Cold War.

Information has become another weapon in the art of war capable of making the difference between winning and losing, regardless of whether the conflict is military or economic.

Changes of such degree impose cultural revolution.

Then there is psychological warfare, one of the principal forms of information war. It is the most sophisticated because it relies essentially on human intelligence, in its capacity to understand possible actions for success by controlling the means of communication.

Little known and scarcely practiced in France, psychological warfare has never received much attention from the military establishment, which has often succumbed to the pressure of events or adversaries, as happened in Indochina and Algeria.

Psychological warfare employs every means available, from disinformation to deceit, from propaganda to interdiction, in clashes of various nature (from the battle against terrorism to conventional warfare and the subsidization of peace) and is moreover directed to public opinion for the purpose of conditioning or manipulating it.

The use of psychological weapons cannot be improvised and is based on an organized operative structure and conducted by specialized personnel and organizations.

Civil communication systems have by now reached levels of performance previously attained only by armed forces and governments. This has led to the accumulation of a critical mass such to enable a lowering of costs. For this reason, even if the conservation of certain autonomous military capacities is foreseen, the development of information systems for defense and intervention depends more and more on civil systems. This creates a vulnerability that might be underestimated in times of crisis or conflict.

The infosphere’s framework has become highly conflictual; information war has become inevitable and is waged with the function of appropriation (intelligence), interdiction (limitation of access to information) and manipulation (intoxication).

Economic intelligence provides a necessary response to a world with no more borders of time or space, where information is immediate and reaction time is zero. A re-organization of structures around the new dimension assumed by the relationship between information and intelligence leads to changes in both the decision-making system and the management of human resources. First and foremost of all, the revolution must be cultural in nature: perceiving information as a weapon to be incorporated into national defense strategy.

Continue Reading

Economy

“Made-in-Russia”: Securing Russia’s economic interests

Kester Kenn Klomegah

Published

on

Squeezed between the United States and European Union sanctions, Russia has been exploring effective ways to increase exports of its industrial products under “Made-in-Russia” program to traditional markets in Latin America, Asia and Africa. The primary strategic goal is to secure Russia’s economic interests abroad while at the same time support Russian industries in raising revenue to modernize Soviet-era industries. But increasing exports especially to African markets, Russia has to confront market competition from western players and Asian countries such as China, India and the Gulf states.

In a recent interview, Peter Fradkov, general director of the Russian Export Center (REC), has explained that Russia has been making every effort to avoid the “raw-materials” export model and focus on developing export-oriented industries and the launch of the Russian Export Center was a key step towards the development of a full-fledged national export support system.

The Soviet Union made a significant contribution to the social and economic development of African countries by building large industrial and infrastructure facilities and helping to establish national education and health care systems. However, in the 1990s the Russian-African relations came virtually to a standstill. At present, Russia’s foreign trade turnover with Africa is about 12 billion US dollars, which is a rather modest achievement. Nevertheless, the African continent remains a rather promising market for Russian industrial goods.

Admittedly, the Government authorities, and both Inter-Governmental Commissions and the REC, are primarily concerned with removing barriers for Russian exporters and opening up foreign markets for them in Africa. Reinforcement of positions of Russian exporters in Africa requires creation of certain conditions and the key task is penetration into the global market. For this purpose, the Russian Export Center has launched a program to promote Russian goods and services under a single country brand “Made in Russia” and in this context, Africa is a very important partner for us, though not an easy one.

He underscored the fact that “Russian manufacturers have a number of specific competitive advantages. Let’s take, for example, agricultural machinery. The main advantage of Russian products as compared to the counterparts by major foreign manufacturers is a lower price and almost the same level of capacity, quality and useful life.”

On the other hand, there are some difficulties still inherent in the Russia-African business partnership. According to Fradkov there are still insufficient awareness of the real economic opportunities, market conditions and specific counterparts in African markets by Russian businesses and poor awareness of capabilities of Russian partners for Africans.

“We are often faced with discriminatory barriers, which are there not because we are from Russia, but because we have just not thought about how to remove these barriers. Our primary task is to gradually change the thinking of Russian entrepreneurs, who are often skceptical about entering foreign markets, including Africa. Secondly, we strive to promote the image of Russia as a producer of diverse and high-quality products,” he underlined in the interview.

With new trends and directions in global business, African countries have to look to the Eurasian region as a huge market for exports as well as make efforts to consolidate and strengthen economic cooperation, says Tatiana Cheremnaya, the president of ANO “Center for Effective Development of Territories” and head of the working group on public-private partnership “Business Union of Eurasia” based in Moscow.

Cheremnaya discussed here three main points and are as follows: The problems of effective cooperation between Russia and Africa are political in nature. Thus, the strengthening of Russia’s position leads to the strengthening of its influence in the world, including in Africa and vice versa, sectional policy has significantly reduced Russian exports.

The second problem for the development of Russian-African business is the lack of competitiveness of Russia which allows working only in the low-budget segment. This is due to structural problems in the Russian economy, the need for modernization, the bulk of the products produced during the Soviet Union.

The third problem is competition from the United States, China and India as more developed countries with more advanced technological solutions, and from the European countries as the former “patrons” of African countries.

Russian President Vladimir Putin, taking part in a congress during the 11th Russian Business Week organized by the Russian Union of Industrialists and Entrepreneurs (RUIE) early February, discussed how innovative technology is reshaping the global business landscape. He, however, encouraged Russian industrialists and businesses participating in the forum to improve their business approaches in order have competitive advantages in the global market.

“This is the most important thing. And fundamentally fresh markets for goods and services will become available, and new leaders will appear as well. Naturally, competition will exacerbate. Clearly, in a situation like that, no one will be playing fair with their competitors, including in the global business environment,” Putin said.

Russia has trade centers established in Africa. But these Russian trade centers must necessarily embark on a “Doing Business in Africa” campaign to encourage Russian businesses to take advantage of growing trade and investment opportunities, to promote trade fairs and business-to-business matchmaking in key spheres in Africa.

Maxim Matusevich, an associate professor and director, Russian and East European Studies Program, at the Seton Hall University, told me in an interview that “in the past decade there was some revival of economic ties between Africa and Russia – mostly limited to arms trade and oil/gas exploration and extraction. Russia’s presence in Africa and within African markets continues to be marginal and I think that Russia has often failed to capitalize on the historical connection between Moscow and those African elites who had been educated in the Soviet Union.”

“It is possible that the ongoing crisis in the relations between Russia and the West will stimulate Russia’s leadership to look for new markets for new sources of agricultural produce. Many African nations possess abundant natural resources and have little interest in Russia’s gas and oil. As it was during the Soviet times, Russia can only offer few manufactured goods that would successfully compete with Western-made products. African nations will probably continue to acquire Russian-made arms, but otherwise, I see only few prospects for a diversification of cooperation in the near future,” added Maxim Matusevich.

Former Ethiopian ambassador extraordinary and plenipotentiary to the Russian Federation, professor Teketel Forssido has also explained that Russian businessmen think that business can be done from government to government levels (at the state levels) but in many countries business at the state levels has been complimented by private participation. Using government as an umbrella could be alright, countries such as India, China and others run businesses without government in Africa. The government, of course, has to clear the way for smooth business transactions.

“Russians are counting on the authorities to do business, but if they always rely on the state, business can be ineffective. That’s why Russians businessmen are slow as we have seen it,” he said.

According to Forssido Russia has to open its market for Africa and there are various ways to this. One surest way is to use the existing rules and regulations. The preferential treatments for agricultural products exist but Africans don’t use them. Then, individual countries have to negotiate with Russian government for their products to enter the market.

Further, the African regional economic blocs can be useful instruments because these blocs are very important and can work with their counterparts to facilitate trade between Africa and Russia. For instance, in COMESA and SADC zones in Africa, goods and services move freely, and now I think these blocs should look into the line of working as regional economic blocs with Russia.

“At the moment, China has done a lot in Africa despite worldwide criticisms. China is not the only player on the continent, but also India, Turkey and other serious players. But, when we talk about Russia, I think it’s not comparable. China has largely involved in Africa, practically in all sectors as we can see. We expect that Russia can do more if they want to, looking at their huge potential capability. They still have their own priorities, anyway,” he pointed out assertively.

As already known, Moscow’s long term goals include developing investment cooperation with African countries, widening the presence of Russian companies in the African markets through increased deliveries of industrial and food products, and enhancing Russian participation in driving the economic development of Africa. At the same time, Russia needs to look at simplifying access to its market for African countries.

In one of his speeches posted to the official website, Russian foreign minister Sergei Lavrov noted frankly in remarks: “it is evident that the significant potential of our economic cooperation is far from being exhausted and much remains to be done so that Russian and African partners know more about each other’s capacities and needs. The creation of a mechanism for the provision of public support to business interaction between Russian companies and the African continent is on the agenda.”

Continue Reading

Latest

Newsletter

Trending

Copyright © 2018 Modern Diplomacy