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Historical Origins of the French School of Economic Warfare

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[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.

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Russia, China and EU are pushing towards de-dollarization: Will India follow?

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Authors: Divyanshu Jindal and Mahek Bhanu Marwaha*

The USD (United States Dollar) has been the world’s dominant currency since the conclusion of the second world war. Dollar has also been the most sought reserve currency for decades, which means it is held by central banks across the globe in significant quantities. Dollar is also primarily used in cross-border transactions by nations and businesses. Without a doubt, US dollar’s dominance is a major reason for the US’ influence over public and private entities operating around the world. This unique position not only makes US the leader in the financial and monetary system, but also provides incomparable leverage when it comes to coercive ability to shape decisions taken by governments, businesses, and institutions.

However, this dynamic is undergoing gradual and visible changes with the emergence of China, slowdown in the US economy, European Union’s independent policy assertion, Russia-US detachment, and increasing voices from across the world to create a polycentric world and financial system in which hegemonic capacities can be muted. The world is witnessing de-dollarisation attempts and ambitions, as well as the rise of digital or cryptocurrencies at an increasing pace today.

With Russia, China and EU leading the way in the process of de-dollarisation, it needs to be argued whether India, currently among the most dollarized countries (in invoicing), will take cue from the global trends and push towards de-dollarisation as well.

Why de-dollarisation?

The dominant role of dollar in the global economy provides US disproportionate amount of influence over other economies. As international trade needs a payment and financial system to take place, any nation in position to dictate the terms and policies over these systems can create disturbances in trade between other players in the system. This is how imposition of sanctions work in theory.  

The US has for long used imposition of sanctions as a tool to achieve foreign policy and goals, which entails restricting access to US-led services in payment and financial transaction processing domains.

In recent years, several nations have started opposing the unilateral decisions taken by the US, a trend which accelerated under the former president Donald Trump’s tenure. He withdrew US from the JCPOA deal between Iran and US, aimed at Iran’s compliance with nuclear discipline and non-proliferation. Albeit US withdrawal, other signatories like EU, Russia, and China expressed discontent towards the unilateral stance by the US and stayed committed towards the deal and have desired for continued engagements with Iran in trade and aid.

Similarly, the sanctions imposed on Russia in the aftermath of the Crimean conflict in 2014 did not find the reverberations among allies to the extent that US had wanted. While EU members had switched to INSTEX (Instrument in Support of Trade Exchanges) which acts as a special-purpose vehicle to facilitate non-USD trade with Iran to avoid US sanctions, EU nations like Germany continue to have deep trade ties with Russia, and  EU remains the largest investor as well the biggest trade partner for Russia, with trade taking place in euros, instead of dollars.

Further, despite the close US-EU relations, EU has started its own de-dollarization push. This became more explicit when earlier this year, EU announced plans to prioritize the euro as an international and reserved currency, in direct competition with dollar.

Trajectories of Russia, China, and EU’s de-dollarisation push

Russia has emerged as the nation with the most vigorous policies oriented towards de-dollarization. In 2019, the then Russian Prime Minister Dmitry Medvedev had invited Russia’s partners to cooperate towards a mechanism for switching to use of national currencies when it comes to transactions between the countries of the Shanghai Cooperation Organization (SCO). It must be noted that in Eurasian Economic Union (EAEU), which functions as a Russian-led trade bloc, more than 70 percent of the settlements are happening in national currencies. Further, in recent years, Russia has also switched to settlements in national currencies with India (for arms contracts) and the two traditionally strong defence partners are aiming at exploring technology as means for payment in national currencies.

Russia’s push to detach itself from the US currency can also be seen in the transforming nature of Russia’s foreign exchange reserves where Russia for the first time had more gold reserves than dollars according to the 2018 data (22 percent dollars, 23 percent gold, 33 percent Euros, 12 percent Yuan). As per the statement by Russian Finance Minister in 2021, Russia aims to hold 40 percent euro, 30 percent yuan, 20 percent gold and 5 percent each of Japanese yen and British pound. In comparison, China holds a significant amount of dollar denominated assets as forex reserves (50 to 60 percent) and has the US as its top export market with which trade takes place mostly in US dollars. Moreover, Russia has also led the push by creating its own financial messaging system- SPFS (The System for Transfer of Financial Messages) and a new national electronic payment system – Mir, which has witnessed an exponential rise in its use.

While China-Russia trade significantly depends on euros instead of  their own national currencies (even though use of national currencies is slowly rising), instead of pushing the Chinese national currency Renminbi (RMB), Beijing is aiming towards establishing itself as the first nation to issue a sovereign digital currency, which would help China to engage in cross border payments without depending on the US financial systems. Thus, for China, digital currency seems to be the route towards countering the dollar dominance as well as to increase its own clout by leading the way for an alternate global financial system operating in digital currencies. It needs to be noted here that EU has succeeded in internationalizing the euro and this can be seen in the fact that EU-Russia trade as well as Russia-China trade occurs predominately in euros now.

Will India follow suit?

Indian economy’s dynamic with dollar is different than other major economies in the world today. Unlike China or Russia (or EU and Japan), which hold dollars in significant amounts, India’s reserve is not resulted by an export surplus. While others accumulate dollars from their earnings of trade surplus, India maintains a large forex reserve even though India imports less than it exports. In India’s case, the dollar reserves come through infusion of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI), which reflects the confidence of foreign investors in India’s growth prospects. However, accumulation of dollar reserves through this route (which helps in offsetting the current deficit faced in trade), India remains vulnerable to policy changes by other nations’ monetary policies which are beyond India’s own control. For instance, it has been often highlighted that a tightening of the US monetary policy leads to capital outflows (capital flight) from India, thus impacting India adversely.

New Dehi has resisted a de-dollarization push for long. Back in 2009, when Russia and China had started the push via BRIC mechanism (Brazil, Russia, India, China grouping), it was argued that New Delhi would not like to upset Washington, especially after the historic US-India civil nuclear agreement was signed just a year before in 2008 -for full civil nuclear cooperation between the two nations.

Further, currency convertibility is an important part of global commerce as it opens trade with other countries and allows a government to pay for goods and services in a currency that may not be the buyer’s own. Non-convertible currency creates difficulties for participating in international market as the transactions take longer routes for processing (which in case of dollar transactions, is controlled by US systems).

 Just like Chinese renminbi, Indian rupee is also not yet fully convertible at the exchange markets. While this means that India can control its burden of foreign debt, and inflow of capital for investment purposes in its economy, it also means an uneasy access to capital, less liquidity in financial market, and less business opportunities.

It can be argued that just like the case of China and Russia, India can also look towards having a digital currency in the near future, and some signs for this are already visible. India can also look towards having an increased share of euros and gold in its foreign exchange reserves, a method currently being used by both China and Russia.  

Conclusion

An increasing number of voices are today pointing towards the arrival of the Asian age (or century). With China now being the leading economic power in the world, US economy on a slowdown, and emergence of an increasing polycentric structure in world economy, the dominance of dollar is bound to witness a shake-up. In order for global systems to remain in sync with the transforming economic order, structural changes like control over leading economic organisations (like IMF and World Bank) will become increasingly desirable.

With an increasing number of nations now looking towards digital currencies and considering a change in the mix of their foreign exchange reserves, a general trend is now visible even if it would not mean an end to dollar’s dominance in the immediate future. As the oil and gas trade in international markets also start shifting from dollar, geopolitical balance of power is expected to witness a shift after decades of US dominance.

Major geopolitical players like China, Russia and EU have already started their journey to counter the dominance of dollar, and the strings of US influence on political decisions that come with it. According to Chinese media, Afghanistan’s reconstruction after US-withdrawal can also accelerate the global de-dollarization push as nations like Saudi Arabia might look for establishing funds for assisting Afghanistan in non-dollar currencies. So, conflict areas highlight another avenue where de-dollarization push will find a testing arena in coming times.

India has several options for initiating its de-dollarization process. Starting from Russia-India transactions, trade with Iran, EAEU, BRICS and SCO members in national or digital currencies can also become a reality in near future. Considering India’s present dollar dependence, whether US sees India’s move towards de-dollarisation as a direct challenge to US-India relations, or accepts it as a shift in the global realities, has to be seen.  

*Mahek Bhanu Marwaha is a master’s student in Diplomacy, Law and Business program at the OP Jindal Global University, India. Her research interests revolve around Indian and Chinese foreign policies and trade relations.

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Today’s World Demands Sustainability

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In the Brundtland Report, the United Nations defined sustainable development as development that satisfies current demands without jeopardising future generations’ ability to meet their own. It is based on the assumption that resources are finite and should be used sparingly and wisely to guarantee that there is enough for future generations without lowering current living standards. A socially responsible society must prioritise environmental conservation and dynamic equilibrium in human and natural systems.

Pillars of Sustainability

Environmental, social, and economic pillars make up the concept of sustainability, which is sometimes known as profits, planet, and people informally. These are especially important in terms of corporate sustainability and company activities.

The most frequently discussed aspect is environmental protection. As part of a supply chain, it is concerned with reducing carbon footprints, water usage, non-decomposable packaging, and wasteful operations. These procedures can be both cost-effective and beneficial to the bottom line, as well as crucial for environmental sustainability.

Social development entails treating people fairly and ensuring that employees, stakeholders, and the society in which a business operates are treated responsibly, ethically, and sustainably. More responsive benefits, such as greater maternity and paternity benefits, flexible scheduling, and learning and development opportunities, could help achieve this. Businesses should, for example, utilise sustainable labour, which entails adequately compensated, mature employees who can work in a safe atmosphere.

Economic development is probably the most straightforward type of long-term sustainability. A firm must be successful and generate enough money to be economically sustainable in the long run. The difficulty with this type of sustainability is finding a balance. Rather than producing money at any cost, businesses should try to make money in a way that is consistent with other aspects of sustainability.

What can be done to quantify it?

The performance of the three basic principles as a whole, in particular a balanced treatment of all three, is used to assess sustainability. Although the Triple Bottom Line’s three core concepts do not provide a measurement methodology in and of themselves, subsequent approaches of assessing sustainability have attempted to do so. Despite the fact that there is no official universal assessment of sustainability, several organisations are developing industry-specific methods and techniques to assess how social, environmental, and economic principles operate within a corporation.

What Impact Does Sustainability Have on Business?

Sustainability is becoming increasingly crucial for all businesses, regardless of industry. A sustainability strategy is considered necessary by 62 percent of executives today, and another 22 percent believe it will be in the future.

Simply expressed, sustainability is a business strategy for generating long-term value by considering how a company works in its environmental, social, and economic contexts. The concept behind sustainability is that establishing such measures promotes firm lifespan. Companies are realising the need to act on sustainability as expectations for corporate responsibility rise and transparency becomes more widespread.

Executives today face a complex and unprecedented confluence of social, environmental, market, and technology forces. This necessitates comprehensive, long-term management. Executives, on the other hand, are frequently hesitant to make sustainability a priority in their company’s business plan, mistakenly believing that the costs exceed the advantages. Academic research and corporate experience, on the other hand, suggest the exact reverse.

Traditional business strategies prioritise shareholder value creation at the expense of other stakeholders. Sustainable companies are changing the corporate ecosystem by creating models that benefit all stakeholders, including employees, shareholders, supplier chains, civil society, and the environment. The concept of “creating shared value” was pioneered by Michel Porter and Mark Kramer, who argued that firms might generate economic value by recognising and addressing social issues that connect with their business. Much of the strategic value of sustainability stems from the requirement to communicate with and learn from important stakeholders on a regular basis. A corporation with a sustainability agenda is better positioned to foresee and react to economic, social, environmental, and regulatory changes as they happen through regular discussion with stakeholders and continuous iteration.

Moreover, Businesses can benefit from the Triple Bottom Line approach to running a firm in a variety of ways. Meeting UN environmental sustainability requirements is not only ethical and necessary, but it is also cost-effective and enables for a better business model. Furthermore, sustainability allows a company to recruit employees, owners, and consumers who are invested in and share the same values as the company’s sustainability aims. As a result, the impact of sustainability on a company’s reputation and income can be favourable

Why is Sustainability Important for Students

Sustainability is a comprehensive field that provides students and graduates with knowledge of almost every element of human life, from business to technology to the environment and social sciences. The essential skills with which a graduate leaves college or university are in high demand, especially in a modern society seeking to substantially reduce carbon emissions while also discovering and developing future technologies. Politics, economics, philosophy, and other social sciences, as well as the hard sciences, are all used to support sustainability.

As firms seek to comply with new legislation, many corporate occupations at the graduate level and above prioritise sustainability skills and environmental awareness. As a result, sustainability graduates will work in a variety of sectors, including civic planning, environmental consulting (both built and natural environments), agribusiness, non-profit management, corporate strategy, health evaluation and planning, and even law and decision-making. Entry-level occupations are on the rise, and bachelor’s grads may expect more options and opportunities in the future years. Sustainability is one of the newest degree programmes, attempting to combine social science, civic engineering, and environmental science with future technology. When we hear the phrase “sustainability,” we usually think of renewable energy sources, carbon reduction, environmental protection, and a strategy to keep our planet’s delicate ecosystems in check. In a nutshell, sustainability aims to safeguard our natural environment, human and ecological health, while also encouraging innovation and ensuring that our way of life is not jeopardised

Even if you aren’t studying environmental science, sustainability is an important topic to learn about. Sustainability is important for business majors to understand since it helps with customer appeal and Corporate Social Responsibility. Students studying agriculture, nutrition, and public health should concentrate on sustainability to understand how to feed a growing population nutritious and high-quality food. Majors in education pass on their knowledge of sustainability to the next generation, preparing them to lead change. Every major has a link to the environment

The Long Run

As people continue to live more sustainable lives as a result of the climate problem, there is a current drive towards sustainability as a more desirable focus for businesses. Positive climate impact across the entire value chain, improved influence on the environment, people, and atmosphere, and useful contribution into society will most likely be expected of businesses in the future. Companies will be held responsible for all parts of the industry, and any environmental damage or harmful emissions from production operations should be controlled or eliminated. In what is known as a ‘circular economy,’ it is also predicted that resources will be reused to accommodate the global growth in population. This transformation would allow one person’s garbage to become another’s resource, resulting in significant waste reduction and a more efficient supply chain.

As we approach the start of a new year, we’re acutely aware of the growing urgency in the climate movement, as well as the need for action to catch up to ambition. Not only for researchers and policymakers, but for everyone—business executives, negotiators, and communicators—there is still much work to be done. We have a better chance of constructing a sustainable future if we can share what is working.

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Economy

The Economic Conundrum of Pakistan

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The State Bank of Pakistan (SBP) is due to convene on 20th September 2021. The Monetary policy Committee (MPC) will be announcing its policy rate after retaining it since March 2020. As the world deals with the uncertainty of the delta variant along with the dilemma between inflation and growth, it is a plenary to watch as Pakistani policymakers would join heads to decide the stance on the economic situation. However, the decision would be a tough one. Primarily because the mixed signals could either lead to burgeoning inflation and subsequent financial deterioration or they should guide the central bank to strangulate the growth prematurely. Either way, the policymakers would have to be cautious about the degree of inclination they lean to each side of the argument – economic contraction or growth with inflation.

A poll conducted by Topline Research shows that about 65% of the financial market participants expect status quo; the MPC to maintain the policy rate at 7% to further accommodate economic growth. Pakistan has barely mustered a 4% growth rate after the contraction of 0.4% last year. In this regard, Mr. Mustafa Mustansir, head of Research at Taurus Securities, stated: Visible signs of demand-side pressure are still quite weak. In another survey conducted by Policy Research Unit (PRU): a policy advisory board of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), 84% of the market participants believe there will be no change in the policy rate. The sentiment implies that the researchers and the business community don’t expect a rate hike in this week’s policy meeting.

However, the macroeconomic indicators paint a bleak picture for Pakistan’s economy: warranting a tougher policy response. The external trade figures released by the Pakistan Bureau of Statistics (PBS) project a debilitating situation for the national exchequer. According to the data, Pakistan’s trade deficit has increased to $7.5 billion in the first two months (July-August) of the fiscal year 2021-22. The deficit stands at $4.1 billion: 120% higher than the same period last year. Due to the accommodative policies implemented by the government of Pakistan, the trade deficit has already climbed 26% up to the annual target of $28.4 billion, set in the fiscal budget 2021-22. Despite excessive subsidies, the bi-monthly exports have only grown by 28% to stand at $4.6 billion. And while it is an increase of nearly a billion dollars compared to the same months in the preceding year, the imports have more than perforated the balance of payments.

During the July-August period, the imports have grown by a whopping 73% to stand at $12.1 billion: 22% of the annualized target. What’s more worrisome is the fact that despite a free-float currency mechanism, the exports have failed to turn competitive in the global market. According to the data released by PBS, Pakistan’s exports have dropped from their previous levels for three consecutive months. And despite a 39% net currency depreciation in the past three years, the exports continue to drift sluggish around the $2 billion/month mark. Yet, the imports are accelerating beyond expectation: clocking a 95% increase last month alone. Clearly, something is not working.

Moreover, while the forex reserves with the State Bank stand at a record high of around $20 billion, the rapid depreciation in the rupee is gradually damaging the financial viability of Pakistan. According to Mettis Global, a web-based financial data and analytics portal, the rupee recently slipped to its all-time low of 168.95 against the greenback. While the currency reserves are at their peak, the rupee continues its losing streak as the State bank has refrained from intervening in the forex market to artificially buoy the currency. Primarily because the IMF program stands contingent on letting the rupee float and find equilibrium. As a result, the rupee is touted to breach the 170 rupees against the US dollar mark by next month. The bankers around Pakistan have urged the State Bank for an intervention to put an end to “abnormal volatility in spite of increased reserves.” However, an intervention seems highly unlikely as the SBP Governor, Dr. Reza Baqir, already warned regarding currency devaluation in the last policy meeting: citing supply constraints, debt repayments, and increased imports as primary reasons for the temporal slump.

Nonetheless, almost 10% of the market participants, according to the survey, expect a rate hike of 50 basis points in the policy rate to hedge against inflation. Furthermore, analysts at Topline Securities expect a hike of 25 basis points to counter “vulnerabilities in the current account and control inflationary pressures.” Regardless of the prudent beliefs in the market, however, a few players actually believe that a rate cut of 50-100 basis points is plausible in the meeting. They argue that while the Consumer Price Index (CPI) – a national inflation measure – refuses to let down, the core inflation of Pakistan has dropped perpetually down to 6.3% in August. A stratum of the business community, therefore, also believes that the policy rate should be gradually brought down to 5% to match the regional dynamics.

I somehow find this notion ironic, as the government has already doled billions of dollars in subsidies, provided lucrative loans, and slashed taxes periodically. Yet, the exports have stayed relatively redundant. While it may not be the most effective time to hike the policy rate and tighten the monetary policy, in my opinion, a cut in the policy rate would be detrimental – catastrophic for the current account and incendiary for prevailing inflation.

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