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The strategies of subversion in the interpretation of the French School of Economic War

Gagliano Giuseppe

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The Brent Spar Case

On February 16, 1995, the British government granted the Shell-UK company authority to sink an oil platform (the Brent Spar) no longer being used off the coast of Scotland. Taking preparation times into account, the sinking was scheduled for the month of June. Several weeks prior to the scheduled date, the international environmentalist organization Greenpeace protested the risk that such sinking posed, affirming that the platform contained 5,000 tons of oil – a dangerous quantity for the marine ecosystem. The English company immediately denied such accusation, in this way dismissing also the idea of an attack against the environment: nearly all the oil contained in the platform had already been transferred to a tanker when the platform was decommissioned in 1991. In reality, only 130 tons of oil remained inside the platform, with uncertain consequences to the ecosystem. Various scientists favorable to the sinking of the platform were then engaged by the British government for the purpose of legitimizing the logic advanced by the Shell Group. Prime Minister John Major announced his position in favor of sinking, claiming that this would be the safest and most economical solution.

Greenpeace launched its media attack beginning with its claims that the scientists engaged by the government were hardly impartial, in light of the absence of any guarantees for the protection of the marine environment and the subjectivity of their opinions. In the meantime, the environmentalist organization had mobilized its German office in Hamburg and Herald Zindler, the head of its action service, who would organize the assault and boarding of the platform together with around 20 militants. The filming of the event was shown around the world. Greenpeace announced its intent to stay aboard the platform until Shell and the British government gave in to its demands. The environmentalist organization also demanded that the platform – and all other platforms destined for dismantling – be brought to land and disassembled for the recycling of composite materials.

During the same period, Greenpeace published a report prepared by a number of independent scientists entitled ”No grounds for dumping: the decommissioning and abandonment of offshore oil and gas platforms” that demonstrated the risks posed by the sinking of the Brent Spar platform due to the fact that “the platform still contained 100 tons of toxic sludge (composed of bio-accumulative chemical products including arsenic, cadmium, PCB, and lead) in addition to 30 tons of radioactive deposits derived from drilling and storage operations in oilfields.”. This report applied the above-mentioned measures to a total of another 416 platforms installed in the North Sea, in such way assessing the pollution in this area at 67,000 tons of stainless steel, 700 tons of lead, 8 tons of PCB, and 1,200 tons of radioactive waste…

Coverage of the conflict in the mass media was intensified by an appeal for European nations to boycott Shell service stations. Protests rapidly reached an unexpected dimension and their success was greatest in Germany, where all the socio-economic categories supported the call, and precisely: the obstetricians’ association, the Kunert company (a leader in the production of hosiery), trade unions, and Protestant churches. By mid-June, Shell’s German subsidiary reported losses to the order of 35 million French francs daily. The fourth-largest subsidiary of the Anglo-Dutch petroleum products group controlled 12% of the German service station market and accounted for no less than 10% of the group’s total sales and therefore 10% of its profit. Obliged to negotiate, with the greatest of discretion, the Shell German subsidiary’s General Manager Peter Duncan organized a meeting with Greenpeace Germany Director Thilo Bode. The environmentalist movement capitalized on Europe’s contradictions stemming from England’s particular position in the European Community and the way it was perceived by other nations. The amplitude of reactions in Germany was such that Chancellor Helmut Kohl asked John Major to refrain from sinking the platform during the G7 Summit in Halifax (Canada). On June 20, 1995, the Anglo-Dutch company officially announced that it had abandoned the idea of sinking the Brent Spar platform, which was towed to Norway and moored in a fjord. Shell was required to disburse 230 million francs for the operation. Greenpeace had won.

1.2

On the strength of this victory against the world’s second largest industrial group at the time, Greenpeace felt invincible and announced to the entire world that its next campaign would by the Moruroa Atoll following news of the President of the French Republic’s intention to conduct a series of nuclear tests there. Applying the principle of monitoring media activity without definitively achieving success, Greenpeace continued its information work. After so many shields had been raised in defense of the environment, Shell’s lawyers engaged the Norwegian Det Norske Veritas Foundation to verify all the scientific data on the Brent Spar platform. Thirty-three specialists were asked to submit their individual reports on October 18. All were unanimous in stating that sinking the platform posed no risk. The association learned of the opinions of the specialists engaged by Shell (and in particular its initial conclusions and probable form of disclosure) and realized that it would soon be placed with its back against the wall by the irrefutable logic advanced in the Foundation’s report. Fearing the strong media attention that could be turned against it, the environmental organization based in the Netherlands decided to stage a pre-emptive counter-attack, a technique that consists in applying a principle developed by Sun Tzu: cut the grass beneath your adversary’s feet. In the case at hand, this meant countering the arguments of the Veritas Foundation before such arguments could be used. The public disclosure of the report would have certainly worked as a media bomb with great detrimental effect to Greenpeace at a moment in which its credibility was at stake in the more important action regarding French nuclear tests.

Contrary to the allegations made, the Brent Spar did not contain toxic sludge or radioactive waste in its central duct. The platform had been effectively nearly empty since it was decommissioned in 1991. By taking the initiative, Greenpeace defused the bomb and successfully dodged the accusations of manipulation, disinformation, intellectual dishonesty, and scientific incompetence, and in this way damage to its image was only slight. The procedure is simple and effective: the Greenpeace-UK Director Lord Peter Melchett sent Shell General Manager Christopher Fay a letter of confession in which he admitted having erred in assessing the risk: “I am very sorry. Our calculations were inexact […]. Please accept my apologies for this mistake. [The samples were taken] in the piping that led to the platform’s tanks and not in the tanks themselves…”.

The international press, irked at having been manipulated in this way, inveighed against the environmentalist organization without result, which was in the eyes of the press guilty of having mystified public opinion by using perfectly orchestrated disinformation. Yves Lenoir, a former member of the French committee, denounced the methods used: “This is a typical example of Greenpeace methods that completely invent a scandal without any facts at all.”

2.1

Mobile warfare is the fulcrum of Greenpeace strategy. In his military writings, Mao Zedong defined the “strategic problems of revolutionary war”. One of the most important strategic problems that must be solved regards the relationship between the positional warfare and the mobile warfare. The former must “fight against fixed operation lines and the positional warfare using mobile operation lines and mobile warfare”, the latter must be compatible with the following principle: “battle against the strategy that aims to strike with two fists in two directions at the same time and instead favor the strategy that aims to strike with just one fist in only one direction at any given moment.”

Knowing how to manage transparency: utilizing this register, on that occasion Greenpeace neutralized the logic of dishonest obstinacy and presented itself as an untarnished hero motivated solely by its constructive objectivity. The principle of transparency is one of counter-information’s essential components.

Turning communication into an offensive weapon: the apology letter addressed to Christopher Fay was publically disclosed. This maneuver of no little interest served the objective of publicizing the environmentalist organization’s behavior to public opinion, in particular, to its sympathizers and donators. Greenpeace received involuntary assistance in this from Shell, whose main objective was to amplify the environmentalist association’s failure. The principle of this publicity initiative applied by Greenpeace permitted its message to be oriented in the desired direction and to limit the margins for the adversary’s criticism. For this reason, despite the communication offensive against Greenpeace launched by Shell-UK, Shell-France, and John Major, the perception of its failure in the eyes of public opinion was mitigated by the perception of its sincerity.

Capitalizing on your adversary’s contradictions: acceptance of one’s errors can be immediately placed in better perspective by bringing theirs to light. Parallel to its confession “Greenpeace recalled that some scientists had asked themselves about shortcomings in the information disclosed by Shell”, while also noting the fact that whereas some scientists believed sinking the platform to be more ecological than dismantling it, others were less convinced. Highlighting these contradictions in the scientists’ reasoning made the possibility of making an error in good faith more believable, in this way legitimizing the error made by Greenpeace.

On one hand, every mistake offers the chance for a new learning experience. The mistake made by Greenpeace allowed Shell to raise a related problem: the management of oil and gas platforms no longer utilizable. The attack that was so detrimental to British interests provided the occasion for a constructive contribution to the scientific debate. On the other hand, this war of information between Greenpeace and Shell brought the latter to a contradiction: continuing to harshly attack Greenpeace and exploit the defeat of its science would appear an unjustified exaggeration, especially in light of the latter’s confession. Crushing the environmentalist organization made it impossible for Shell to regain its previous media status. The environmentalist organization’s media skills suggested that it would be better for Shell to have it as an ally than an enemy, and for this reason Shell officially invited Greenpeace to take active part in its “Offshore Europe 1995” conference dedicated to environmental protection.

In order to ensure adequate media coverage for its Brent Spar operation, Greenpeace spent 350,000 pounds sterling to rent satellite communication lines – twice the amount the BBC paid to cover the event. Its days of being a dilettante were long over.

2.2

By adopting a decidedly defensive strategy that continuously confirmed the complete reliability of the sinking operation, Shell expended great energy and obtained only mediocre results, and was never really able to counter the attack of which it was a victim. This fatal outcome for the oil company originated in the falsification of its perception of the theaters of action. Whereas Shell communicated on the basis of tangible, objective reasoning and scientific facts, Greenpeace based its fight on subjective, subversive, pseudoscientific terrain and the enlargement of contradictions. This forced Shell to add arguments of more self-justificatory nature based on objectivity. If the Anglo-Dutch group had mastered the art of polemic and the offensive techniques of information warfare, the final verdict would have undoubtedly been different.

“These new forms of warfare are no less radical than the previous ones, and oblige those under attack  the economic world, the protagonists of civil society to adopt new strategies. In particular, it is fundamentally important to prevent accusatory actions whose effects are irremediable because they are media effects: the pathetic apologies made by Greenpeace will not remedy the injury done to Shell in any way.”.

For most organizations, traditional crisis management and institutional communication models have shown their limits when faced with radicalization and the massive use of new communication technologies. A number of elements of precise and effective response can be derived from the concept of counter-information, which may be defined as the combination of communication actions that thanks to pertinent and verifiable information permits to attenuate, invalidate or turn back an information attack against the attacker. Counter-information differs from the disinformation employed by special services but responds to constraints and requires the same quality as the original information attack, and precisely: preliminary intelligence, mastery of psychological and psycho-sociological mechanisms, skillfulness in the management of communication techniques and principles (including advertising), and close contacts with the mass media, etc.  Hence every prevention of an insidious open information attack requires knowledge and mastery of the offensive techniques of information warfare. The criteria of effectiveness of counter-information are as follows:

–              in order to be credible, counter-information must make an effort to channel open and well-argued information, verifiable and not manipulated information;

–              where, when, how, and to which extent must information be employed? Counter-information is a question of information strategy and management;

–              the adversary’s contradictions and weaknesses must be systematically attacked;

–              the argument in support of attack is all the more incisive when the evidence of the facts presented can be ascertained;

–              communication is linked to the exemplarity of demonstration and the skillful use of spontaneous resonance elements.

The media defeat suffered by Shell Group demonstrates, above all, the limits of a discourse and logic based exclusively on a technical validation of the issues at hand, while also suggesting that counter-information is the only response that permits the mitigation or even the reversal of an embarrassing and untenable situation.

Hostage to its own certainties, Shell Group attempted to wage the battle on apparently favorable ground. Remaining in a strong/weak relationship without taking the initiative, the Anglo-Dutch company was forced to develop a defensive strategy. The oil company’s reaction based on mechanisms of direct conflict provided inadequate response to the powers of persuasion of the environmental protection organization that had acquired mastery in the art of dialectics and rhetoric in the meantime. Despite its initially restricted margin of maneuver, Greenpeace was able to construct global reasoning that publicized the issue with the use of subversive techniques. Its sensational victory is exemplary from various points of view. First and foremost, it demonstrates that no international company may deem itself safe from the risk of substantial destabilization by even an organization with limited means. Many structures today are capable of conducting effective communication campaigns and selecting the resonance amplifiers most appropriate for the exertion of pressure on political institutions. No multinational appears to be dedicating enough attention to these new risks, and some have been victims of similar experiences, such as the French oil company ELF, which was obliged to pull out of an important business project in Chad.

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Transitioning from least developed country status: Are countries better off?

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The Least Developed Countries (LDCs) are an internationally defined group of highly vulnerable and structurally constrained economies with extreme levels of poverty. Since the category was created in 1971, on the basis of selected vulnerability indicators, only five countries have graduated and the number of LDCs has doubled.  One would intuitively have thought that graduation from LDC status would be something that all LDCs would want to achieve since it seems to suggest that transitioning countries are likely to benefit from increased economic growth, improved human development and reduced susceptibility to natural disasters and trade shocks.

However, when countries graduate they lose international support measures (ISMs) provided by the international community. There is no established institutional mechanism for the phasing out of LDC country-specific benefits. As a result, entities such as the World Bank and the International Monetary Fund may not always be able to support a country’s smooth transition process.

Currently, 14 out of 53 members of the Commonwealth are classified as LDCs and the number is likely to reduce as Bangladesh, Solomon Islands and Vanuatu transition from LDC status by 2021. The three criteria used to assess LDC transition are: Economic Vulnerability Index (EVI), Human Assets Index (HAI) and Gross National Income per capita (GNI).  Many of the forthcoming LDC graduates will transition based only on their GNI.  This GNI level is normally set at US $ 1,230 but if the GNI reaches twice this level at US $ 2,460 a country can graduate.

So what’s the issue?  A recent Commonwealth – Trade Hot Topic publication confirms that most countries graduate only on the basis of their GNI, some of which have not attained significant improvements in human development (HAI) and even more of which fall below the graduation threshold for economic development due to persistent vulnerabilities (EVI).  This latter aspect raises the question as to whether transitioning countries will, actually, be better off after they graduate.

Given the loss of ISMs and the persistent economic vulnerabilities of many LDCs, it is no surprise that some countries are actually seeking to delay graduation, Kiribati and Tuvalu being two such Commonwealth countries despite easily surpassing twice the GNI threshold for graduation.

How is it possible that a country can achieve economic growth but not have appreciable improvements in resilience to economic vulnerability?  Based on a statistical analysis discussed in the Trade Hot Topic paper, a regression model, based on all forty-seven LDCs, was produced.  The model revealed that there was no statistically significant relationship between economic vulnerability and gross national income per capita.  The analysis was repeated just for Commonwealth countries and similar results were obtained.

Most importantly, analysis revealed that there was a positive relationship between GNI and EVI. In other words, increases in wealth (using GNI as a proxy) is likely to result in an increase in economic vulnerability.  This latter result is counterintuitive since one would expect more wealth to result in less economic vulnerability.

So what’s the take away?

The statistical results do not necessarily imply that improving the factors affecting economic vulnerability cannot result in improvements to economic prosperity.  It does suggest, however, that either insufficient efforts have gone into effecting such improvements or that there are natural limits to the extent to which such improvements can be effected.

One thing is clear, the multilateral lending agencies should revisit the removal of measures supporting climate change or other vulnerabilities for LDCs on graduation, since the empirical evidence suggests that countries could fall back into LDC status or stagnate and be unable to achieve sustainable development. Whilst transitioning from LDC status should be desirable, it should not be an end in itself. Rather than to transition and remain extremely vulnerable, countries should be resistant to such change or continue to receive more targeted support until vulnerabilities are reduced to more acceptable levels.

What are your thoughts?

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U.S. policy and the Turkish Economic Crisis: Lessons for Pakistan

M Waqas Jan

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Over the last week, the Turkish Lira has been dominating headlines the world over as the currency continues to plunge against the US dollar. Currently at the dead center of a series of verbal ripostes between Presidents Donald Trump and Recep Tayyip Erdogan, the rapidly depreciating Lira has taken center stage amidst deteriorating US-Turkey relations that are wreaking havoc across international financial markets. Considering Pakistan’s current economic predicament, the events unfolding in Turkey offer important lessons to the dangers of unsustainable and unrealistic economic policies, within a dramatically changing international scenario. This holds particular importance for Pak-US relations within the context of the impending IMF bailout.

In his most recent statements, Mr. Erdogan has attributed his economy’s dire state of affairs as an ‘Economic War’ being waged against it by the United States. President Trump too has made it evident that the latest rounds of US sanctions that have been placed on Turkey are directly linked to its dissatisfaction with Ankara for detaining American Pastor Andrew Brunson. Mr Bruson along with dozens of others has been charged with terrorism and espionage for his purported links to the 2016 attempted coup against President Erdogan and his government.  There is thus a modicum of truth to Mr. Erdogan’s claims that the US sanctions are in fact, being used as leverage against the weakening Lira and the Turkish economy as part of a broader US policy.

However, to say that the latest US sanctions alone are the sole cause of Turkey’s economic woes is a gross understatement. The Lira has for some time remained the worst performing currency in the world; losing half of its value in a year, and dropping by another 20% in just the last week. Just to put the scale of this loss in to perspective, the embattled currency was trading at about 2 Liras to the dollar in mid-2014. The day before yesterday, it was trading at about 7 Liras to the dollar.

While the Pakistani Rupee has also depreciated quite considerably over the last few months, its recent drop (-17% against the dollar over the past 12 months) pales in comparison to the sustained and exponential downfall of the Lira. Yet, both the Turkish and Pakistani economies are at a point where they are experiencing an alarming dearth of foreign exchange reserves that have in turn dramatically increased their international debt obligations.

The ongoing financial crises in both Turkey and Pakistan are similar to the extent that both countries have pursued unsustainable economic policies for the last few years. These have been centered on increased borrowing on the back of overvalued currencies. While this approach had allowed both governments to finance a series of government investments in various projects, the long term implications of this accumulating debt has now caught up with them dramatically. As a result, both countries may soon desperately require IMF assistance; assistance, that in recent times, has become even more overtly conditional on meeting certain US foreign policy requirements.

In the case of Pakistan, these objectives may coincide with recent US pressures to ‘do more’ regarding the Haqqani network; or a deeper examination of the scale and viability of the China- Pakistan Economic Corridor. With regards to the latter, US Secretary of State Mike Pompeo has clearly stated that American Dollars, in the form of IMF funds, to Pakistan should not be used to bailout Chinese investors. The rationale being that a cash-strapped Pakistan is more likely to adversely affect Chinese interests as opposed to US interests in the region at the present. The politics behind the ongoing US-China trade war add even further relevance to this argument.

In the case of Turkey however, which is a major NATO ally, an important emerging market, and a deeply integrated part of the European financial system, there is a lot more at stake in terms of US interests. Turkey’s main lenders comprise largely of Spanish, French and Italian banks whose exposure to the Lira has caused a drastic knock on effect on the Euro. The ensuing uncertainty and volatility that has arisen is likely to prove detrimental to the US’s allies in the EU as well as in key emerging markets across South America, Africa and Asia. This marks the latest example of the US’s departure from maintaining and ensuring the health of the global financial system, as a leading economic power.

Yet, what’s even more unsettling is the fact that while the US is wholly cognizant of these wide-ranging impacts, it remains unfazed in pursuing its unilateral objectives. This is perhaps most evident in the diminishing sanctity of the NATO alliance as a direct outcome of these actions.  After the US, Turkey is the second biggest contributor of troops within the NATO framework. As relations between both members continue to deteriorate, Turkey has been more inclined to gravitate towards expanding Russian influence. In effect, contributing to the very anti-thesis of the NATO alliance. The recent dialogues between Presidents Erdogan and Putin, in the wake of US sanctions point markedly towards this dramatic shift.

Based on the above, it has become increasingly evident that US actions have come to stand in direct contrast to the Post-Cold War status quo, which it had itself help set up and maintain over the last three decades. It is rather, the US’s unilateral interests that have now taken increasing precedence over its commitments and leadership of major multilateral frameworks such as the NATO, and the Bretton Woods institutions. This approach while allowing greater flexibility to the US has however come at the cost of ceding space to a fast rising China and an increasingly assertive Russia. The acceleration of both Pak-China and Russo-Turkish cooperation present poignant examples of these developments.

However, while it remains unclear as to how much international influence US policy-makers are willing to cede to the likes of China and Russia over the long-term, their actions have made it clear that US policy and the pursuit of its unilateral objectives would no longer be made hostage to the Geo-Politics of key regions. These include key states at the cross-roads of the world’s potential flash-points such as Turkey and Pakistan.

Therefore, both Turkey and Pakistan would be well advised to factor in these reasons behind the US’s disinterest in their economic and financial predicaments. Especially since both Russia and China are still quite a way from being able to completely supplant the US’s financial and military influence across the world; perhaps a greater modicum of self-sufficiency and sustainability is in order to weather through these shifting dynamics.

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Social Mobility and Stronger Private Sector Role are Keys to Growth in the Arab World

MD Staff

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In spite of unprecedented improvements in technological readiness, the Arab World continues to struggle to innovate and create broad-based opportunities for its youth. Government-led investment alone will not suffice to channel the energies of society toward more private sector initiative, better education and ultimately more productive jobs and increased social mobility. The Arab World Competitiveness Report 2018 published by the World Economic Forum and the World Bank Group outlines recommendations for the Arab countries to prepare for a new economic context.

The gap between the competitiveness of the Gulf Cooperation Council (GCC) and of the other economies of the region, especially the ones affected by conflict and violence, has further increased over the last decade. However, similarities exist as the drop in oil prices of the past few years has forced even the most affluent countries in the region to question their existing social and economic models. Across the entire region, education is currently not rewarded with better opportunities to the point where the more educated the Arab youth is, the more likely they are to remain unemployed. Financial resources, while available through banks, are rarely distributed out of a small circle of large and established companies; and a complex legal system limits access to resources locked in place and distorts private initiative.

At the same time, a number of countries in the region are trying out new solutions to previously existing barriers to competitiveness.

  • In ten years, Morocco has nearly halved its average import tariff from 18.9 to 10.5 percent, facilitated trade and investment and benefited from sustained growth.
  • The United Arab Emirates has increased equity investment in technology firms from 100 million to 1.7 billion USD in just two years.
  • Bahrain is piloting a new flexi-permit for foreign workers to go beyond the usual sponsorship system that has segmented and created inefficiencies in the labour market of most GCC countries.
  • Saudi Arabia has committed to significant changes to its economy and society as part of its Vision 2030 reform plan, and Algeria has tripled internet access among its population in just five years.

“We hope that the 2018 Arab World Competitiveness Report will stimulate discussions resulting in government reforms that could unlock the entrepreneurial potential of the region and its youth,” said Philippe Le Houérou, IFC’s CEO. “We must accelerate progress toward an innovation-driven economic model that creates productive jobs and widespread opportunities.”

“The world is adapting to unprecedented technological changes, shifts in income distribution and the need for more sustainable pathways to economic growth, “added Mirek Dusek, Deputy Head of Geopolitical and Regional Affairs at the World Economic Forum. “Diversification and entrepreneurship are important in generating opportunities for the Arab youth and preparing their countries for the Fourth Industrial Revolution.”

With a few exceptions, such as Jordan, Tunisia and Lebanon, most Arab countries have much less diversified economies than countries in other regions with a similar level of income. For all of them, the way toward less oil-dependent economies is through robust macroeconomic policies that facilitate investment and trade, promotion of exports, improvements in education and initiatives to increase innovation and technological adoption among firms.

Entrepreneurship and broad-based private sector initiative must be a key ingredient to any diversification recipe.

The Arab Competitiveness Report 2018 also features country profiles, available here: Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, United Arab Emirates.

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