IMD International

13th November Paris attacks: Implications for business

IMD Professor Reacts: Jean-Pierre Lehmann on the Paris attacks

17 November 2015

There are no words to describe the massacre in Paris on 13 November: the deaths, the injuries and the immense suffering.
 
There are however important messages that business leaders should be attuned to. The Paris massacre is not an isolated incident. In this first decade and a half of the 21st century there have been several: New York (2001), Madrid (2004), London (2005), Ankara (2007 and again 2015), Mumbai (2011), Nairobi (2013) and Paris twice this year, in January at the offices of the satirical weekly Charlie Hebdo and at the kosher supermarket, and now on 13 November.

Not only is Paris 13 November not an isolated incident, but neither, it is alas safe to predict, is it likely to be the last. Of course in terms of human tragedy, there is above all the fighting in the Levant, which has claimed an estimated 300,000 lives and internally displaced people and refugees in the millions.

These are the acts perpetrated by adherents of radical Islam which in the course of this century has become truly global, extending right across the Eurasian continent and parts of Africa. As many Islamic countries, especially in the Middle East North Africa, have low economic growth, rising populations, with a very significant youth segment (60% under the age of 20 in the Arab world), poor governance, and high youth unemployment, it is also, alas, safe to assume that the trend will continue.

While fundamentalist Islam is global and therefore most visible, Hindu fundamentalism is rising in India, as seen through the recent public murder in front of his family of a Muslim man accused of eating beef, and the persecution by Buddhists of the Muslim Rohingya minority in Burma. The phenomenon of pure blind hatred on racist or religious grounds is also virtually everywhere, tragically illustrated by the brutal murder of an American-African congregation attending church in Charleston South Carolina in June this year. Racist extremist parties are on the rise in Europe.

I have long stressed, since the high tide of globalization in the 1990s, that while we are actively aiming to build an integrated global market, we are failing to create an integrated global community. Clearly, however, without a global community the global market will be fragile and in constant risk of fracture.

And indeed that is what is happening and can be seen by the faltering of global governance. As the Paris 13 November massacre occurred, the G-20 summit was held at Antalya (Turkey) and seems, once again, to have achieved nothing. In two weeks will be the Climate Change summit in Paris. With the previous summits since Copenhagen in 2009 having produced nothing substantial to alter global warming, it was hoped that the Paris summit might witness some substantial progress, though at the moment of writing it would seem that the hopes risk being forlorn. Next month, in Nairobi, will be held the ministerial meeting of the World Trade Organization where the Doha Round will be on the agenda, as it has languished for the last fourteen years!

In this litany of global geopolitical woes I have not mentioned the numerous potentially explosive territorial disputes in most of Asia, notably in the South China Sea, nor the possible truly calamitous consequences of cross-border conflicts emerging from water shortages.

What does all this mean for business? Of course it can mean a lot in terms of lost sales and profits in markets that suffer from violent disruption: as , for example, the Danish dairy firm Arla discovered in its extensive Middle East market presence following the publication of the “Mohammed cartoons” in an obscure provincial Danish newspaper Jyllands-Posten in 2005.

But more broadly it has been my experience that too often business executives do not want to hear the unpleasant music of the global communal cacophony, preferring to put in ear plugs and pretend that all is well. With the fall of the Berlin Wall and the end of the Cold War it was assumed that geopolitics no longer mattered. In reality, as world events and trends have developed, geopolitics is even more prominent while much more confusing than before.

Exactly two weeks ago, ten days before the Paris massacre, I was giving a presentation on the global geopolitical scene and was accused by one of the participants of being too pessimistic. There are of course many reasons for optimism. But optimism is dangerous when it becomes complacency. As I have said, repeat and insist, it is far better to be alarmist and proved wrong than to be complacent and proved wrong. Business leaders must integrate the geopolitical dimensions in their views of the world and strategies, not just in foreign markets, but in domestic markets as well: fundamentalist terrorism knows no borders.

I shall become more optimistic when I see business executives taking out the ear plugs and in the process taking the global threats more seriously.

Jean-Pierre Lehmann is Professor of International Political Economy and the Founding Director of The Evian Group @ IMD. Professor Lehmann teaches on the Orchestrating Winning Performance program.



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