The grey zone: How business influence has become the new battleground for state warfare

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In the late 1930s the business model was primarily vested in a national market – you operated in a town, region, city or at most national landscape. The titans of industry were men (just about always men) who sat at the top of social orders that were national in nature and shaped by national narratives. You were an American Company (even if you felt you were Texan or MidWest or cosmopolitan Manhattan), an Australian outfit (either a subsidiary of a British firm or a local home grown product behind protectionist trade barriers) or maybe a Canadian concern driven by the exploitation of huge natural resources, growing labour availability and progressive confidence in a Dominion that was asserting its unique story. Transnational or global was the rare exception like Coca Cola, Ford or BP… and the cultural mindset was still nationalistic.

Survivors from the Edwardian era of mechanical and technological innovation, from the trenches of Polygon Wood, Vimy Ridge or Gallipoli, and the global depression that gave free trade, international markets and free flow of capital a bad name. You were not capitalists or managers of capital of anywhere – you were citizens, community leaders and stewards of precious capital from somewhere. Customers, investors or critics shared your shared citizenship. 

Take us 90 years or just three generations to now, and we are in a business environment where the product is designed in Seattle, manufactured in Shenzhen, shipped to Sydney, used by a backpacker from Sherbrooke with profits eventually distributed to pension funds in Stuttgart, Sheffield and Seoul. Global markets have risen because of technology, access, and trade since the end of the Cold War.

Nationalism is dead… so we thought. Everyone was a student of the “end of history” and reveled in the consumption of the same products, listening to the same music, driven by the same social media and embracing the “one world” viewpoint of unimportant borders, broad live and let live attitudes followed by a blurring of differences in political systems and their redundant values.

But then reality struck: we had invasions of territory by Russia, cyber trolling of opinions across national boundaries, the buying of influence in political parties across Western democracies by “new money” friends of authoritarian regimes, bullying of universities that offered platforms to critics of the authorities in Beijing, St Petersburg, Havana, Pyongyang or Ramallah. All in a decade post the global financial crisis when North American, Australian or European corporations were struggling to return to acceptable returns on investment, productivity or capital. Boom time followed by the downturn.

Faced with global debates on gender, climate, diversity, inclusion and redress for past historic injustices, it was easy to think that your market adversaries were just other global corporations, opinion leaders and a media circus of 24 hours coverage. Corporate Social Responsibility is a well established feature of a mature and risk managing enterprise (private, public or charitable). Corporate National Responsibility (giving due regard to the demands and peculiar requirements of the sovereign state giving you your “license to operate”) is something that fails to excite or trigger the Western executive or decision maker.

But an old problem has returned with a vengeance from the Cold War era: efforts by nations that have differing concepts of what capitalism, markets and freedom are to coerce, constrain, condition western liberal democratic society businesses to their agenda – illiberal, anti-competitive, neglectful of human rights and fundamentally corrosive to the national interests of liberal democracies.

It is played out in what is alternatively called the “grey zone” conflict and is in the news almost daily. We never fail to notice the allegations of impropriety with decision makers or the questioning of our social cohesion. Yet the main focus to-date of “hybrid warfare” — which uses non-military means to achieve warlike ends — has predominantly been on tactical methods such as cyber attacks, fake news campaigns and espionage. But understanding hybrid warfare’s strategic context equips political and business leaders better to address it. 

In simple terms, hybrid warfare uses capabilities not normally associated with war to coerce or subvert. Such techniques are intended to delay recognition that an attack is under way, provoke paralysis in decision making through confusion and discourage the victim from responding forcefully due to the absence of “legitimate” military targets. China, Russia (and to lesser degrees Iran and North Korea) are taking on capitalist democracies and hoping to re-make the international political, economic and trade systems through a coordinated hybrid effort that is taking place largely outside the traditional military or diplomatic realms. 

BRICS, the emerged Chinese development banking sector, the Belt and Road strategies and vast capital flows by the global wealthy from closed societies into Mayfair, Melbourne, and Manhatten all shape our acceptance that little can be done by tired, tense and politically divided free societies. 

The goals of these hybrid efforts appear to harm economic strength; undermine the legitimacy of key institutions such as governance bodies, academia, diplomatic entities and the media; sow social cohesion discord; and weaken the bonds between the nations and international organisations such as NATO. The erosion of economic resilience and the weakening of cultural values are probably the more pressing threats and likely the hardest to reverse once they are accomplished. 

Cyber attacks on private companies, state managed infrastructure and core government entities are a chilling example of grey zone warfare: something that sits below the threshold of naked violence or breaches of international law. 

With entities as diverse as the National Cyber Security Centre in London, the RCMP in Canada, the FBI in the US and Department of Defence in Australia all giving recent alarms over the threat profile facing civil society (in particular business and political decision makers) from State and State-sponsored  interference, the time to plan a modern style of deterrence is long overdue.

Policy voices like the RAND Corporation, the Royal Unites Services Institute, the Australian Strategic Policy Institute and Canada’s Mackenzie Institute have all pointed towards the growing risk profile posed by hybrid warfare and the corresponding requirement to bolster national responses.

Business is not in the business of defending a nation. But is it is a vital stakeholder in upholding the civic values underpinning its own legal, economic and cultural validation. 

Defence, security, intelligence and critical infrastructure leaders operate in an environment where they depend upon the reliability and resilience of private sector entities, their staff, managers and ultimately shareholders. Just as pension funds and mutual investors are long term players in capital markets, business is a long-term stakeholder in the preservation of Western pluralist free societies. 

Any security threat is a market challenge just as significant as the climate emergency, mass people movement, unfair trade practices or corruption. 

Shareholder value, brand or reputation management all contribute to today’s CEO headaches – but rising competition between great and emerging powers also raises the question: “have we met our corporate sovereign nation responsibilities?”. Consumers and shareholders via the media have plenty of opportunity to pass judgement on corporations that fail the test of public opinion.

Business leaders excel and profit from the freedoms derived from free societies under the rule of law. Defending these societies is no longer a luxury in a world only a few mouse clicks or fake news stories away from harm.

Noel Hadjimichael is a London based public policy consultant in the security, defence and civil society space with relevant experience working in politics, the civil service, industry and the charitable sectors.

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