Theme 6: Key Issues to Doing Business in Conflict Zones

[Peace Through Commerce]

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A discussion moderated by Timothy Marshall, Chairman, International Institute of Peace Through Tourism Visit Biographies for more about presenters

How can business handle the key issues in conflict zones?
This session focuses on flashpoint issues that arise in conflict sensitive zones. While some issues are common in any business settings, certain issues recur that businesses must address as part of their overall strategic focus.

Presentations:
Key Issues in Doing Business in Conflict Zones
Watch the three videos and join the discussion with presenters below.

	Igor Abramov, Counsel, Heenan Blaikie LLP "Building Peace in Fragile States: Building Trust is Essential for Effective Public-Private Partnerships"(5:48)			Don Mayer, Professor of Business Ethics and Legal Studies, University of Denver "Peace Through Commerce and Private Militaries"(3:36)

	Tara Radin, Wharton School of Business, University of Pennsylvania "Justice and Reconciliation in Post-Conflict Markets"(6:10)		Working Papers Building Peace in Fragile States – Building Trust is Essential for Effective Public-Private Partnershipss Igor Abramov Heenan Blaikie LLP Peaceful Warriors: Private Military Security Companies and the Quest for Stable Societies Don Mayer University of Denver

Discussion: How can business mitigate the key issues in conflict zones?
- While some issues are common in any business settings, which issues recur that businesses can address as part of their overall strategic focus?

[Emma Werlin]

I am interested to learn and see if many of these very high profile conflict zones will be able to entice businesses and tourism to set-up subsidiaries in their lands. It seems that there are so many inherent community based problems that have led to these conflicts and many of them still have yet to be solved. I think that, as most have been saying, businesses moving into these terror and war ridden lands would be a way to ease the problems, but it is necessary for these countries to deal with, or at least begin to deal with, the current social and community problems that have caused these problems before this can happen.


My question is do you think that it is wise for organizations to move into these zones before they have even begun to scratch the surface of identifying and working on solving some of their inherent problems? Is it possible that businesses moving into these lands when the countries are not yet hospitable would be counterproductive?

Thanks,
Emma Werlin

[David Staples]

This is an interesting article from the BBC that I came across the other day, possibly the ultimate in high profile conflict zone tourism:

http://news.bbc.co.uk/2/hi/middle_east/7957974.stm

I think it is great to see Iraq attempting to reestablish its tourism industry, although clearly that effort is off to a slow start. I definately expect to see more of this in the coming months, as critical commercial air service continues to return to Baghdad from London and other european hubs. Of course this is a fairly niche market, consisting of those people who like thrills when they travel. Clearly the travel companies have faith in the state of the country and its people. This company featured in the article even did the tour without the cover of armed guards, seeing as the requirements for their use were too stringent. I expect to see the private security business flourish in these types of areas as more and more people decided to take the plunge and visit.

[Kristen Simpson]

This is in response to the last several posts.

When thinking of companies moving into post-conflict and potentially areas that would be a risky investment, I think of neighborhoods in our very own city of DC. We have all heard at some point about areas the city is trying to clean up. In some cases, to do so involves building brand new, sometimes expensive strip malls, restaurants and businesses, and the idea is to drive the "bad" community and crime out, and bring a different crowd in.

We see that a large percentage of the time, this does not work. The crime persists, and if the strategy does work, it takes a substantial amount of time.

Does anyone have any comment on how THIS is different than moving businesses and corporations with strong CSR strategies into areas of post conflict? Is the only difference that the companies are committed to the community? Do we send the tourists and the businesses into these areas and hope for the best? How strong is strong enough for these companies' CSR strategies to work and make a difference?

Also, I just wanted to say that I think a strong incentive for companies to move into these areas to try and make a difference is driven by the desire not for profit, but for a positive, lasting reputation in the long term, given they are successful in their efforts.
I am really interested to know peoples' ideas on some of the questions I've raised.
Thank you

[Scott Lowenstein]

Kristen,

You raise an interesting question that regards the difference between businesses moving into less-developed areas of our city, versus countries once previously burdened by conflict. Also, you bring up the current strategy of building up underdeveloped city areas through new development, whose goals are to attract new types of customers, and more businesses.

There are probably many examples of similarities between these two scenarios, but I see one inherent difference.

Goals aimed towards building up undeveloped city areas, as you mentioned, attempt to attract new customers and to "drive the 'bad' community and crime out." In practical terms, this means attracting new "types" of customers and people to the area, and pushing out undesired ones. Whereas simply attracting new customers to a city area may improve that local economy, this strategy is not a viable option in post-conflict burdened nations. Instead, bringing commerce and business to these areas more often involves incorporating the local workforce and attracting local customers. Of course industries such as tourism pull travelers from nations abroad, but they still require local workers to run operations. The basic underlying difference between these scenarios is that while one strategy seeks new customers and commerce, the other works with the current status of the local community and aims to develop it using the local workforce and resources.

[Timothy Kim]

I think the best way to approach this would be for organizations that have a strong attachment to the region, say in terms of an organization that needs to utilize the regions resources, to move in before solving some of the inherent problems. This gives them strong incentive to protect not only their company on foreign soil, but to work to develop a long lasting peaceful community. This is off course highly risky given the fact that there could be hostility from locals. However, I feel this gives the company the most incentive to work towards establishing peaceful relations, while at the same time, pushes the local community's economy with jobs.

But, do you think there are other ways that organizations would be incentivized to quickly establish peaceful relations that benefits both sides in terms of profit as well as CSR?

[Komal]

I agree that when corporations enter conflicted countries they are aiding in the effort to "drive our crime" and to promote peace as well as reduce poverty. All of these things are being done because they allow for industrialization as well as enabling even greater job creation. The tourism industry is a great example of this. Although it is risky for many countries to enter a new country, especially ones that may not be as stable, I believe that there are some advantages to it - in an economical and "non fiscal" way. In Theme 2, Steve Kaplitt discussed a program that he is a part of, EESR - The Economic Empowerment in Strategic Regions Initiative. In this, private companies are able to invest in businesses of entrepreneurs and capitalists that are in these conflict regions. EESR finds these capitalists, aids them in formulating a proposal, and then they send these out to private companies who think they may want to invest. If companies did this, not only are they fulfilling their CSR duties and investing in foreign projects, but they are also not taking as great of a risk by simply entering into a conflict region with the hopes of being successful.

[Vini Trambadia]

I have read your paper and I think its very interesting. I believe the process which you have outlined to build trust hits all points that would requite it to be successful.

I had one question, since these are conflict zones their wounds are quite fresh. Do you think they will be receptive to the process? Is there a way to gain some trust before the process is implemented?


Vini Trambadia

[Tara]

In any business, not just tourism, companies are finding that their strongest assets are often the people who live there. There's an increasing bias against ex-pats..... At least in my experience.

[Abbas Zaidi]

My question is for Igor Abramov.

In your video you discuss that the first part of the in-country assessment is to engage all relevant stakeholders in a discussion to assess their needs. I was wondering, how difficult it is to do something like this? I would imagine that many stakeholders benefit from corruption and suppression of one side. It might not be in their best interest to end such practices even if it is for the overall good. How would you go about first introducing opponents to each other in a peaceful manner and then convincing both sides that working together is the optimal solution?

I ask this because I am from Pakistan and the people who live there all know that corruption is prevalent but no one is willing to give up their piece of the pie so the cycle continues. The scope of corruption is as small as getting out of speeding violation to running for political office.

Thank you,

Abbas Zaidi

[Igor Abramov]

The process of assessing needs can be difficult and lengthy process, especially in countries with history of periodic wars and ethnic problems. It takes time to bring people in such conflict zones together. In one country it took us almost one year to accomplish this goals, and yet it became one of our best partnerships. The lesson I learned from this was, just because it is difficult and contentious it does not mean taht people can not come together.

In terms of bringing stakeholders together, please take a look at my response to Brandon. This approach has worked for me in many countries, and I do not see why Pakistan would be an exception. Often people tend to be too ambitious in their goals and fail to identify small and tangible goals on which diverse stakeholders can agree on. However, most skilled moderators or professionals can help find common interest even among the most diverse stakeholders. Then the challenge becomes gaining commitment from them to work together towards same goals. This is where foreign aid can be helpful.

Please let me know if I did not fully respond to your question.

[Abbas Zaidi]

yes, thank you!

[Rebecca Wilson]

This response is directed to Igor.

In your paper you write about promoting public sector governance initiatives and including the government in private sector processes to promote a mutually beneficial relationship. I agree that the public sector is essential in enabling growth in the private sector. It seems to me that it is easy to identify the public sector as a problem preventing stability and growth, but much more difficult to actually fix the problem.

I studied abroad in Argentina and noticed a prevalence of corruption in and distrust of the government. It seemed that there was no potential for citizens or businesses to fully prosper or to take advantage of growth opportunities until confidence was re-established in the markets and in the banks.

What specific measures can you take to combat the corruption preventing growth in the privates sector? What can be done if the government of the country is unwilling to change because these individuals are benefiting from this corruption? How can you change a government in which corruption has been prevalent for decades, if not centuries? And how can you go about measuring these small steps in the right direction? Or, is there any action that businesses can take to combat this corruption and attempt to re-instill confidence in the country's people?

Thanks so much,

Rebecca