Corporate foreign policy: (def) (1) a principled methodology guiding current and future decisions in the foreign relations between and among governments and private sector business interests. (2) An emergent network of transactions and relationships leading corporations to pursue political objectives, and governments to pursue business objectives.

By Robert Amsterdam 

Of all the well known, inevitable follies of ambitious predictions, the one I continue to hold the most sympathy for is that of Francis Fukuyama, who in 1989 published his seminal essay entitled “The End of History?”  This infamous argument, celebrating the eventual triumph of liberal democracy and markets, attracted admiration, scorn, and heated debate throughout the 1990s, as the world considered the prospect of one universal system of governance, and the end of great conflicts. 

I am sympathetic toward Fukuyama’s thesis and the euphoria with which it was greeted, because I believe it was largely symbolic of the public’s thirst for simplicity and clarity in global affairs.  Businesses were eager to safely discover lucrative new markets, while families were thrilled to feel safe from bombs with jobs that wouldn’t suddenly be pulled away.  Both ideas seemed possible under America as the sole superpower in global affairs.  Coming from the century that brought us two world wars and decades of Cold War paranoia of nuclear annihilation, the pax americana of the Bill Clinton years did indeed engender a wild optimism, seen everywhere from the “irrational exhuberance” in the economy to the rapid liberalization of former totalitarian states.  People thought we were at a historical crossroads of great promise. 

However this sense of simplicity and clarity was brutally shattered over a very short period of time, as was any remaining belief in Fukuyama’s tidy end of history.  It was not just the terrorist attacks of Sept. 11 which began the downward spiral, but rather a confluence of events including an unprecedented spike in the price of oil to reach of $100 a barrel, the rapid depreciation of the US dollar, and a massive shift of wealth into the hands of governments and state-controlled entities.  Several examples such as Russia and China disproved the idea that democracy provides the greatest potential for a nation’s economic growth, and the spread of these authoritarian capitalist states began to pose a powerful challenge to the supremacy of liberalism.  Not in recent memory have governments come to play such a large role in the private sector, and never before have multinational corporations been so willing to be complicit in state interference.

The world had reached a new crossroads:  an environment in which one resource nationalist state can find protection from international law from other resource nationalist states, where sovereign wealth funds and state-owned companies could acquire assets to increase political leverage, and where leading private sector corporations are converted into lobbyists for a foreign government’s interests in their home country.  As these states got their first taste of entrepreneurialism, individual rights have rapidly eroded, global rule of law contracted, and corruption worsened, even among the wildly growing authoritarian states. 

It is from this environment that the concept of Corporate Foreign Policy (CFP) comes.  The term has its origins in a series of panel discussions organized by the World Bank on the failings of the Corporate Social Responsibility (CSR) doctrine, which has been reduced to meaningless by the insincere rhetoric of the public relations industry.  However, the question is no longer whether or not corporations should have a foreign policy, but rather what principles should guide a corporation’s engagement abroad.

However CFP is in my view a two-way street, applicable not only to the transparency and operational methodology of corporations abroad, but also regarding the activities of state-owned businesses and funds operating locally and internationally.  The point of exploring the features of both successful and negligent CFP by states and corporations is not only to install mechanisms of transparency and accountability, but also to ensure that these entities are clearly pursuing the interests of their respective shareholders and constituents.  

CFP is at once new and many decades old, and represents both a threat to global stability and an opportunity for responsible growth.  It is true that the line between the public and private sectors has been blurred, and in some cases, it is not in the public interest to re-establish this boundary.  However not everybody is playing by the rules, and, in many cases, these rules of engagement have yet to be written.

I don’t claim to put forward an answer about the viability of these competing systems of governance and corporate conduct in foreign relations – and I most assuredly am not the next Francis Fukuyama (whose thesis was ironically inspired by the Russian-born Alexandre Kojève).  However I do believe in the necessity to promote a dialogue about these issues, which are of immediate concern not only to executives and shareholders, but also to the sovereignty and rights of citizens.  Everyone stands to lose from the status quo, but a deeper understanding of the motives, objectives, and outcomes that surge forth when the worlds of business and politics collide is if anything a modest step forward.