Andrea Mennillo’s speech on “Geopolitcs: its Impact on Global Business” Made at Fordham University’s Gabelli School of Business.

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Fordham University - Gabelli School of Business

Lincoln Center, October 24, 2019

Opening Remarks

Good afternoon to everyone. As always, I want to thanks Dean Rapaccioli for her usual willingness to give space to meetings with strong and concrete international view.

I also want to thank Father McShane and Rev. Vincent Decola for their sensitivity for giving green light to these conferences with an international perspective. Today we focus on geopolitics.

We are here today because it is important to enrich our personal cultural background starting from knowledge and study.

The objective is to understand what happens around us gathering information from day by day reality around the world. It is crucial to know more about international politics and international relations and related impacts on business activities.

These are just insights that apparently seems very far away from us but - on the contrary - they are not, because have great consequences on the way we do business.

Business is global now. Talking about impacts, let’s think about for example to the relevance of trade agreements, to oil prices changes during conflicts, etc…

So, welcome to everyone, and thank you for being here with us.

Geopolitics and globalization in the digital era

Geopolitics and globalization are two concepts that it is important to clarify because they are strictly connected. First of all, what does geopolitics mean?

Geopolitics is a recent word created to define the complexity of relations among states in the modern era.

Rudolf Kjellén, a Swedish political scientist, was the first to use this word at the beginning of the 20th century and it came into worldwide use during the World Wars.

Geopolitics is the union of two Greek words - GEO + POLITICS – where:

• GEO means Hearth and this has to do with a global idea which oblige us to turn this ancient word into a more contemporary one that is “international”;
• POLITICS comes from Polis, that means "affairs of the cities"(according to Aristotle’s ideas), defining the set of activities associated with the governance of a country, or an area.

Finally, Geopolitics is the analysis of the relation of international political power to the geographical setting. Here we come to globalization.

Thecurrent context is strongly dominated by interculturality, complexity and dynamism.

Globalization is not a phenomenon that is born today but has always existed and over time took on different connotations depending on the historical period.

Todaythe rapid growth and spread of new information technologies applied to telecommunications reduces even more distances between countries, both referring to economic activities and to everyday life.

The “winners” in this current scenario are all the companies that:

• deal with the physical transfer of goods (see Amazon, for example);
• sell intangible services through the network (see big internet companies, for example).

However, we have to consider the reality, made up by different countries, boundaries, commercial treaties, fiscal rules, payment systems, tariffs, customs duties and taxes (direct and indirect).

Some of the main international economic agreements in force are:

• NAFTA(North American Free Trade Agreement) which is going to be replaced by the USMCA (which includes Mexico), introducing the progressive elimination of all tariff barriers among countries within the agreement;
• therecent Europe-Japan agreement;
• theWTO rules;
• CETA, the agreement between the EU and Canada;
• MERCOSUR, agreements among South American countries;
• bilateral(increasingly widespread) and multilateral agreements;
• freetrade agreements;

In this global arena we have to think about criminal actions so there are set of laws and procedures to preventthem.For example those rules related to anti-money laundering. US imposed the Foreign Account Tax Compliance Act (FATCA) to foreign countries that want to make business with US citizens in order to contrast tax evasion. These rules were necessary to manage great growth of international transactions.

Today it is important to be informed on what is happening around the world (in USA, there seems to be very little general interest in what happens outside), because event now has global consequences, even in real time.

There are important examples of globalization that come from the past (religious and territorial).

In our Jesuit tradition we have two important men to remember, both consistent with Ignatian spirituality and its missionary dynamism:

• Francis Xavier, was born in XVII century (1506), he brought the Christian message throughout Asia (in particular, in Japan and in India). Francis Xavier together with Ignatius of Loyola was co-founder of Society of Jesus. He is Patron of Catholic Missions;
• MatteoRicci, who in the 16^th century dedicated his mission to the Christianization of China, fully penetrating the Chinese culture and learning language, tradition up to become a leading representative of the imperial court, esteemed for his great experience, and thanks to this he still be remembered in China even today.

As you see, the evangelical message was the first global message. Francis Xavier and Matteo Ricci are here great examples.

Coming back to the past means learning from who came before us, means contemplating and always having in mind valuable experiences.

The playground is the world and in our daily business life it is important to know who passed the baton to people like Father Mcshain and Rev. Vincent Decola.

The same Ignatian spirit today requires from each of us "... the willingness to participate in social and political life and to develop our human qualities and professional skills to become more competent operators and more credible witnesses"(from Principi Generali della Comunità di Vita Cristiana del 1998). Once again this message tell us that it is important to acquire the necessary knowledge around us, to become a bridge between diversity.

Here in Fordham we must be the first who are able to understand this kind of messages. Knowing history means that we should understand the globality of Jesus‘ message. A message wich is does not closed within borders.

The Christian faith is -in fact- an inclusive concept, it is an attitude of reciprocity and openness towards the others which goes beyond political and cultural boundaries.

An other example of globalization, this time a territorial one, is the Roman Empire expansion, which I often like to mention in my interventions: from a few huts near the Tiber river, it expands throughout the Mediterranean and Europe.

Rome was one of the first multi-ethnic and "global" state.
Its open society leads it to attract various Italic people and to integrate its cultures into a unique "melting pot", from which was born a state capable of assimilating external elements, enhancing them and expanding itself to the borders of the world known at that time.

Geopolitics and Diplomacy

Why is geopolitics so important? Geopolitics, even if involves different disciplines - such as history, geography, anthropology, economics and others - is not a science, but rather the study of specific cases, where there is competition for a territory and for projects.

The keywords are always dialogue and confront. In all ages. Activities traditionally delegated to diplomacy and ambassadors.

But what is diplomacy and who was the ambassador?

• Diplomacy comes from the Greek verb „diploun“ (fold in two). During the Roman Empire the imperial documents, as „passports“ and transit permits, were fixed on double metal plates, folded and sewn. These documents were called "diplomas". Later, this name was used for all the official documents. The use of the terms "diplomacy" and "diplomatic" dates back not earlier than 1796, when in England Edmund Burke began to use it by designing "the set of political-institutional procedures through which states maintain relations with each other". Starting from 1815, after the Congress of Vienna, the diplomatic service became a real profession distinct from the politician, thus acquiring juridical value with norms and prescriptions;
• Geography is related to diplomacy: in the past borders were mainly set by nature (rivers, mountains, seas,…). Then borders were sometimes decided by politics without taking into considerations people living over a specific land. A fact that is often a reason for conflict;
• See for example: Kurds is an ethnic group composed of 50 million people divided (by politics) in five nations such as Turkey, Iran,Iraq,  Syria and Armenia. The Kurdish diaspora is similar to other ethnic group such as the Armenians. Today Kurdistan is not a State but is a region with geopolitical relevance. In Syria and Iraq they have gained a special status; in Iran people live peacefully but in the other countries they are fighting;
• Current news makes us well understand what today's geopolitics is. See revolutions currently open all around the world.

Ambassadors were spokesmen and reported to their sovereign. They represent their own country in other states, where they are in charge of conducting negotiations and maintaining relationships. The importance of this role, is demonstrated by the fact that it is the highest office among the civil servants (the appointment as ambassador is the highest honor a citizen has received from his country). In fact, in the republics they had a superior authority to that of the royal correspondents. In the second millennium, the countries with the largest diplomacies were: France, Spain, UK, Vatican City.

Today, technology has changed their role. The web has made relationships faster and more direct, even among Presidents and Prime Ministers. The role of diplomacy has therefore become more commercial oriented.

In the current global scenario it is therefore important to learn to relate and to reach points of convergence.

It is not by chance that ambassadors were political experts, trusted, cautious and with diplomatic ability.

In this context, arises the value of a profession that I know well as Business Diplomacy.

It consists in establishing and sustaining positive relationships with foreign government representatives and non-governmental stakeholders (economic and non-economic) with the aim to build and sustain legitimacy in a foreign business environment.

Business diplomacy is a way to seize opportunities in the current globalized world. It requires a set of important competences such as cross-cultural communication skills, interpersonal influence, empathy, networking abilities, adaptive thinking, resilience, knowledge of country’s culture and traditions.

In business diplomacy, what opens doors for multinational companies worldwide is an individual’s ability to build trust with rulers, decision-makers, entrepreneurs and leading figures in foreign institutions – even where such opportunities come intertwined with complex challenges and barriers to entry.

In business diplomacy, it is one’s reputation, diplomatic talents, and deep study of the country that make creating important opportunities.

Geopolitical poles

In this globalized world it is fundamental to be able to analyze international equilibrium from a wide perspective.

During decades (years 1950, 1980, 2000, today) the first 5 countries ranking for GDP, population and military expenditure has changed, reflecting changes in world balances.

I see 6 big areas of power/influence

1. Three main leading countries: US, China and Russia. They are the strongest economies of the world with the most powerful armies.
   • Russia has a leading political influence, but a lower economic power than US and China. It ranks 5th in the world by GDP;
   • But they are very different countries in terms of government systems (only US is a democracy);
   • Russia is a huge country, it starts from Europe and covers a very big part of Asia: Vladivostok[1], a Russian city placed beyond the Eastern part of China and in front Japan - is 8,30 hours fly from Moscow, vs nearly 5 hours from Los Angeles to NY;
   • Can you imagine the difficulties in governing such a broad country, with so many differences among areas?
   • Today in Russia there is a President on power for 22 years. In 1997 Boris Yeltsinappointed Putin deputy head of the Executive Office of the President;
   • We do not know too much about what happens in Russia. Considering the foreign policy – from the European point of view- Russia has a very active role, as it is our neighbor;
   • Currently, USA and China are playing a “trade war” in order to gain the hegemony of the global market.

2. Europe. It is the area that seems to have more stability.
   • European Union is facing several internal troubles and it has to do with populism. So foreign policy is influenced by internal politics;
   • If Europe is home of democracy and through cultural illuminism its structure shifted from dictatorship to democracy, today Europe is living a difficult moment. Differencies among political choices and people values are increasingly generating mistrust;
   • Brexit docet. Today there is a big confusion that should lead to irreparable damages (even if UK decides to come back);
   • From political point of view, it can be considered an unsuccess, even if economically it is the only way;
   • Relations between member states are not fluid and it is difficult to find a common view on many topics affecting internal and external affairs (migrations, economic policies, public accounts);
   • Now it is facing the issue of Brexit, in order to find a balanced agreement with UK;
   • It is important for the EU to be able to open a dialogue with Russia, its most powerful neighbor.

3. The American Continent, in particular South America that has been freed from colonial control just one century ago
   • Venezuela is one of the main oil producers in the world. Its wealth sudden increased, but it is very polarized in the society;
   • Brazil, Argentina and Chile have natural resources but are most controlled by foreigners and are not so evolved in terms of citizens’ quality of life standards and of democratic processes;
   • Canadais a big country, which needs to be contaminated from outside. Culturally, it is very much connected to the European world and for some extent even more then to the US;
   • Mexico is a country that needs regulation. Its immigration brings not only workforce but also brings a sense of aggregation and social values as family, according to Christian values.

4. Far East. The Asia-Pacific region is still seeing a quite powerful economic growth.
   • Japan created the third largest economy in the world after the war, even though it is now losing ground due to the rising of other countries of the region;
   • There are some emerging stars, like South Korea, Indonesia, Vietnam and the Philippines;
   • India, after recent elections is now looking for economic stability that, the new government will have to reach through reforms;
   • This area has differences in political and economic systems, in the culture and in the religion (most people are polytheists);
   • It is an area where conflicts still exist.

5. Middle East. An area that was controlled by the British until 50 years ago
   • Composed of countries (e.g Kuwait, Qatar, Oman) whose economy was traditionally based on trade, but then oil changed equilibriums and relationships. They are countries governed by emirs with absolute power
   • Israelis is surrounded by hostile countries. Alliances are so changeable that this could push to an alliance with Saudi Arabia

• Now the scenario is much more complex and the focus is on the conflict between Sunni and Shia feeded by autocratic governments and Islamist movements
  • Lebanon is a small country but it is crucial for the equilibrium of the area. It has a great history. There is a strong Shiite community hostile to Israel. The Sunni and Maronite Christian presence is lower. If Lebanon is in equilibrium, this is also valid for the rest of the region
  • Lebanon, Israel and Iran are the only countries where elections exist.
  • In Lebanon, the situation is evolving in Beirut. The attack of the Turkish army in Syria is maybe putting under pressure the south of Lebanon. We have to add scandals involving president Hariri and poverty among the population

6. Africa. It is the most interesting area of the world in terms of potential
   • Africa is now living an ongoing industrial revolution, and it has great unexploited resources;
   • But there are many obstacles for enterprises in sub-Saharan Africa, such as access to finance as their biggest business obstacle, energy and political instability;
   • Life standards remain very low. More than half of the extreme poor live in Sub-Saharan Africa. The number of poor in the region increased by 9 million (1990-2015), with 413 million people (on total of 736 million poor people in the world) living on less than US$1.90 a day. If the trend continues, by 2030, nearly 9 out of 10 extreme poor will be in Sub-Saharan Africa;
   • In particular, Nigeria will be the rising star of the next future. It accounts more than 200 mln people (the same of Brazil, or 2/3 of US population, or Germany + Japan population).

Values and knowledge for profitable international relations

As you can see, we are not alone in this world ... we are always surrounded by relationships and we have seen how humans have a strong exploratory nature. Since ancient times they felt the need to move from their birth areas to explore and learn about new places ...

We are all result of a continuous cultural contamination and I think that each one of us has the right to express his thoughts.

It does not mean to come into conflict. You are free not to accept someone’s else vision, but you have the duty to understand him.

If you are here it is because you embed the values of this institution. One day you will be a leader and, so you have the duty to be informed. A leader must start from here, from study, because study is the bearer of cultural, economic, ethical-religious values.

Knowing and understanding allows us to have profitable relationships and to make alliances, respecting different cultures, different values and different religions. Values are the compass for finding one's way in this world of diversity.

Ancient civilizations have laid the foundations of our being, bringing specific peculiarities and common traits. For the Western world the references come from classical Greece and the Roman Empire.

The concepts of polis and happiness for the Greeks, where polis means respect of the rules, even moral, of coexistence with others and the right to the pursuit of happiness ...

About happiness: This is what the Greeks called Eudaimonìa. It comes from the words eu (good) and daimōn(spirit): that was their concept of happiness.  Here we can see happiness as a purpose of life and as foundation of ethics.

Happiness had a precise role in directing one's conduct. According to Aristotle, happiness means to live in accordance with complete virtue, not for some chance period, but throughout a complete life. Happiness was an attitude of the soul.

This was the purpose of poleis, the ancient Greek city-states(the most complete form of political organization of Western history).  In a polis, "living well" simply was the happiness of citizens, realized by logos, the rational principle that put together and gave a sense to life within the polis.  Logos allows us to discuss and decide what is right and what is wrong, what is good or what is bad.

To Aristotle, polis has a very deep meaning. It is a community, a physical presence, a relationship. The community arises to make life possible and to produce the conditions for a good existence. To live individually is not enough.

The Greek concept of happiness is not very far from the concepts of societasand mos maiorum, which was the moral force in the Roman culture. An idea very similar to the importance given by Jewish culture to wise men words.

However, do not forget other great civilizations, such as:

• The Caucasian populations, or the Egyptians
• Middle Eastern civilizations
• The ancient Chinese and Japanese cultures

Into the globalizing process, each people take from its ethical-religious tradition values, criteria and models that give consistency to a common ethos of humanity.

In all the great religious and ethical traditions there are some elementary ethical standards gathered around the so-called "golden rule".

This also applies to the economy, which has a very strong human foundation, meaning the place for caring for relationships, or for brotherhood among men. In fact:

• For the Greeks it was oikonomia,which means administration of the affairs of the house
• In Arabic it is expressed with the term iqtisadwhich means moderation
• In Japanise it is keizai, which means good administration of the country[2]

Benedict XVI in his Caritas in Veritate, defined the economy as the place of good relationships, thus making the sense of respect and responsibility towards the human family indispensable in this context of globalization.

To have the guts to admit to your own weaknesses and, unlike Icarus, to be aware of your own limitations is what will set you apart as you work towards your hard-earned successes. It is important to keep your pride in check with what the Greeks called Metis: wisdom and, again, prudence.

Ethics and business are not contradictory aspects of life – they are the winning path to sustainability. The challenge today is to prepare ourselves to be women and men with a sound set of cardinal values ​​as well as financial notions and entrepreneurial spirit.

 Closing remarks

We all live in a continuous cultural contamination, we live in the middle of globalization. You must be aware that the world is made from different points of view. The right approach is always to know who you face and what happens in the world.

So, study and knowledge are very important as well as respect of different cultures…not only to look in our own garden.

Globalization means great interconnections, trade and exchanges. The situation today is more sophisticated than in the past.

You must be aware that in a globalized world even the smallest business is impacted by changes happened somewhere else in the world:

• The exponential growth of international exchanges generated, of course, a lot of rules, limits and obstacles;
• Now we are in a digital era and technology is the innovative element which is giving a new shape to it. Most of the products and services we buy are produced or managed abroad (example: payment services when we use credit cards abroad);
• Even from advertising and communication point of view, big international financial institutions leverage on messages which give a global perspective, also in dealing with complex international rules.

Here at Fordham you are in the right place, a university that gives you the right tools to face the global reality which surrounds you and at the same time to give you the compass of the Ignatian spirit towards the world.[/vc_column_text][/vc_column][/vc_row]