Efficiency and ethics.
Advanced Master’s thesis in International Risk Management (HEC Paris).
« The private sector and security are linked in many ways, most obviously thriving markets and human security go hand in hand ». Kofi Annan, Secretary-General of the United Nations.
Two decades ago, the collapse of the Soviet Bloc promised more stability hence more development throughout the world. This was not the case, and conflicts have increased between neighbouring States and even internally. New international business strategies had therefore to be developed.
In his thesis, Pablo Bauquier aims to lay out a few ideas regarding business development in conflict and post-conflict zones still seeming full of opportunities. (http://www.nytimes.com/2008/02/28/business/worldbusiness/28iht-MAFRICA01.html?pagewanted=all&_r=0 ).
The risk management concept (http://en.wikipedia.org/wiki/Country_risk) is one of the most appropriate for these activities (voir http://www.oecd.org/tad/xcred/crc.htm). The principle is to examine one case in a more operational and detached manner than traditional financial analyses would. Profit is guaranteed in operations led within post-conflict zones and success remains dependent on good operational conduct. This concept has given rise to a number of studies (http://www.univ-orleans.fr/leo/liensdr/liendr2007/dr200706.pdf). This multidisciplinary subject matter embraces law, economics, geopolitics, and management.
International groups have long incorporated the notion of conflict in their development strategies. Conflict is perceived as an « event » requiring upstream and downstream management. The most cynical investors will go as far as to consider the « event » as a real opportunity. A classic example is the fall of a fossilized regime leading to a redistribution of wealth exploitation. There are numerous such cases in West Africa (Guinea, Ivory Coast).
In the above-mentioned study, Pablo Bauquier lists several cases of conflict zones where international groups have set up competing strategies (e.g. Total and Lukoil in Iraq). Each strategy attemps to take advantage of a situation at time t while positioning itself on the future process. This may be the case when a company uses a dictatorial regime to acquire business permits, knowing that this regime will fall in the short to medium term, allowing to « freeze » an established legal status, while other competitors took other decisions and avoided such projects.
On page 71 of his thesis, Pablo Bauquier develops a non-exhaustive country risk typology and highlights the quantitative and non-quantitative aspects of the matter. However, a successful approach is probably to elaborate a specific methodology adapted to the case study. All methods remain valid and include a more or less important financial dimension (http://www.euromoney.com/Article/1080478/Country-risk-assessment-methodology.html). There lies the pitfall of many Anglo-Saxon methodologies favouring financial data, for the mathematical aspect can reassure and enable a clearer assessment facilitating decision making.
It should be noted that the notion of country risk is shifting and regularly called into question. If some commentators have limited it to the study of emerging countries, and especially post-conflict ones, recent events have shown that mature economies remain subject to the same tools. As a result of the current economic crisis, several European countries have engaged in a legislative instability, a criterion that should be incorporated in a country risk analysis.
Pablo Bauquier aslo suggests to focus on geoeconomics, an already well identified but still fledgling discipline. One definition could be : the study of the influence of geopolitical and sociological events on economic activity and development.
The title of this dissertation could seem somewhat provocative. « Investing », that is « taking advantage », is not acceptable in a conflict-devastated country. Yet, Pablo Bauquier insists on development processes associated with any investment in a conflict or post-conflict zone. Even more boldly, the author – who has worked as a delegate of the International Committee of the Red Cross’s (ICRC) – details in chapter 2 the ICRC experience through its collaboration with the private sector. The ICRC is an effective humanitarian actor in conflict zones which has been able to establish various collaborations with the private sector (http://www.icrc.org/eng/what-we-do/other-activities/private-sector/).
« Investir dans les zones de conflits et post-conflits. Théorie et pratique », (« Investing in Conflict and Post-conflict Zones: Theory and Practice) by Pablo Alexandre Bauquier under the supervision of Professor Pascal Chaigneau.
Advanced Master’s thesis in International Risk Management at HEC Paris with Jean Moulin-Lyon 3 University.