Delivering economic good: a new role for diplomacy

The British government has recently launched an initiative to make its Ambassadors front-line persons in pushing British business abroad. There are lessons in this move for small states including those in the Caribbean, and governments should be taking note to revamp the outmoded structures through which they conduct their foreign affairs.{{more}}

Over the last decade, the world has gone through cataclysmic changes which have had – and are still having – adverse effects on small countries. Among these are climate change, the spread of HIV/AIDS, the fallout from the global financial crisis that started in October 2008, the rise of the ideology of trade liberalization leading to unfair terms of trade for small countries, and heavy constraints on financial services imposed by wealthy nations in the name of the prevention of money laundering and terrorist financing.

Small states have no arsenal of foreign policy tools such as economic clout or military capacity with which to advance their interests or counter the constraints that are imposed on them by more powerful countries and institutions. They rely entirely on the capacity and forcefulness of their diplomacy.

Given the state of the international political economy, small states should be aggressive in doing precisely what the British government now expects of its diplomatic service – they should require their diplomats, as a primary task, to contribute to the earnings of the national treasuries by seeking out and expanding markets for their goods and services, and procuring investment. The exceptions to this would be the missions of a purely political nature, such as those accredited to the UN and its specialized agencies.

As part of the British initiative, the Foreign and Commonwealth Secretary, William Hague, has said that he intends to appoint businessmen to key Ambassadorial posts.

The Financial Times reports this development as “part of Mr Hague’s pitch for resources to the Treasury, casting the embassy network as an important driver of Britain’s economic recovery.”

The manner in which Foreign Ministries and Embassies (or High Commissions) were structured by Caribbean countries after independence, followed too slavishly the British model of the 1960s, and regrettably, they have remained so even while the British themselves have undergone periodic change.

Not enough emphasis was placed by Caribbean governments on the commercial aspect of Embassies – the business of actually promoting trade and investment. Very few persons working in Caribbean diplomatic missions have any experience in business at any level, and, therefore, they lack the knowledge and experience to understand what conditions attract businesspeople.

To be fair to these Caribbean diplomats, many of them also get little – if any – guidance or direction from their governments, largely because the foreign ministries to which they respond are also staffed with public servants who have not been exposed to, or trained in business.

Diplomatic training – such as it exists in the Caribbean – is also still too focused on traditional diplomacy. There is a gaping hole in commercial diplomacy – the business of promotion, marketing and negotiation.

In this context, Caribbean countries need to reform and revamp their foreign ministries and their diplomatic missions to put them in the forefront of promoting trade and investment. To do so, they would have to establish close working relationships with Chambers of Commerce, Hotels and Tourist Organizations, manufacturers and agricultural export organizations, and their financial services sector. The work programme of the foreign ministry in trade and investment should be devised and constantly revised by a joint board drawn from the private and public sectors.

Some governments may find the notion of a public-private board to drive foreign economic policy as too big a pill to swallow, inured in the belief that policy making and implementation is the government’s exclusive domain. But, this is an anachronistic concept.

In the member states of the Organisation for Economic Cooperation and Development (OECD) governments consult widely and deeply with their private sector before they agree to rules that apply within the group, and that the group then imposes on others. The OECD countries know well that it is their companies that trade and invest, and it is the profits of these companies that grow their economies. Governments, therefore, have an active interest in their success.

It is far more important for small states to reform and revamp their overseas missions than it is for industrialised nations, such as Britain, whose embassies, for the most part, have commercial capabilities. If Britain recognizes the importance of strengthening the commercial capacity of its embassies, it should be urgent for countries in the Caribbean.

One part of the British government’s initiative, is likely to pose difficulties requiring creative solutions for the same reason that it would present a problem in the Caribbean. Mr Hague wants to appoint businessmen to key Ambassadorial posts. The two constraints on this are: businessmen are unlikely to abandon their businesses for three years or more to become Ambassadors; and the pay for the job would be much less than businessmen earn.

But, this constraint should not stop top executives in small states from taking leave of absence from the private sector to work for governments on flexible contracts with realistic pay, and for limited periods to work on the international stage. They are much needed in Embassies in Brussels where the work of Caribbean governments on the Economic Partnership Agreement with the European Union is focused, and they should be in Caribbean missions to the World Trade Organisation (WTO) where trade rules are negotiated.

It would also be extremely beneficial if, in the Caribbean, there was a permanent private sector presence at the Secretariat of the Caribbean Community (CARICOM) and within the Office of the Trade Negotiator.

Another of Hague’s initiatives also has a lesson for Caribbean countries. He is creating, in the Foreign and Commonwealth Office, a team to co-ordinate strategy towards the emerging economic powers – Brazil, Russia, India and China – the so-called BRIC nations obviously because he recognizes them as sources of investment in Britain and markets for British goods and services.

This is an initiative that Caribbean countries should have launched over a year ago, assigning the CARICOM Secretariat the task of developing a joint strategy for promoting trade and investment with the BRIC nations on advantageous terms. Given that three of them are developing countries, a well thought out strategy may have yielded impressive success.

All this calls for a sea change in government thinking and attitudes toward the private sector in the Caribbean, so that the relationship becomes one of genuine partnership. It is a sea change that has all the urgency of now.

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