What surprises does the world have in store for us in 2012? Judging from the last 12 months we might well be in for another bumpy ride. But we have seen so many remarkable twists and turns that we have now become almost desensitised to both the pace and sheer bizarreness of recent change. The extraordinary has become ordinary.
As I write this, the eurozone fiasco and the pending banking crisis continue to dominate the headlines, even though the public is totally fatigued by a situation that economically they struggle to understand and politically makes them despair. In the US, many people are now too despondent to watch television news. A few weeks before he died, Steve Jobs’ Apple Corporation had greater cash resources than the federal government, simultaneously a tribute to Jobs’ commercial genius and an indictment of a political system falling into disrepute.
Western liberal democracy seems to be a tarnished brand given the economic woes and anaemic political response on both sides of the Atlantic. But ironically in a year when large numbers of people in the West have become almost terminally frustrated by their system of government, huge numbers of people in other parts of the world have risked – and given – their lives to rid themselves of incompetent autocracies.
Tunisia, Egypt, Libya and Syria have all embarked on revolutionary change that has called into question many basic assumptions about what constitutes political stability. And with political prisoners being released in Burma and the announcement of some tentative political liberalization in Saudi Arabia, the shockwaves of the Arab revolutions continue to reverberate.
Historians, not political scientists, will be better placed to determine the causes of the individual revolts and to shed light on what strange alchemy caused them to spread so quickly. Demographics, food-price rises, social media, urbanisation, political Islam, unemployment: the roll call of overlapping causes will be argued about for many years to come.
But the one indisputable lesson from 2011, and where political risk analysis can help now, is that planning for low-probability but high-impact events must be part of any sensible strategic forecast. Having advised – at close quarters – many international companies in their response to the events of the last year, it is quickly apparent which ones have been hamstrung by an overly prescriptive view of how key markets will perform, and how others were better able to accommodate the vicissitudes of socio-economic turbulence. The successful ones have relied on a combination of culture – business leaders able to think beyond the obvious – and a willingness to take the time to formally think through outlier scenarios.
I have just returned from South Africa: if I had a dollar for every time a client has asked whether we think the ‘Arab spring’ could head south across the Sahara, I would make the shareholders of AnnaPurna Consulting very happy. In fact, it is easy to articulate why the countries of North Africa differ from their continental neighbours in ways that make a direct replica unlikely. But the clear lesson and business imperative is that even the less likely possible outcomes must be addressed when planning for next year.
Business Intelligence Map’s Global overview takes as its backdrop the significant political and economic upheavals of the last year and pushes deeper into what this means for political systems and international business.
For many, unexpected change has been exhilarating. On a recent visit to Tripoli, the sense of exuberance among the numerous militia members around the city was palpable. But for others, the upending of old certainties causes anxiety.
And not just in Libya. Summer riots in London were a graphic illustration of what happens when two worlds collide. That is one of the main themes that extends throughout this publication: the willingness of people who believe they have been left behind by conventional political structures and ‘casino’ economics to take matters into their own hands.
It is a stretch to give opportunistic looters in London the same historical legitimacy as the massed ranks of veiled women marching towards heavily armed riot police in Yemen. But whatever the motivation and moral authority, extra-political protest will be a key feature of 2012. It is happening in North Africa, the Middle East and in austerity-affected cities of the EU. And it is one of the things the Chinese leadership fears the most.
Business Intelligence Map goes on to examine key risk factors on a region-by-region basis, covering all the main markets of concern to our clients. These include: China’s ability to keep its economic engine fuelled; Russia’s willingness to modernise its economy as its political process ossifies; the emergence of Latin America as a political as well as a trading partner; and how Africa’s political landscape will be shaped by competition for natural resources. In the long run, the drive against corruption will improve the ability of companies to do business transparently, even though in the short term the different pace of reform around the world will cause additional complexity and anxiety.
In conclusion, it seems extraordinary that there is now a debate about a BRIC bailout of the eurozone. It is as if the world has come full circle in the last ten years. It is easy therefore to believe that we are living in the strangest of times. Interestingly, the one person I know who doesn’t seem that surprised by this turn of events is my 87-yearold father. Perhaps when you have lived a long time you realise that the only constant is change.
This article appears as the introduction to AnnaPurna Consulting’ 2012 Business Intelligence Map report. To download a copy of the report or for our global map of political and security risk, visit our website.