Often overlooked, the relationship between human rights and risk analysis has become increasingly important. A guest post by Nicolas Tenzer, Chairman of the Paris-based Centre for Study and Research for Political Decision (CERAP).
It is a common refrain that human rights issues have nothing to do with risk analysis, which is supposedly only about economic uncertainties, geopolitical threats, and political adventurism. This could have been correct if the violation of human rights were not offering a prediction on economics, geopolitics, and politics. If we adopt a coherent, realistic view that suits with risk analysis, we shall on the contrary offer human rights a pivotal place, while assessing the risks of a country or area.
In order to do so, we must emphasize the fact that human rights cannot be separated from a more global economic, geopolitical, and political context, whilst going hand in hand with economic structures and rules, international and security policy, and political and social organization. A crackdown on human rights often generates a chain effect on both.
Human rights’ offense and economic risks
Disrespect for human rights goes more often with an economic freedom limited to those who pay tribute to the ruling class, feeble courts of justice and poor compliance with the rule of law and fair trial, endemic corruption, and not trustable agreements. To be sure, for a long time business people accommodated these bad practices, and they accepted to pay bribes to leaders while turning a blind eye to the suffering of political prisoners and exploited workers. Major Western companies had in the past engaged in this kind of behavior, which can also explain many revolts, and the success of communist-like ideologies.
Even if those behaviors have not completely disappeared, Western companies are now committed to respecting some basic anti-corruption laws, to signal money laundering to legal authorities, and promote good labor practices (child labor, decent conditions of work etc.). There is, of course, still room for improvement, but many states and international organizations have started to pay more attention to companies.
Some may be blacklisted from tenders-lists (World Bank, UNDP, some regional development banks, while others may face harsh fines. It is now part of the game of international business for some competitors to denounce their rivals to the legal authorities. Moreover, whistle-blowers, investigative journalists, and NGOs quite often publicize these bad practices which may create genuine reputational issues for firms.
Of course, Western companies may face unfair competition from non-Western businesses that do not have to comply with states’ and international regulations. However, the risks are becoming too high to take them on a broad scale. We may guess this trend will continue to prevail in the years to come: companies will be held accountable at home before the courts and the public for their deeds abroad –the same will be true for dangerous practices against the environment.
Human rights and geopolitical risks
Human rights violations at home offer a good prediction for aggressive behavior abroad. Even for cynical managers and investors who disregard human rights, they must envision for their company’s sake the many risks it creates for their own business.
On the one hand, human rights abuses go hand in hand with a lack judicial independence. In many authoritarian regimes, for instance, it is connected to state’s support to illegal activities – as the Panama Papers recently pointed it out – and sometimes even sponsorship of terrorist activities.
For investors and business partners, meanwhile, it raises a series of legal concerns, and the results of trials may be anything but fair. Moreover, the lack of transparency, assaults against free media, and repression against investigative journalists – including business‑ frequently goes with an unsustainable and unbalanced development of the economic sector, and dependence on raw materials and energy sources’ revenues. This situation offers the temptation for dictatorships to espouse nationalist sentiments and divert the public from their daily misfortune in military operations abroad.
On the other hand, beyond the intrinsic risk to military operations for any investor, the substantial share of the GDP devoted to defense expenditures generates a major risk of insolvency of the state and of cost-cutting in economic development and welfare state public expenses that undermines the future of investments and the growth of consumption. It will logically create a backlash on benefits of many foreign companies.
Hence, those foreign companies will be highly dependent on state-owned or state-sponsored companies. They will then be hostages of the state that may use them as supporters of their indefensible cause abroad –just see how some big foreign companies advocate Russia’s behavior in their own countries and try to pressure their government, for instance, to lift sanctions.
Last but not least, major powers are not only likely to invade other countries or to back separatism for the sake of their own expansionist interests –like Russia in Ukraine – or to become more assertive in their territorial claims – like China in the South China Sea. They are also supporting sometimes criminal authoritarian powers to threaten the world order and t fuel instability and war in a whole region. Thus, they represent a significant global geopolitical threat, fueling terrorism abroad and wreaking desolation everywhere. Russia’s foolish game in Syria is all about that.
Human rights and political instability
First of all, it is a significant failure to silo the numerous dimensions of political life. A crackdown on human rights accompanies not only poor governance but also political and social discontent and sometimes popular upheavals. It darkens the prospects of all business, cultural, and social activities.
Secondly, one should take into account the evolution of societies throughout the world. Human rights and freedom are becoming a genuine universal claim, not just from a theoretical point of view, but also a pragmatic one. In Arabic, Turkish or Persian societies, in Confucian and Muslim Asian societies, in Central and Latin America, more people, sometimes illiterate, are standing for liberty and dignity. Human rights are not only an intellectuals’ dream and vibrant people’s yearning: they are not simply imposed by the West. Beyond any claim for Western values, people are ready to fight and to die for their human rights.
This is a positive development, of course: no dictator has the certainty to stay at office. For business people, it means that human rights offenses are likely to raise political instability. Hence the states or companies who are cozying up to strongmen are facing a genuine risk of retaliation when democracy does triumph.
Lastly, since the world is interconnected and social media and freedom advocates are playing their role in campaigning against the accomplices to crimes, the support an authoritarian regime is likely to jeopardize the image of unscrupulous firms. More efficiently sometimes than international organizations, NGOs and charities are playing a major role in fulfilling the promises of a fairer world. This matters for business too.
Nicolas Tenzer is Chairman of the Paris-based Centre for Study and Research for Political Decision (CERAP). In addition, he is also editor of the journal Le Banquet, author of three official reports to the government, including two on international strategy, and has published 21 books, including Le monde à l’horizon 2030. La règle et le désordre, Perrin, 2011 and La France a besoin des autres, Paris, Plon, 2012.
This article was published as part of the GRI Guest Post Series. GRI guest posts come from leading experts in business, government, and academia. The series strives to bring a diverse range of perspectives on the critical issues of our time. The views expressed in this article are solely that of the author and do not necessarily represent the views or opinions of GRI.