Business

We must (re)learn how to manage the risk of war

Damaged Russian vehicles in Ukraine, in the city of Kharkiv. (Photo: Getty Images)

GEOPOLITICAL ANALYSIS. We thought this risk was over in the West with the end of the Cold War, but Russia’s invasion of Ukraine brought it back to life. War is once again among the risks that Canadian companies must (re)learn to manage when they are active in Europe in order to continue to do business there almost normally.

I am writing to (re)learn this risk, because Canadian multinationals had learned to manage it in Europe after the Second World War. From 1945 to 1989, the former Soviet Union occupied half of the European continent, and Westerners lived in constant fear that Russian tanks would one day sweep into Western Europe.

Older business people or history buffs still remember this time, when there were many political crises on the old continent:

  • Blockade of Berlin (from June 24, 1948 to May 12, 1949), during which the Union of Soviet Socialist Republics (USSR) tried, but without success, to seize the western part of the German city, then controlled by the United States. United, France and the United Kingdom.
  • People’s uprising in Budapest against the Hungarian communist regime (October 23 to November 10, 1956), which was crushed by Soviet troops.
  • Prague Spring in Czechoslovakia (January 5 to August 21, 1968), which ended with the intervention of the armed forces of five Warsaw Pact countries, namely the USSR, Bulgaria, Poland, Hungary and the GDR (Communist East Germany).

This is without mentioning the constant risk of a war between the troops of the North Atlantic Treaty Organization (NATO) and those of the Warsaw Pact, with the potential use of so-called tactical nuclear warheads on the ground. European, that is to say much less powerful than the Hiroshima bomb.

Or other international crises between Americans and Soviets that could have gone really bad, starting with the Cuban Missile Crisis (October 14-October 28, 1962), which nearly caused a nuclear war.

Despite all these risks, Canadian companies did not really stop themselves from doing business or investing in Western Europe between 1945 and 1989. Rather, they learned to manage the risk of war and to continue their activities almost normally. .

Well, we have to relearn how to do the same thing in the wake of the invasion of Ukraine.

The risk of invasion resurfaces in Europe

For example, it will be necessary to learn how to manage the risk of invasion of a sovereign country by another sovereign country in Eastern and Central Europe.

Also, if your company has for example the project to obtain supplies or to set up in Romania, Poland or the Baltic countries, well, it should not necessarily give up despite the war in Ukraine.

Of course, zero risk does not exist in the current context.

As, moreover, zero risk did not exist during the Cold War either, when a Canadian company obtained supplies or established itself, for example, in West Germany, not far from Soviet soldiers and those of the countries of the Pact of Warsaw, massed behind the iron curtain.

Moreover, the fact that Romania, Poland and the Baltic countries are members of NATO also reduces this risk, without however excluding it. Because an attack by Russia against one of these countries of the Atlantic alliance would lead to a response from all the other NATO countries.

And the Russian President, Vladimir Putin, knows it very well.

A Ukrainian soldier awaiting combat. (Photo: Getty Images)

The nuclear risk is also back, and we will have to live with it in the future.

That said, the use of a tactical nuclear warhead in Ukraine remains unlikely, even if NATO allies take this threat seriously.

However, without minimizing it, this risk should not paralyze us.

This is the great lesson of the Cold War: the nuclear powers are very reluctant to use these weapons, because the risk of escalation is too great and its consequences disastrous for humanity and the environment.

Mutual destruction limits atomic risk

It is the principle of mutually assured destruction or the balance of terror that prevents the use of these weapons. Several specialists have written on this subject, including the American Kenneth N. Waltz (1924-2013), one of the greatest theoreticians of international relations.

He deals with this question in Realism and international politicsa collection of essays published in 2008 on various issues, including the impact of nuclear weapons on international relations (Towards nuclear peace).

The war in Ukraine ushered Europe into a new era, the full scope of which we do not yet grasp.

Certainly, we cannot go back. We will have to live with a new geopolitical reality, where Europe’s collective security will be a priority for years and decades to come.

In terms of business, Canadian companies active in Europe will have to manage a risk of war, as many are already doing when they are active in certain regions of Africa and the Middle East, for example.

Because, in spite of everything, (business) life must continue insofar, of course, as the safety of personnel is not directly threatened in Europe.

Men and women did it during the Cold War on the old continent.

You can do it today too.

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