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Modern warfare is catching companies in its crossfire


The writer is a fellow at the American Enterprise Institute, a think-tank

War is an indisputably frightening spectre. But while Russian troops mass on the border with Ukraine, we should not lose sight of the fact that states seeking to intimidate and punish their adversaries are much more likely to use non-military methods, from cyber attacks to intellectual property theft to stealthy acquisitions of companies developing sensitive technologies.

This so-called greyzone aggression, which falls below the threshold of formal conflict, takes place every day. Increasingly, companies are the target. A new survey by international insurance broker WTW, due out next month, reveals profound industry concern about being caught in the greyzone crossfire.

Last January, Sweden’s foreign trade minister, Anna Hallberg, suddenly received a string of alarming text messages from Ericsson’s chief executive, Börje Ekholm. Sweden’s telecoms agency, the PTS, had decided to exclude Ericsson’s Chinese rival Huawei from Sweden’s 5G network, and Ekholm was afraid Beijing would retaliate against his company. “At the moment Sweden is a really bad country for Ericsson,” Ekholm complained in his messages to the minister. He was right to be alarmed: Beijing swiftly cut Ericsson’s business in China, one of the company’s key markets.

Ericsson’s fate has not gone unnoticed in global boardrooms. Nor has the rollercoaster ride experienced by European energy companies after they joined Russia’s Nord Stream 2 gas pipeline, or the woes of countless European companies whose cargo, containing Lithuanian parts, was held up in Chinese ports in revenge for Vilnius’ closer relations with Taiwan. Geopolitical aggression directed at companies has become such a pronounced trend that this year WTW added it to its annual risk survey.

The results of this poll make for sobering reading. Nearly three-quarters of companies expressed concern about state-sponsored cyber attacks, while over half are worried about government-led retaliation against private companies in international diplomatic disputes. Just under half reported concerns about growing use of sanctions targeting private companies or individuals. (With the renminbi increasingly able to compete with the dollar, Beijing will soon be able to follow Washington’s path and impose sanctions on companies of its choosing.) In total, 40 per cent worry about state-sponsored theft of intellectual property, and 31 per cent fear state-directed acquisitions of sensitive technologies.

This brings a dilemma for business leaders, who are used to operating in a world of globalise-or-lose. Now globalisation itself poses a risk. Had Ericsson exclusively sold its wares in western countries, Sweden’s 5G decision would have been of no consequence. But even as confrontation between states appears to be increasing, the operation of a global market place remains indispensable for companies and countries alike.

If governments really want to prevent their companies being crippled by state-sponsored cyber attacks and coercion, they must set up regular consultations about prospective threats. Establishing such dialogue with top executives would enable security officials to alert critical industries to potential aggression headed their way. It would also open a channel for executives to contribute threat intelligence to government.

Such links are essential preparation for if an attack does occur — they would allow businesses, diplomats and security personnel to put up a united front. Desperate text exchanges between chief executives and ministers are in no one’s interest.

Dialogues between governments and industry won’t eliminate greyzone attacks, but they will remove their sting. In an era in which geopolitics is challenging the very principles of globalisation, that is no mean feat.

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