Deterrence in geoeconomics power play

World is a village in geoeconomics power play. Any country asserting itself has the capacity to upset the fine balance maintained in power dynamics. Measures and counter-measures are taken as and when necessary to bring the situation to an equilibrium. Here is, how it is done:

In any game there is gain or loss that is to take everything to its logical conclusion. This type of extremity must be abandoned when your company or country is caught in the web of geoeconomics power play. First of all you have to realize that the concept of absolute gain in every transaction in not tenable. By the way you must be coached in the concept of relativity. By extension it can be relative gain or relative loss as the case may be. Once you ate focussed on this you build deterrence against any foul play by major powers.

Second most vital measure is to move out of transactional relationship into transformational relationship with competing firms or countries. The first one is limited to each and every transaction that brings up total loss position or total gain position at the end of a particular period. When you sign up for transformational relationship with competitors in the market or trade partners globally your emphasis is holistic approach where both parties holding hands move towards a sustainable relationship. In certain sectors you get relative gain and in others relative loss. Your opponent in the ring faces exactly the same result, opposite to the situation you are in.

Third issue at hand is to minimize cost and maximise gain when faced with geoeconomics power play. The cost/benefit analysis is the key parameter here. For example, if a country that is more powerful than you threatens you with sanctions and restrictions, you must deflect it by making counter measures.  One such counter measure is to make the imposer also suffer from the consequences of his own sanctions. The central theme here is you suffer less cost the imposer more. Alternatively you get more profit while the imposer gets less.

Recently global north imposed sanctions over Russian oil exports. To add more pain a price ceiling was imposed that would result in loss if at all Russian exports get through. Russia came with an innovative counter measure. She sold oil at deep discounted price initially to friendly countries which in turn was re-exported to the global north at exorbitantly higher prices. Progressively Russia started reducing the discount, touched base with the cap and later invoiced oil exports at higher prices than the cap. Resulting loss for the global north was tremendous. Russia recouped all what she lost within three months of the “price cap operation”. Russian deterrence in geoeconomics worked so well that there was no more mention of price cap in the western media thereafter!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist