Geoeconomics of rules based system

Rules Based System is essentially a western tool that seeks to control geoeconomics where both allies and enemies are subjected to diktats by the USA to conform to her own desires, intents and purposes. Beginning with the end of WWII this system had a tight noose tied around countries in the globe. How it is operationalised?

At the conclusion of the WWII only one country remained economically sustainable that is America. Corralling the defeated and victorious Western bloc, America came out with an economic package that included aid with strings &, lend-lease schemes to put back the weakened satraps back in the form they began prior to the War. In addition, selected countries in Asia & Africa were showered with long term finance. Japan was one of the major recipient of the largesse as she suffered heavily due to being subjected to atomic weapons.

Rules based System (RBO) has octopus tentacles built in every activity of geoeconomics. Bretton Woods’ twin The International Monetary Fund & the World Bank are chief amongst the top rung lassos along with the Bank for International Settlements. The power and authority of America in Geoeconomics was sealed when she midwifed the United Nations to give birth to World Trade Organization (WTO) that admitted countries only on the recommendation of America.

Peoples Republic of China had to wait for almost 15 years to become a member in 2001 since the formation of WTO due to dragging of the feet by USA. Russia which was allowed to join the World Bank in 1992 after the Soviet Collapse had to face curtailment of her activity in March 2022 after the Ukraine Special Military Operations that began late February of that year.

Replacing Pound Sterling the US$ became the chief exchange and reserve currency by the Eighties. Almost all the countries in the globe were persuaded to have reserves in US$ that too to be held in Federal Reserve or in US Treasuries.

In 1971, President Nixon stopped the convertibility of the US$ to gold an arrangement that was in force as part of the Bretton Woods Agreement that also established that the USD as  the dominant reserve currency and fixed the rate of $35 per ounce of gold.

The SWIFT fund transmission system inaugurated in 1973 continues to be a geoeconomics tool in the hands of America. The cross border payment system has banned countries like Iran & Russia using her services.

In sum, unless and otherwise a country behaves according to the wishes of America its life is subjected to misery in the field of geoeconomics!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Geoeconomics amidst extra territoriality

Ali Laidi who wrote the masterpiece essay “American Extraterritorial Legislation” laid bare the intent of America using her law as a geoeconomics toolkit. He went on to describe America as “The greatest legal-economic warrior of the current age”. Put it simply it is business warfare using geoeconomics tools. Here is broad stroke in my canvass:

Before that, let me give some notion as regards to what is implied as extraterritorial jurisdiction. It basically means competence of a Government to make, apply and enforce rules of conduct in respect of persons, property or events beyond its territory. Ordinarily, this type of competence be exercised by way of prescription, adjudication or enforcement. For every intent & purposes this measure allows the use of strong arm tactics within or outside the borders of a country. United States has plethora of legislation in this category.

The following are few ways how such competence is in fact exercised in US legislation:

1. Prohibition of Corruption and Money Laundering:  The US Foreign Corrupt Practices Act (FCPA) which became law in 1977, enables America to prosecute people suspected of bribery or corruption practices even of these are committed outside the jurisdiction of USA.

2. Arms Export Control Act (AECA): This 1976 legislation provides broad extraterritorial authority to regulate U.S. controlled goods and technology, wherever they may be exported to. Put it other way provides undiluted authority to control the import and export of defence articles and services where US inputs by way of technology or IPR is traced even mildly.

3. Export Administration Act (EAA): This piece of legislation adopted in 1979 provides legal authority to the President to control U.S. exports for reasons of national security, foreign policy, and/or short supply.

Broadly all these legal pieces give power and authority to America by way of suo motto or under various treaties where she is signatory to force other nations to comply with the provisions of these Acts, citing international human rights violations, freedom of navigation, threats to aviation and maritime safety and other matters of international concerns that affect America in particular and the West in general, negatively.

Ali Laidi sums up the entirety of this geoeconomics toolbox thus: “American Legislation, an Excellent Weapon of Economic Warfare”. His paper can be downloaded from:

https://www.berghahnjournals.com/view/journals/theoria/68/166/th6816605.xml

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 

 

Four pitfalls in strategy execution

Executing business strategy is not a straight forward task. There could be surprises thrown in the path of implementation process. Moreover in evolving field of business competition changes take place at the most unexpected moment that too with massive upheaval. Here are four such pitfalls a business must be ready to avoid:

1. Losing your cool in the moment of crisis is the first and foremost drawback. Many firms are good at chalking out excellent business plans that are notoriously absent of having the B Plan. This happens where the chosen business strategy has never been revisited at the stage of implementation. General De Gaulle commands “have a good strategy but re-visit it often”. This demands that strategist validates all the underlying assumptions while drafting his strategy and during its execution.

2. In military warfare as well as business warfare a strategist must anticipate how the opponent would react to a particular move the firm is making. The response to such a move vary in the spectrum of deflecting attack to countering attack. Assuming an opponent would blink and meekly surrender is never a reality in business lore may be in fictions. Hence it is vital for business strategist to think through each and every component of his strategy thoroughly before he gives the go ahead for execution.

3. Nothing is conventional these days. Behaviourists come out with all expected scenarios that are perhaps laboratory tested or derived from class room discussion. But the sad truth is no one can predict either human or industrial behaviour occurring within a definitive range. Responses and outcome in business competition could range between conventional to unconventional. A good example is a firm trying price skimming tactics at the time of falling demand for its key product. His opponent go contrarian and hike up the price to indicate to the consumers that his product retains high quality standards.

4. Failing to look at the choices consumers would make over a period of time is the fourth and most damaging flaw that could bring about total collapse of the demand for products a firm manufacture and sell. Fashions change, demands change, and usability changes in fact the entire spectrum changes. The bottom line is we are living in ever changing world where fads and fashions come and go. Unless the product satisfies a known, useful and permanent factor such as electricity generation firms must have their eyes focused on the evolution of the product per se and tweak it in addition to tweak the overall business strategy of creating, delivering and realizing value!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist