As the world transitions to a more multipolar, competitive landscape, this is an important moment to take stock of the role of the private sector, particularly multinational enterprises, in the genesis and resolution of armed conflict. Today, the world’s biggest corporations are wealthier than many nations and the private sector is playing an increasingly important role in geopolitics. At the same time, we are seeing a rise in violence and conflict that threatens to pose major risks to business around the world. Amid this period of disruption, there is a compelling argument to be made that the private sector — encompassing both national and transnational companies — should go beyond conventional assessments of risk and cost and marshal its substantial power and resources to actively contribute to the prevention, mitigation and resolution of violent conflict.
Engaging in such peace-promoting activities does not have to be viewed simply in terms of a moral imperative. Building peace also aligns with long-term business interests because stability and security are prerequisites for sustainable profitability and growth. By exploring the intricate interplay between the private sector and the ecosystem of international actors working on conflict resolution, opportunities emerge for businesses to leverage their influence for peacemaking and stabilization, while safeguarding their bottom line. It’s really a win-win.
A Neo-mercantilist, Multipolar Moment
Volatility around the world is palpable. Our international community, now decidedly multipolar, is grappling with treacherous escalations of violence and armed conflict. While the ongoing war in the Middle East is generations old, it can also be viewed as part of a new wave of proxy confrontations that have plagued the region and the African continent for over a decade. Meanwhile in Europe, Russia’s illegal war in Ukraine rages on and there are looming frozen conflicts nearby.
At the same time countries are increasingly sidelining the World Trade Organization's rules-based approach to governing globalization, ignoring its pleas for reform. This shift poses a threat to some European and nonaligned nations that champion multilateralism and cooperation, and undermines the stability and fairness of the international economic system, particularly disadvantaging small-and middle-income countries that rely on a predictable and just dispute resolution mechanisms.
In other words, the global economy is increasingly shaped by expanding neo-mercantilist policies. This is a term used to describe, among other things, the economic policies of some East Asian countries, like Japan, South Korea and China after World War II. Their strategies involved close government-private sector cooperation, with the state playing a leading role in guiding industrial policy and economic development aimed at achieving rapid economic growth and modernization.
As the U.S.-China rivalry has intensified, the last two U.S. administrations have employed a number of policies that also could be considered a manifestation of the burgeoning global trend toward neo-mercantilism. Critics argue that these policies can lead to trade imbalances, contribute to global economic instability and provoke trade tensions, as other countries may respond with their own protectionist measures.
The threats of instability from increased protectionism are juxtaposed against a global economy that, despite some troubling indicators like debt, overall has experienced remarkable resilience, dynamism and diversification. Prior to the setbacks from COVID-19, the world saw three decades of progress reducing extreme poverty. The recently announced expansion of the BRICS bloc is a reminder that emerging economies, previously on the fringes of the global economic dialogue, are now at its forefront. Strategically and geopolitically, these developments are taking the form of a renewed nonaligned movement and the powerful emergence of the Global South in international fora. Their leap forward is powered, in large part, by increasingly sophisticated private sector partnerships, which harness both local insights and global best practices to maximize growth trajectories.
This is a part of the picture of an increasingly multipolar global landscape, in which the traditional paradigms that once guided efforts to maintain peace and stability are undergoing a seismic shift. The classic Westphalian model, predicated on the post-1945 absolute sovereignty of nation-states as the arbiters of war and peace, is steadily giving way to more complex power dynamics. Russia’s invasion of Ukraine is just the most prominent example of how this system is being challenged.
The diffusion of relative power across the international stage has engendered a situation where both emerging powers — such as India, with a strategic role in the Indian Ocean, or Turkey’s ascending influence in the Middle East and Africa — and a multitude of non-state actors significantly shape the trajectory of global conflict. Gangs in Central America wield enormous power through violence and territorial control. Violent extremist groups in the Middle East and Africa transcend traditional geopolitical boundaries and threaten state monopolies on violence. Increasingly, multinational enterprises, possessing resources that rival or surpass some nation-states, are all emblematic of this shift.
In 2023, Apple's total market valuation reached $3 trillion, exceeding the Gross Domestic Products of Italy, Brazil and Canada. A 2018 study revealed a striking disparity between corporations and governments in terms of overall wealth; among the top 200 entities, 157 were corporations. Remarkably, companies such as Walmart, Apple and Shell have amassed wealth exceeding that of relatively affluent nations including Russia, Belgium and Sweden. If Amazon were a country, it would be wealthier than 92% of the world, per data from 2021.
The private sector's pivotal role in shaping the contemporary global framework is not just reflected in its financial prowess, but also in its ability to transcend traditional boundaries. Duke University scholar Gary Gereffi highlights a trend of "denationalization," emphasizing the diminishing relevance of sovereign nations as the primary units of economic activity. Instead, companies are integrating various global locations into their comprehensive value chains, creating transnational networks and utilizing local business actors as critical nodes in this intricate web. This approach has benefited major companies like Glencore and Archer Daniels Midland, which specialize in effectively mobilizing crucial raw materials for multinational enterprises.
In this transformed landscape, it becomes a strategic imperative for multinational corporations to build strong partnerships with local business actors, who are now indispensable elements within the extensive ecosystem of the private sector. These local entities act as vital connectors across borders and as stabilizers that contribute to fostering an environment conducive to successful business operations. In this way, they bridge the gap between local expertise and global strategies, ensuring operational efficiency and bolstering the bottom line, while simultaneously fostering a stable, resilient global economic structure and promoting peace and conflict resolution.
Peace and Profit
The “business case” for the private sector to promote peace and stability in conflict-ridden countries seems straightforward. Unrest, violence and sustained armed conflict pose risks to a company's profitability. These include security concerns related to potential harm to assets and employees, political uncertainties that might result from upheavals, legislative reforms, regime change or abrupt nationalization threats. There are also threats from reputational challenges due to scrutiny from both local and international communities. Moreover, there's a rising trend of legal challenges, as companies face more lawsuits alleging their complicity in authoritarian regimes’ human rights abuses.
Of course, some businesses choose to take the risks and work within thriving “war economies.” In this context, it is vital to differentiate between companies whose genuine business operations, like energy companies, unintentionally impact conflict dynamics negatively, and commercial entities like arms dealers and private security companies that intentionally capitalize on war through often illegal and invariably exploitative war-related ventures. One of the most egregious business practices is the sale of “booty futures,” a term coined by political scientist Michael Ross in 2005, to highlight how non-state armed groups in various African countries have pre-emptively sold foreign access to natural resources in territories they have not yet captured.
Large transnational companies, especially in extractive sectors like hydrocarbons and critical minerals, can inadvertently finance conflicts through concession, royalty and bonus payments to oppressive governments, which then channel these funds for counter-insurgency operations, predatory security practices, or suppression of dissent. In these cases, major Western businesses face challenges regarding their reputation with consumers who hold liberal, democratic values, particularly compared to competitors that are either state-controlled or located in nations with limited public oversight, where there's minimal market drive to adopt conflict-sensitive approaches.
The truth is that in times of war and violent upheavals, experiences between business sectors vary. For example, studies show that moderately destructive conflicts mostly affect labor-intensive sectors, while highly destructive conflicts heavily impact capital-intensive sectors. For relatively healthy economies, formal markets — which function within the recognized and regulated economic framework of a country — often grapple with supply chain disruptions, insecurity and regulatory inconsistencies; for example, construction companies might face material shortages or oil firms could confront damaged infrastructure.
So, how can the private sector proactively engage to help advance human security and stabilization? To start, businesses can add to the work they do in corporate social responsibility (CSR) by playing sophisticated roles in international peace and security architectures.
While understanding the political landscape is crucial, businesses must go beyond mere risk-assessment insurance schemes and play an active role in shaping the global ecosystem of peace and security. This means not only preparing for potential conflicts but actively participating in conflict prevention, violence mitigation and conflict resolution at all levels — local, provincial and national.
Traditional CSR efforts, often limited to philanthropy or community appeasement, need a strategic overhaul, supplemented with initiatives that engage more broadly with the peace and security apparatuses. With increasing emphasis on environmental, social and corporate governance (ESG) issues, businesses need to be particularly wary of their operations in countries with histories of colonialism or other forms of foreign influence. It's about building bridges with national and international actors and forging alliances that aim for lasting peace and stability, thereby creating a conducive atmosphere for sustainable economic growth. Businesses, particularly multinational companies, have shown the capacity to mold geopolitical events to ensure the stability necessary for their operations.
The Private Sector Can Be a Force Multiplier
International efforts to combat piracy in the Red Sea Region are a great example of how the private sector is becoming more critical to influencing positive outcomes for peace and stability. The U.S. government has celebrated its collaboration with industry in the early 2010’s to stop piracy off the coast of Somalia and in the Red Sea Region more broadly. A significant factor was the maritime industry's proactive measures, especially the widespread adoption of best management practices and other security measures. These practices, activated by local and multinational enterprises, included sailing at full speed in high-risk zones and using physical barriers like razor wire to harden ships against pirate attacks.
These efforts fit within a larger multilateral framework that included several of the world's most powerful navies, including all five permanent members of the United Nations Security Council, conducting anti-piracy operations and, special legal institutions developed to prosecute and imprison the pirates, bolstered by regional capacity-building to incarcerate locally and within Somalia. The result was a significantly reduced risk of piracy in Somali waters, the Indian Ocean and the Gulf of Aden.
Another notable instance of positive progression is evident in Libya. In response to escalating violence in 2019, the U.N. and global community amplified their efforts to facilitate a comprehensive political and security resolution, engaging Libyan participants alongside the Security Council's permanent five nations and other nations with vested interests. The special representative of the U.N. secretary-general presented a plan to initiate a truce, organizing an international meeting as a precursor to a Libyan summit, and hosting an intra-Libyan dialogue to forge common ground on crucial matters such as enforcing an arms embargo, establishing a cease-fire and reigniting various dialogue channels.
The U.N. mission in Libya and the U.N. Development Programme convened a Libyan expert economic commission as a component of the economic track of the peace process, which also included an international-level economic working group. Led by Libyans from the private banks and private businesses, the commission made insightful recommendations to the U.N. and the international community for economic reforms, reconstruction and development, and for strategies to distribute Libya's wealth more equitably among its people. While most of the policy recommendations have not yet been implemented, the model still serves as a meaningful example of how the private sector can be integrated into larger peace and stabilization processes.
Drawing from these examples, a private sector group of Haitian business owners called Institut Macaya is hoping to bring its own solutions to Haiti’s seemingly impossible political and security situation. Over the past year, Haiti has sought international support to reinstate peace and stability amid rampant gang violence, poverty and food scarcity. In response, the UNSC recently approved the deployment of a Kenya-led international police force, comprising 1,000 officers, while the United States committed $100 million and logistical assistance. Amid many years of tragedy and instability, Institut Macaya sees this latest international effort as an opportunity to be part of lasting solutions. Part of their mission is to “rethink and profoundly reinvent our way of living together in society and work together for the recovery of our [n]ation.”
Now, in broad consultation with Haitians from across civil society and from various geographic constituencies, they are hoping to help steer international efforts to stabilize the beleaguered nation. The Kenyan-led mission has been temporarily put on hold due to an injunction from a Kenyan court. However, assuming that is resolved, Institut Macaya hopes that the security support may catalyze a broader plan for supporting “sustainable development and the creation of opportunities for all Haitians in order to reduce inequalities and promote social peace,” according to their literature. Organized and serious, this group of Haitian business owners are a valuable asset that should be capitalized on by the bigger ecosystem of players — including multinational enterprises — looking to resolve Haiti’s ongoing crises.
The private sector is becoming an indispensable factor in the complex, multipolar network striving to establish peace and security in a world plagued by conflict. Multinational conglomerates and local business owners alike have the unique opportunity to join forces, creating powerful coalitions aimed to address the underlying causes of conflict and mend societal rifts. However, their involvement must transcend traditional risk management and public relations strategies that focus solely on safeguarding their investments. Instead, they should proactively utilize their extensive networks, influence and resources to mediate and forge sustainable, peaceful resolutions, demonstrating a commitment to stability that benefits both their operations and the communities they serve.