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"World Tensions and Their Impact on Business: the Costs of Neglect".
Notes for Presentation by Gareth Evans to ICC 34th World Congress, Denver

I. What has Changed since 911

- Business has always operated in an environment of risk � commercial risk from the market, legislative and regulatory risk from government, legal risk from the courts, and social risk from ever more active civil society. But risk from conflict or politically motivated violence, at least for developed country businesses, has been pretty much confined to certain sectors � resources, transport and tourism, insurance, and to those choosing to make risky offshore investments.

Now, post 911, as we know to our cost, everyone can be massively affected by the impact of terrorist or other violence on everything from employee security and recruitment to consumer purchasing, stockmarket prices, insurance costs, internal security costs and just-in-time inventory management.

- There is unquestionably a new sense of global interconnectedness. For many people globalisation moved from clich� to reality overnight. Crises and conflicts which could always be dismissed previously as �dirty little wars in far away places that our none of our business�, have been starkly demonstrated to be very much our business because of the impacts they can generate in terrorism, refugee outflows, narcotics trafficking and other organised crime, health pandemics, and sometimes environmental catastrophes as well.

- On the credit side, 911 has helped stabilise some important international relationships, and made some longstanding conflicts easier to solve. The US has found it easier to find common cause with Russia and China than seemed possible this time last year, and long-running and ugly conflicts in places like Sudan and Sri Lanka have come closer to resolution than for a long time, partly as a result of the new climate of hostility to terror that has existed internationally since 911.

There�s also been a potential positive in the intense new level of interest in the affairs of the Arab and Islamic world � most of the problems of which used to capture attention only when Western oil supplies seemed threatened. But as we are all too well aware none of that has yet done anything to stop a disastrous further deterioration in Israeli-Palestinian relations.

II. What has Not Changed in the Overall Security Environment

All that said, the main effect of 911 was to change perceptions rather than realities. The fundamentals of the global security environment remain pretty much as they were:

- The distribution of power in the world remains incredibly lopsided, with the US just as much after 911 as it was before a military and economic hyperpower in comparison with everyone else � and a target as a result for a great deal of envy, resentment and outright hostility from a lot of the rest of the world.

- Throughout the world, in many parts of Asia, Africa, the Middle East, Eastern Europe and Latin America, there are major unresolved political problems � some of them with underlying economic and social causes - that have been inadequately addressed, incompetently addressed or deliberately left to fester, and nearly all have potential to generate significant conflict.

- The economic and social inequities are still stark. As Kofi Annan put it last December: �For many people in the world 2001 was not different from 2000 or 1999. It was just another year of living with HIV/AIDS, or in a refugee camp, or under repressive rule or with crushing poverty.�

- There remains, on top of all these underlying factors, the endless capacity of individual leaders to create havoc, miss opportunities and generally undermine the best-laid assessments of how the world works and how peace can be assured. So much seems to depend just on the luck of the draw: whether at a time of fragility and transition you get a Mandela or a Milosevic, a Rabin or a Sharon, an Arafat or an Ataturk, an Obasanjo or a Mugabe. It has been ever thus.

What are the challenges we are all going to have to face as a result of these fundamentals being as they are?

- Wars between states are much less common than they used to be, but can�t be discounted. The situation between the two new nuclear powers India and Pakistan remains very fragile, with a real risk of miscalculation; the Taiwan Strait remains quiet for the moment, but will need a lot of continuing work to remain so; and tensions between many states in Africa remain very close to the surface.

It should be acknowledged however that the war between states that is currently generating most apprehension around the world is the one the US President has made clear he wants to wage against Iraq. Nobody has any time for Saddam Hussein, and there is much to be feared in his weapons program, but there is almost universal consensus in Europe and elsewhere that US Administration advocates are very much understating the risks and overstating the benefits of unilateral military action against him.

- Wars or conflict within states remain overwhelmingly the most likely cause of continuing disturbance, and spillover impact elsewhere. In the last decade 53 of the 56 major armed conflicts were of this kind, whether driven by grievance, greed, state failure or all of the above. From Colombia to Zimbabwe to Somalia to Macedonia to the Caucasus to Central Asia to Indonesia � and many places in between, in most of which ICG has a presence � there is a very real risk of major conflict breaking out, or escalating, or recurring or continuing. Ongoing attention to all of them by the key players in the international community is very hard to ensure, but it�s crucially necessary.

- Wars on states are hardly a new phenomenon, with terror being used as a weapon by the weak against the strong since time immemorial, but it�s the security challenge we have of course been focusing on most since 911. Just as with the concept of globalisation, the notion of �asymmetric� security threats moved in an instant from abstraction to alarming reality.

How to best deal with these threats, apart from just shoring up homeland security and punishing the perpetrators is the big policy issue. There is however an understanding growing that what is most critical and effective is having the active cooperative support of the frontline states themselves, those from where the terrorists come, in cracking down on their own extremists: and that the only way to generate in those states the capacity and the will to so act, is to take seriously the big problems � like Israel-Palestine � that their people care about. This is not about trying to remove the motivations for individual terrorists, and its certainly not about rewarding them � it�s about addressing the problem in a serious way.

The security challenges we will all confront can be approached from another angle � in terms of the way that violence is or can be perpetrated. The concern here is about three different kinds of weapons:

- Conventional weapons, including small arms and landmines as well as those of a higher-tech variety, in which the world is awash � and where the policy options for reducing the flood are very limited.

- Weapons of Mass Destruction � nuclear, chemical and biological � where non- proliferation regimes are under real stress, and there is real concern about such weapons falling into the hands of non-state actors with terrorist agendas. The problem is a real one and has to be addressed with every ounce of cooperative spirit the international community can muster � including the business community, which has a critical role in relation to chemical and biological inspection regimes in paricular.

The only serious policy goal for all of these weapons, including nukes, is absolute elimination, on the basis that so long as any state has them, others will want them, and as long as anyone has them there is a fair probability that they will eventually be used, by accident or design, to catastrophic effect. It�s not a very good argument that you need to retain some nuclear � or chemical or biological � weapons to deter rogue states producing or using them, when current generation conventional weapons give all the deterrent or retaliatory muscle that could ever possibly be required.

- Weapons of Mass Disruption are the third class of weapons we have to worry about and perhaps the hardest of all to deal with even with much more sophisticated intelligence gathering and exchanges than we have now: cyberspace attacks on critical communications networks; highly strategically focused simultaneous physical attacks on key electrical stations, causing cascading power failure throughout the country; and miscellaneous other nightmare scenarios now being written about in Foreign Policy and elsewhere.

III. What Can be done by Governments to Meet these Security Challenges

My checklist for governments and intergovernmental organisations is pretty straightforward:

- Act comprehensively, which means addressing security problems in a way that recognises they are not one-dimensional, and that social, economic and cultural factors can be at least as important as political and military ones in explaining why people and governments act as they do, and in persuading them to act otherwise.

- Act cooperatively, which means recognising that in the real contemporary world, however big you are, most international problems are only solvable with the help of others, and that acting together rather than in splendid isolation in addressing security threats is what for the most part is required by the UN Charter � the only dominant system of security law that we have, and which we would have to invent if it didn�t exist.

- Act intelligently, which means acting not only comprehensively and cooperatively, but in a number of other ways as well:

- Before the event, act preventively � on the basis that nothing is so cost effective in terms of dollars, lives, property destruction and misery

- During the event, in reacting to a situation, act productively rather than counterproductively. For example:
* Don�t solve one problem by creating others � as may have happened with buying support for Afghanistan at too high a price from CentralAsians (been there, did that in Cold War years).
* If you�re determined to take out Iraq�s WMD capability, do it in a way which has some chance of bringing rest of international community with you.
* If you�re going to make a helpful contribution to resolving the Israeli-Palestinian crisis, recognise the limits of security-first incrementalism - and the absolute necessity to get people talking again immediately about the substance of a fair and comprehensive political settlement.

- After the event, act sustainably - - be prepared to devote as many resources to post-conflict reconstruction and peacebuilding as to the initial intervention.(There is a real danger, despite all the rhetoric, of this not happening in Afghanistan).

IV. What is Business�s Role in All of This

Business does have a significant role � and should not just see itself as passive bystander, prisoner of events. It�s twofold � not to contribute to the problem, and to contribute something positively to the solution.

1. Don�t contribute to the problem

This is not likely to be an issue for any of the highly distinguished and conscientious members of the ICC, but it�s worth spelling out anyway. Don�t make things worse:

- by acting in a way that directly or indirectly supports the proliferation of weapons of mass destruction, or the illegal distribution of conventional weapons - by trading or investing in circumstances that directly generate revenue for those engaged in illegal armed conflict � eg the conflict diamonds issue - by not investing in activity which is directly reinforcing or perpetuating a grievance based conflict - eg. oil in Sudan - by contributing in other ways � eg. environmentally and socially insensitive resource exploitation � to the creation of grievance based despair and hostility - by giving encouragement, whatever the temptation, to corrupt practices of the kind which undermine the quality and effectiveness of governance.

2. Do actively contribute to the solution

- By being a voice for intelligent government engagement in conflict prevention and resolution. Governments � not least in the US � are always looking nervously over their shoulder at their domestic constituency: the business community is an important part of that constituency. It�s no longer possible to isolate pure business issues from security issues � global tensions and crises are these days everyone�s business.

- By being a voice in particular for intelligent, cost-effective, before the event preventive action - whether that involves diplomatic strategies, or legal and constitutional strategies, or economic development strategies or military strategies (including ultimately the threat of use of armed force)

- By being an active and helpful voice in the building of effective non-proliferation regimes for WMD, even if that support has some commercial implications for you � as chemical and biological weapons elimination regimes certainly do for chemical and pharmaceutical companies. One of the most productive experiences of my whole life in public policy was, as Australian Foreign Minister, leading a new global initiative, working with the global chemical industry in the late 80s and early 90s to put in place the Chemical Weapons Convention, with its far-reaching and highly intrusive inspection regimes.

- By being prepared, if you have the capacity to do so, to put effort and resources into the rebuilding of shattered post-conflict societies - to get them on their feet, functioning, consuming and trading again.

I have long argued, in and out of government, that governments have a hard-headed self-interest in acting decently, intelligently and cooperatively - in seeing their national interests as not just being bounded by traditional security and economic interests, but extending to being, and being seen to be, good international citizens.

I strongly believe that the international business community has exactly the same kind of enlightened self-interest in making a positive contribution on global security issues. You all have an enormous business stake in a safer and saner world; many, if not all of you, have the resources to make a difference, and you certainly all have a voice that can make a difference.

Please feel free to use that voice, and those resources � those of us labouring away in the conflict prevention and containment business need all the help we can get!

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