The Hindu Business Line : Facing up to risk of terrorism

THE Academy of International Business, a US-based body of academics in the field of international business, was scheduled to hold its annual meeting in Istanbul, Turkey, during July 10-14, 2004. And, then, terrorism struck Istanbul on November 15 and 20, 2003, when a synagogue and the offices of the British Consulate were targeted by suspected terrorists, leading to some casualties. On December 17, the AIB took stock of the situation and decided to move its conference to Stockholm, Sweden.

Terrorism is a fact of life around the world today so much so that along with `business' and `sports', newspapers in the near future may well devote to one page daily to `terrorism'. The mere whiff of an unattended bag has led to entire airport closures in the US, although people continue to travel.

From January 1, 2004, the new rules of the US Government now require all visitors to the country (except from 27 designated mostly European countries) to be finger printed both when applying for a visa and when they arrive at the port of entry. Yet, visa application lines outside US consulates around the world do not seem to shorten.

As we try to lead normal lives in the face of terrorism, it will be useful to deconstruct the reasons given by the AIB in shifting the venue to `safer' Stockholm. To quote from their Web site, "All the arguments for keeping the meeting in Istanbul, and there were many, could not hold up against the one point that was most salient in our minds, the travel advisories from the US and UK Governments. We do not know where the next terrorist attack may occur, and chances are it won't be in Istanbul, but we could not dismiss the severe difficulties over the liability of going ahead in a situation where several government warnings are in place."

The crux of the argument appears to be the liability that arises from the travel advisories of the Governments of the US and the UK. I therefore took a look at those `advisories'. These are notifications provided by these governments for the benefit of their citizens. The US advisory, in short, says: "In light of the recent terrorist bombings, the Department of State recommends US citizens defer non-essential travel to Turkey." There is no prohibition but a warning to avoid non-essential travel. Clearly, they don't want US citizens wandering or congregating in the streets and attracting attention.

The UK warning is more neutral. The Government says, "We urge you to be vigilant in all parts of the country, and especially in the vicinity of potential terrorist targets." They go on to suggest that those responsible for the terrorist attacks are doing so because they dislike "sites which symbolise the political, religious and economic values of western countries, including the UK." There is no restriction on travel to Turkey, but just a warning to be careful not just in Turkey but everywhere.

If this is what scared the AIB, then it has some implications. One is that they believe that attendance from the US and the UK would be affected by these advisories as the citizens of those countries would be guided by their government's warnings. The association has about 3,000 members from 65 countries. While country-wise break up is not available, one must assume that the body is so heavily dominated by citizens of the US and the UK that attendance at the meeting would be affected. This is not good for an academy that sees itself as being global. It also suggests that these travel advisories by western powers have such far-reaching implications that they are a new policy tool. At the height of the India-Pakistan tensions last year, a similar travel advisory by the US about India led to many expatriates parking themselves in other countries for a while because of their head office instructions to abide by these advisories.

The UK has learned a lot about terrorism having suffered at the hands of the Irish Republican Army who, in their heydays, were as violent a bunch as al-Quaida. Visitors to London will recall the days when there were frequent warnings in public places not to touch or move an unattended package but to call the police immediately since it may be a bomb. Yet life went on as normal as possible and I do not recall conferences being cancelled or moved away.

The US is the most recent entrant to the club of terrorism victims when a home-grown terrorist blew up a government building in Oklahoma City on April 19, 1995, and the World Trade Centre was attacked on September 11, 2001. Responding to the World Trade Centre attack, the US President Bush advised the people to go shopping. He was not being facetious but was only trying to make a point that we should continue life as normal and not let the terrorists win by disrupting routine activities.

It looks like what the terrorists were not able to achieve in Istanbul, the travel advisories of the US and UK governments have achieved. Or were the advisories just an excuse by the Board of the AIB?

The AIB advertises itself as the "leading association of scholars and specialists in the field of international business." So let us take a look at what most textbooks on international business have to say about dealing with risk. Risks that are unique to international business in the main relate to political risk (for example, changes in political situation and government policies) and monetary risk (for example, exchange rate changes). Where possible, individuals will seek to protect themselves against the risk through insurance and hedging policies and make their final determination by weighing the expected return against the estimated risk.

Even a repressive communist government with high levels of corruption has not dampened investment flows into China. In spite of daily killings of both Iraqis and foreigners, many governments around the world were upset that they were not included in the special list of the US administration as to who would be allowed to bid on contracts for work in Iraq. As the theorists would argue, there is no single formula to evaluate risks. Each situation is unique.

In Turkey, we have a situation of a secular country that sees itself as a bridge between the east and the west — both geographically and culturally. A democratically-elected government with a strong military keeping a watchful eye has been committed to the global fight against terrorism. Surely, a couple of bombings in December is a risk that could have been managed for a conference that was to meet in July.

It is, perhaps, time for me to confess that I am a member of the AIB although I did not intend to attend this meeting. I checked with a Turkish colleague who teaches at a university in Istanbul. She is upset at the decision to change the venue and has decided not to participate in the conference. I'm quite sure that the AIB conference will have several panel discussions and papers being presented in Stockholm about evaluating the risks in Turkey. But business folks seem to know more about dealing with risks that academics and scholars for various international trade shows, exhibitions, and specific industry conferences continue to take place in Istanbul and elsewhere in Turkey.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

More Stories on : Terrorism | American Periscope

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tragedy at Srirangam

Pricing urea

Globalisation revisited

Some risks need to be taken

Facing up to risk of terrorism

Cancun: A start for developing countries

Importance of the FIIs

Borrowing cost

Farm sector

Social security