Can Business Interests Prevail Over Politicians Spoiling for a Fight?

Epic bloopers, such as 'Oh no Britain and Germany won't fight,' indicate that it can't, even if business could decide what its interests are.

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As a great confrontation of powers, the likes we haven't seen since the Berlin Wall's collapse ended the Cold War, the Crimea crisis will test of whether economics can trump politics. Can the interests of business – in this case, to end the crisis as quickly and quietly as possible – prevail over politicians and public opinion, which are spoiling for a fight?

This isn't a question just for Russia, Ukraine, the United States and Europe, all of whom stand to lose from a revival of the east-west confrontation. It has a bearing on Israel.

Since the 1990s, Israel has enjoyed an almost complete disconnect between the Sturm und Drang of the Middle East –short wars with Hamas and Hezbollah, Intifadas, the Arab Spring – and its economy, which grew, matured, liberalized and opened to the world.

That is remarkable, and, for those who remember Israel from the 1970s and 1980s, it was unpredictable. But it can't last forever. The Arab Spring chaos is moving closer to Israel's borders. The West Bank Palestinians won't remain quiescent forever. The Iran threat remains ready to flare up again and the boycott – much talk and little action so far – could emerge as a challenge to Israeli business.

We may be facing some tough choices going forward. Do we want to stiff the Palestinians and walk away from a peace deal, fanning the boycott flames? Do we want to confront Iran and undermine business confidence? How ready are we to shut down the economy for days and weeks at a time to fight another missile war?

And would Israel's business community – that amorphous creature that encompasses everyone from tycoons and bankers, to the financial markets, to corner grocery stories – take a stand? Would it make a difference?

Epic bloopers

The history of business' real or imagined influence on war and peace over the past century or so is filled with bloopers on an epic scale. It starts with Norman Angell's "The Great Illusion," a treatise published unfortunately just five years before World War I. Angell posited that Britain and Germany were unlikely to risk war because their commercial ties were so deep that neither would risk it. Four years of fighting and some 10 million dead proved him wrong.

After the war, the opposite theory gained prominence - namely that businessmen and bankers were warmongers. A panel chaired by U.S. Senator Gerald Nye on the eve of the Second World War in the late 1930s concluded that the siren song of wartime profits for the banking and munitions industries pushed America into the war.

Many Marxists contend that a permanent arms economy, like America's during the Cold War or after 9/11 or Israel's since 1948, is a device used by capitalists to rescue a system doomed to collapse. Lenin thought that imperialism was a race for colonies among the world's industrialized countries as bankers and industrialists sought profits they could no longer make at home, which also encouraged war.

Needless to say, none of this proved to be any more prophetic than Angell.

More than a half century ago, then U.S. President Dwight Eisenhower warned about a club of generals and defense companies, the infamous "military-industrial complex, controlling U.S. defense and foreign policy. He had a point, but the U.S. defense budget has been on a downward trajectory since Eisenhower issued his warning, despite two major wars.

Oligarchs afraid to say boo

Russia certainly has something to lose economically if the West applies sanctions in response to the Ukraine aggression. The Russian economy is reliant on energy exports to Europe, its oligarchs need Western financing and any hope of reforming an inefficient and corrupt system that produces little of value that isn't mined from below the earth needs the West's help.

The oligarchs have the most to lose by their country's economic isolation. However, they have expressed nothing but support for the Crimea adventure, for they know perfectly well that even the most powerful businessmen could find themselves facing trumped-up tax charges, or worse, for opposing Putin.

That says a lot already about the influence of Russian business on what is easily the most important event for the country of the last decade. In an economy of crony capitalism – and in that regard, Russia ranks No. 2 in the world, according to an index published by The Economist this week – loyalty to the leader is the paramount business interest. All power emanates from Putin and business is regarded as the personal and dishonest endeavor of a privileged few, not as a pillar of the economy.

That puts Russia in stark contrast to the U.S. and Europe, where business is an important power center, but has to compete with politicians and public opinion.

Business may not be venerated, but people at least understand that their standard of living depends on it.

If the West isn't enthusiastic about confronting Russia, it's not just because business is opposed - but because the public doesn't care enough. Polls show Americans distrust Russia more than any time in decades, but that doesn't mean they will be demanding sanctions, much less send their sons and daughters off to another distant war.

Exaggerating the role of business

Here in Israel, some contend that the security threat we face is exaggerated by a local version of Eisenhower's military-industrial complex. A permanent war footing keeps defense companies profitable, gives generals and security experts sway over public policy and, some would contend, is a useful tool for distracting the public from desperately-needed social and political reforms.

It will be easier to tell in hindsight whether any of this is true, but the theory smacks of the same massive misreading of political dynamics that Angell, Lenin and Nye made in their times. It erroneously assumes that business can manipulate politicians and public opinion to suit its needs (and that business can reach a consensus about what its needs are to begin with).

Israeli business has been saved the stark choice between the interest of peace and prosperity or war and want. But given the choice – and assuming cynically that they are only looking at their profit-and-loss statements, not at the country's vital interests – the great majority would go for peace.

The power and influence of the defense industry pales beside that of the technology, financial services, chemicals/pharmaceutical and emerging energy industries, all of whom would gladly trade a tank for a treaty. If and when the time comes, it will be interesting to see whether the likes of Yossi Vardi or Rami Levy (high-tech entrepreneur and supermarket magnate, respectively) can out-influence the camp of Moshe Ya'alon or Naftali Bennett (the former chief of staff and economy minister) .


The War Room in Stanley Kubrick's 1964 film 'Dr. Strangelove.'Credit: Wikimedia Commons

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