Big British businesses are well known to be international in reach and outlook. While the world has always been messy, it has only rarely slid into the spheres of turmoil it currently plumbs. The result is that executives in boardrooms are tearing their hair out at what is to be done about the turbulence and volatility of the situation. As 2024 is a US election year, restoring stability or steadying the ship should be a priority for business houses. But the Biden administration’s policy track record offers little hope of a reverse thrust towards stability. The Bank of England’s most recent Systemic Risk Survey highlighted the fragility of big business with a specific pointer to the so-called year of elections, when it is estimated two billion people will vote in general elections around the world. It said that there were specific fears in the boardroom related to upcoming elections, current conflicts and concerns over the resilience of global infrastructure. The survey itself said that geopolitical risk was cited as the top threat by 41 per cent of respondents, which was a rise in the rating of 18 percentage points since the last edition in the second half of 2023. Overall, 85 per cent of those taking the survey mentioned geopolitics as a risk, also an increase of nearly one-fifth in just a few months. Next up was cyber security and the report said respondents had linked the two issues in their feedback to the Central Bank survey. Usual business concerns around inflation and economic downturn were ranked lower down the top five. Big UK businesses tend to be very global with firms such as BP or Vodafone and often have dual international footprints such as HSBC in Hong Kong or Rio Tinto in Australia. Therefore the state of the world matters and what the survey shows is that deteriorating security is now pervasive. Turning to the current White House may not offer much comfort. Donald Trump’s candidature and possible victory delivering an internal but systemic challenge to the US does not provide any apparent hopes of a turnaround either, in the view of most business leaders. This is not just about Russia having decided to invade Ukraine, a development that marked the start of a new world order. It carved out a dividing line down Europe that directly cost businesses badly. The loss of investments in Russia has forced many top firms into painful write-offs, in the tens of billions of dollars. The increased inflation from energy costs and a rebalancing of the international LNG mark was a blow to rival that of the pandemic. Where the Biden administration’s foreign failures are biting most sharply is in the Middle East where a new geopolitical shock to Europe has emerged. The starting point of Joe Biden’s presidency was disengagement with the Middle East and the means to achieve this was a rapprochement with Iran. The priority given to doing a deal with Tehran has left a long shadow over Washington, as it was forced to repeatedly come back to the region (I use its own term) to deal with crisis after crisis. This may be a pattern but it has also made the US a deeply unreliable player in the region. For a start, despite everything, the senior US figures have not shed the concept that if only some kind of fix with Iran was in the offing, then a new equilibrium would be possible. Yet, at this juncture, it has no such prospect. It is instead looking at the reality of a brutal war in Gaza that it is only now moving to contain. It is doing so in a fitful manner that does little to engender trust in its directives. The destabilisation of Lebanon is complete; Syria is boiling with escalatory tensions; and Iraq has been triggered into unleashing its militia politics, perhaps worse. Washington has once again resorted to a no-levers-to-pull mode, having lost Afghanistan to the Taliban on a theory of pullout and stability that fell apart in weeks. For business fearing the spillover of geopolitics, this is unnerving. The rise of the Houthis using Yemen’s strategic position on the global trade routes poses a challenge to the world economy that Washington has struggled to address. The Houthis, empowered by the disruption that the attacks on shipping have caused, grabbed an advantage that few groups of their size could dream of coming within their reach. Iran, the sponsor of their rise, has gained from the theory that their leverage with the Houthi high command is a route to defuse the crisis. Even though the US has mobilised to lead air strikes against Houthi bases, Europeans and others are operating to protect ships. There is no route map to a return to normality for business supply chains. Providing international leadership entails getting ahead of the next lurch by the aggressors. With Iran promising to retaliate against Israel – and its allies – Washington is instead left at the apex of a now familiar waiting game. These have become way points on a spiral of instability and the foreign policy leadership in the US can’t offer the shield that global businesses crave.
