Diplomacy making in XXI Century towards a new approach
New players are now entering the ranks of international politics. 21st-century diplomacy is no longer merely the preserve of governments and professional diplomats.
- Thursday, 14 March 2013
New players are sitting at the table, out of necessity in some cases, and co-opted in others. The economy has emerged as a pressing issue in the diplomatic debate. Today, more so than yesterday, economic decisions are not dictated exclusively by the logic of power, but often by the influence of the new players – economists, intellectuals, large NGOs, ex-politicians, magnates and pressure groups – who now have an unprecedented ability to make an impact. More than a G8 gradually transformed into a G20, a body such as the World Economic Forum is now assuming great importance as the annual venue for the expression of international extra-diplomatic relations. Given the increased international economic mobility and the near-absence of bottom-up delegation, the challenge is now to define a framework of rules in which the economy does not dominate politics due to its inherently slower decision-making processes and territorial roots. In the wake of the recent international financial crisis, there have been calls from many sides for greater control of international finance. This objective is not an easy one to pursue, without reintroducing harsh controls on the international flows of capital. A less ambitious but more realistic objective might be that of introducing internationally-approved rules for financial supervision and regulation, in order to guarantee a level playing field. In this context, transnational banks such as UniCredit can play an active part in change: thanks to a multi-country presence, through a network of branches and subsidiaries (UniCredit is present in 22 countries and 50 financial markets), with its supranational group-oriented vision, the Bank can exert an influence on local authorities, in a move towards greater harmonization of laws and regulations. The internationalization of the banking system in Italy (and in Europe as a whole) was initially accelerated by the freeing-up of the circulation of capital within the European Union (in 1990), followed by the introduction of the Euro in 1999, eliminating exchange risk between the Single Currency member states. During the second phase in the early years of the 21st century, the international expansion of Italian banks – a process in which UniCredit was the major player – shadowed and often anticipated the convergence of Central-Eastern European countries and Turkey towards the EU. UniCredit, thanks to its internationalization towards the East, has certainly made a great contribution to the foreign and neighborhood policies of Italy and the European Union, while at the same time gaining important advantages from the process of European expansion. It is no coincidence that the Group's process of internationalization began in 1999 in Poland, with the acquisition of 50.1% of Bank Pekao and an investment of $1.2 billion. At the end of January 2013, the sale of 9.1% of the same bank (we are still majority shareholders because HVB had contributed precisely 9.1%) was worth € 890 million (approximately $1.170 million, almost the same value paid for our first acquisition). Today, the Bank Pekao share is at the highest level since 1999, and its value over the past 14 years has increased by 600%. UniCredit has managed to obtain these results by anticipating the process of economic and social convergence of Eastern European countries towards Western standards, and benefiting from the general process of European integration. Looking to the future, Italian banks and UniCredit in particular will still be able to rely on the large flows of revenues from Eastern European countries, especially Turkey, as their growth rates will still be higher than in Western Europe, despite the evident negative repercussions that the Euro crisis is producing, also in those countries. Joining the EU has brought stability and growth prospects to many of the new members from Central and Eastern Europe, and has certainly contributed to foreign investors' decisions to establish a presence in those countries. It has also contributed to the presence of large foreign investors such as UniCredit and ENI among others. This will help the new EU members to align themselves more quickly with European standards. Turkey is a case in point. Turkey's alignment with the EU has slowed (13 chapters are still open out of 35 – the last was opened in 2010 – just one has been closed) but thanks to our presence in the country (more than 17,000 employees and 900 branches – the country's fourth largest bank) we are making an active contribution to keep attention focused on this issue, also among the Turkish people, while exploiting every possible opportunity to keep the EU as one of the cornerstones of Turkish foreign policy. Central and Eastern Europe, which is and will remain the most economically thriving part of Europe, represents the core business of UniCredit. It is the leading bank in a region that includes high per capita income nations such as Germany and Austria, and countries whose prospects for growth are still ample, such as Poland and the Balkan states. In most Central-Eastern European countries, UniCredit is among the top three places in terms of market share (it holds first place in Bulgaria, Austria, Croatia and Bosnia, second place in Poland, and is third in Germany and Serbia). There is no doubt that UniCredit has made a great contribution to national and European foreign policy objectives, and that it can continue to do so. Once the current crisis of the Euro and sovereign debt is back under control, we hope that new, important synergies can be created with the traditional players in foreign policy, also in terms of exploring and stabilizing the emerging new frontiers – China, India, and Brazil but also the African continent. The dimensions of the internal markets in those regions, and their prospects for economic growth, make them assets that it will be increasingly difficult to ignore, in both economic and political terms. The only way for our national system to be competitive is by achieving a high level of integration among the traditional players in foreign policy and the multinationals with an international presence.