Chaos in Policy Roll-Out

While it may seem odd that a 1960s television seems to presage where we currently find the intersection of politics and business, it turns out that Mel Brooks and Buck Henry had it right with Get Smart. The two competing forces were CONTROL, headed by Chief and home of Agents 99 and 86 and KAOS, formed in Romania but incorporated in Delaware “for tax purposes”. Thomas Friedman pointed out the congruity of these competing ideologies in the context of global politics in his most recent book Thank You For Being Late but I see this dichotomy in the current domestic political situation.

From the more general business perspective, one can only term the first two weeks of the Trump Administration as chaotic. Peggy Noonan, writing in her weekly Wall Street Journal (WSJ) column, in a piece entitled “In Trump’s Washington, Nothing Feels Stable”, wrote of President Trump and Congressional Republicans, “when they look at him see Chief Crazy Horse.” Leaving aside the political chaos engendered over the past two weeks, it has been as equally chaotic for US businesses. From tweeting, to mixed signals and messages to the ban on Muslims entering the US with a valid Green Card or Visa, to insulting one of our two closest neighbors – Mexico; our largest trading partner – the EU; and our most steadfast ally for the past 70 years – Australia; it has been very un-nerving time for US businesses with an international sales component or international supply chain.

Daniel Henninger, also writing in the WSJ in a piece entitled “Trumpian Shock and Awe”, said, the Muslim ban “has politicized people the administration didn’t need among the disaffected. That includes the management and employees of the entire tech industry and of many other American companies. It includes some Republicans and important staff in Congress, numerous U.S. universities and research scientists, ambivalent pro-Trump voters, and foreign leaders such as Theresa May, Angela Merkel and Enrique Pe?a Nieto. Not to mention the men and women now rethinking offers to take subcabinet positions after watching the public humiliation of an unprepared federal attorney in a Brooklyn courtroom Saturday.”

The markets responded poorly to the ban as well. James Stewart, writing in his Common Sense column in the New York Times (NYT), said, “Wall Street did take notice. After months of cheering the prospect of tax reform and infrastructure spending, investors sold stocks after a weekend of chaos at the nation’s airports connected to the president’s executive order on immigration. On Monday, the Dow industrials experienced the biggest one-day decline since the election, fueled by worries that a dysfunctional White House wouldn’t be able to execute Mr. Trump’s policies.”

If there was one lesson I learned from my work in corporate America, it was that business leaders did not respond well to uncertainty. The chaos engendered by the new administration by the Muslim refugee ban is far beyond simple uncertainty as it moves to truly uncharted waters. Working in the self-proclaimed Energy Capital of the World, Houston TX, this ban has been particularly problematic. Obviously a large portion of the energy industry is centered in Middle Eastern, Muslim countries or countries like Indonesia, the world’s largest Muslim country by population. Iraq and Iran both have large national energy concerns. As noted by Christopher Drew and Clifford Krauss, writing in a NYT article entitled “Immigration Order Complicates U.S. Companies’ Plans in Middle East”, said that US companies which have worked with the Iraqi government to help rebuild the country since 2003, “are irritated that their country, which is working closely with the United States to battle the Islamic State, was one of seven predominantly Muslim nations included in the 90-day immigration ban imposed by the order.”

But more than simple irritation from business leaders, there is real concern about retaliatory travel restrictions which will inevitably result from the unilateral US action. Dragen Vuckovic, President of Mediterranean International Inc., a Houston-based service company that operates across the Middle East and North Africa, was quoted in the piece “It’s tit for tat.” The article noted, “Vuckovic said he had been scheduled to travel to Iraq soon to speak to officials in the country’s energy ministry but had changed his plans” and went on to say, “I have a visa but they may not let me into the country in retaliation to Trump’s travel ban. I’m not going over there for nothing. It’s a very bad situation.”

The concerns are broader than simply the seven countries listed in the Muslim ban. It could easily and quickly spread to other Muslim countries and the resulting backlash could well be devastating for America’s short and long term business interests. The NYT piece cited to “Michael Dynan, vice president for portfolio and strategic development at Schramm, a manufacturer based in West Chester, Pa., that has supplied rigs to companies working in more than 100 countries including Iraq” who noted “tensions over the immigration order could affect American business beyond the seven countries.” Dynan stated, “My concern is retaliation, and that is just going to open things up for competitors like the Chinese. What I am scared of is there could be a backlash in other Muslim countries or in general against America. We’ve always opened our borders and been the leader in trade and exports. It’s our brand.”

The response of several companies in Houston was to ban international travel by its employees. The reason, with the chaos and uncertainty these companies did not want their employees caught in a country they could not get into or worse, get out of and be stuck in some type of limbo. This travel concern also plays into persons coming into the US, who are not from countries subject to the Muslim refugee ban, yet who may have traveled to such countries during the pendency of their current passports. Here one might consider the example of the former Prime Minister of Norway, Kjell Magne Bondevik, who was traveling under a Norwegian diplomatic passport, identifying him as a former PM, yet was detained at Dulles airport because he had traveled to Iran and had an Iranian visa in his passport. All of this in spite of contact between the Norwegian embassy and its US counterparts in Washington during the detention, explaining that Bondevik was a former PM of Norway and as such was no terroristic threat to the US.

Noonan observed, “The president and his advisers are confusing boldness with aggression. They mean to make breakthroughs and instead cause breakdowns. The overcharged circuits are leaving them singed, too. People don’t respect you when you create chaos. Prudence is not weakness, and carefulness is a virtue, not a vice.” Gretchen Morgenson, no doubt channeling her inner Bette Davis in this week’s Fair Game column, advised businesses to ‘buckle up” as it will likely be a bumpy ride.

One of the things that both Noonan and Henninger made clear in their articles was their biggest concerns were over the chaos in planning and execution. So over the next few blogs I will be exploring the failure of the administration in these most critical business functions to see what lessons both the compliance practitioner and business leader might discern. Kaos indeed.