The International Business Council (IBC) was honored to host the US Ambassador to Saudi Arabia, James B Smith, in Kansas City, MO, on May 26, 2011. Visiting during a time of revolutionary upheaval throughout much of the Middle East, the Ambassador spoke of the turmoil’s impact on the Kingdom of Saudi Arabia as well as the perception that the Kingdom has avoided much of the reform that has taken root and flourished elsewhere in the region. Finally, he spoke of economic opportunities in the region and why he was optimistic for the future of Saudi Arabia.

Talking about the revolutionary fervor in the region, Ambassador Smith pointed out how little the protests are about the US or the western world. Rather than focusing their anger on the West, the protestors directed their venom at their own corrupt and repressive governments. In fact, as the Ambassador said, for the first time in 700 years, these protests & revolutions are not about someone else—not about an imperialist occupier or invader—but rather about the countries themselves and the people’s desire to improve their quality of life. This presents a great but rare opportunity for governments, businesses, and individuals in the West to offer support, strengthen economic ties, promote peace, and expand in the region.

Moving on to Saudi Arabia in particular, the Ambassador stated that despite claims to the contrary, the Kingdom has undergone massive societal changes in the last fifty years, although much remains to be done.

• In 1965, 5% of women were literate. Today, 55% of college graduates in the Kingdom are women—at least partially due to King Abdullah’s call for all women to be as well-educated as their husbands.  But, the literacy rate for females is still only 70% compared to over 85% for males.
• The Kingdom is investing heavily in education at all levels. However, education continues to be highly devoted to the study of Islam and is generally seen as unsophisticated—relying on rote memorization instead of problem solving and application of knowledge.
• The King has recently created the office of the Minister of Corruption whose charter is to root out and eliminate corruption—a significant inhibitor of economic growth.  Of course, it is the Royal Family themselves who are most often the subject of allegations of corruption.
• Finally, the Ambassador sees a ground-shift in the people of Saudi Arabia’s self-perception—from subjects, beholden to the king, to citizens, responsible for improving their country. Part of this perception shift can be attributed to the explosion of social media and access to information previously restricted and controlled by the government. However, national elections have never been held, and the ability of citizens to protest continues to be severely limited.

Despite the above improvements, reform in the Kingdom is controlled and calculated. As an obvious example, women are still prevented from driving—a clear sign of their second-class status—despite their significantly improved educational opportunities.  But, protests to hasten change tend to be counterproductive.  Saudis are culturally resistant to pressure and past protests have caused the government to dig in and retrench rather than respond positively to the protesters’ demands.

Asked about the royal family’s succession planning, the Ambassador professed no concern, despite the King’s ill-health and lack of clear heir. Historically, the crown has passed to the next eldest but still capable relative, and he does not see that tradition changing when King Abdullah is no longer fit to rule. The Ambassador envisions no power struggle and no turmoil, a welcome forecast for the stability of the region and for companies looking to conduct business in the Kingdom or partner with Saudi companies.

Finally, Ambassador Smith believes that the controlled pace of reform in the Kingdom should provide a stable platform upon which the economic ties between the US and Saudi Arabia can be strengthened further.  Today, Saudi Arabia is the US’s 7^th largest trading partner, accounting for $7 billion of trade per year.

Throughout the evening, the Ambassador struck an optimistic tone regarding all facets of Saudi life, from politics to the economy to trade to reform. It will be interesting to watch as King Abdullah continues to push through moderate reform and as the Royal Family debates and ultimately decides upon an heir. Stay tuned.

Special thanks to Ambassador James Smith for joining us and sharing his views on Saudi Arabia and the Middle East. In recognition of his dedication to Peace Through Commerce in Saudi Arabia, the IBC awarded Ambassador Smith the 2011 Peace Through Commerce Award.

Contribution from
Andrew Morris
(Director of University Relations)

The Student International Business Council was in full force for a weekend in early November for their annual International Politics of Economics Forum (IPE). Every year a topic is chosen for discussion, with each council spending months researching and forming an argument to support such research. This year’s topic was How the fluctuating value of the U.S. dollar impacts world peace. As you can imagine, this topic allowed each council to arrive at three separate, but all valid, presentations and arguments. Each school did a wonderful job of presenting and defending their arguments in regards to the topic, while also leading the judges and those in attendance to comprehend such a vast concept as to the power of the U.S. dollar on world peace.

Here is a quick synopsis of how each council approached the topic, and their presentation.

NOTRE DAME

Notre Dame, whose team consisted of Mia Genereux, Erik Wang, Alex Wood, and Alex Ydoate as the presenters, presented their position that It is imperative to stabilize the value of the US dollar as its drastic decline is likely to export worldwide inflationary pressure that will impede the sustainability of democracies and therefore hinder the prospect of world peace.
Notre Dame then proceeded to quickly discuss the relationship between the depreciating dollar value, and global conflicts. The power of the US dollar in global economies was also clearly illustrated. The argument was that with a depreciating dollar and increased inflation, that there would be income inequality—which would lead to the decline of democracy and cause conflict.
In support of this, Notre Dame argued that the Democratic Peace Theory points to the fact that countries that have established democracies do not go to war with one another fairly often. This is attributed to the fact that democracies have checks and balances within the government, as well as giving power to the masses.

In light of these arguments, Notre Dame referenced a case study on Chile. In 1973 there was a poor balance of trade and a volatile US dollar. This caused international inflationary pressure, which then led to economic crisis. This crisis caused income inequality—which leads to social instability. In Chile a military coup took place and there was great internal conflict. Notre Dame argued that this illustrates that a weak US dollar led to instability within Chile.

On the flip side, Chile was able to experience low inflationary pressure in 1990—due to a stable dollar—which led to a strong internal economy and the return of democracy to the country.
To conclude their presentation, Notre Dame discussed how the Fed controls and impacts inflation. Notre Dame also stated that while no inflation is unrealistic, that the Fed needs to help stabilize the US dollar through limiting their printing of the US dollar. By stabilizing the US dollar, world peace is able to be maintained internationally.

BENEDICTINE COLLEGE

Benedictine College, whose team consisted of Andrew Carlson, Bridge Jenson, Jordan Neville, Rob McCabe, and Lauren Sheeley, presented the argument that The US dollar, through free trade, would sustain the US as the leader in international trade and promote international peace.

Benedictine College (BC) pointed to the fact that we currently have symptoms of a strained international relationship with China, which is further causing the lack of international investments into global health. Through free trade, BC argues, we would be able to improve our relationship with China and increase investments in global health initiatives.

BC also illustrated what they feel the status quo is—by reviewing the value of the dollar compared to other currencies, and that there is a lack of confidence in the US dollar. BC also stated that the dollar remains the fiat currency within international trade, which increases the demand for US treasury securities by foreign governments and buying powers. This international demand and use of the US dollar causes BC to argue that the dollar affects international peace through not only trade—but free trade. Free trade being defined as eliminating all tariffs and other trade barriers imposed by nations.
Free trade impacted BC’s resolution in three key ways: 1. It allows for peace to exist between nations. 2. Would lead to cooperation between China and the US. 3. With the lack of conflict, it would allow for an increase in investments in health initiatives.

In regards to China, the fact that the US feels that they are devaluing the value of the Yuan—which allows for their goods and services to be cheaper to buyers than US goods and services—causes tension. With the US pressuring China to revalue their currency, and China resisting, the cycle of conflict is perpetual. BC feels that the solution to this conflict is promoting free trade, which would level the playing field, and allow for both countries to prosper through increased trade instead of increased tension.

BC stated that the US is the global leader in health initiatives, and that more investment is needed. To help promote an increase in global investments, the US needs to promote stability within the global economies. This is done through free trade, which would then allow other countries to recognize the connection between increased health initiatives and world peace—for health initiatives assist in increasing the overall standards of living and the curing of infectious diseases. BC stated that if everyone is living a quality life and is healthy, that the cause for conflict is greatly decreased.

UNIVERSITY OF SAN DIEGO

University of San Diego (USD), whose team consisted of Nick Ongaro, Andrew O’Such, Greg Viscomi, Blake Ward, Chris Blay, and Miranda Denny, presented this topic: That the role of the US dollar, through Quantitative Easing (QE) policies by the US Federal Reserve, in the re-blanacing of global markets, and its effects on international peace.

This topic was very interesting, given the timing of the event coincided with the Fed announcement of phase two of Quantitative Easing. This announcement, which USD pointed out, caused quite a backlash within the domestic and international market. Several governments, including Russia and China, spoke out against this plan for it exported inflationary pressure on their domestic currencies.

USD did a great job of explaining what QE is—which is when the central bank creates money and uses that money to buy back government bonds—and how it directly impacts our money supply. With the Fed pumping more US dollars into the economy by purchasing back government bonds, the amount of dollars are chasing the same amount of goods—at least within the near future—are greatly increased. The outcry of this action is due to the fact that many governments and individuals feel that the market is saturated with US dollars already.

In the end, USD clearly illustrated how QE works, the impacts on inflation, how it impacts global markets, and how this affects international relationships. The overall impact of QE policies will not be fully known until it happens, but USD illustrated that there are many questions and concerns surrounding this type of policy—and how it can lead to a threat to international peace.

While each council gave great presentations and arguments, there had to be a declared “winner” of the event. In the end, Benedictine College walked away with the trophy—but each council was praised by the judges for their articulate and unique approaches to the broad topic.

Promoting Peace Through Commerce sounds like a great mission – if you know what this means. It is especially galvanizing if one understands how to pursue this mission.

Before explaining what the IBC does, it’s probably helpful to begin by first explaining what Peace Through Commerce even means.

Peace Through Commerce is the concept that strengthening economic bonds and cooperation between two countries, two regions, two states, or even two individuals removes the alienating struggle over scarce resources and replaces it with a cooperative pursuit of resource maximization. At its core, it is the belief that market forces can empower individuals to break the cycle of dependency and empower individuals to lift themselves out of poverty. Ultimately, it is the vision that commerce can lead to the eradication of poverty and the universal spread of peace.

In the spirit of this vision, the IBC was founded as a spin-off of a student group at the University of Notre Dame (the Notre Dame Council on International Business Development) which was itself founded over twenty years ago through the generosity of Notre Dame alum, Frank Potenziani, whose generosity continues today.

What role does the IBC play in this pursuit of Peace Through Commerce?

At its inception, the Council functioned as a professional networking and social group that provided members with opportunities to mentor students. Today, the organization executes on its mission by providing business consulting services to entrepreneurs in emerging markets. Our ideal engagements involve partners where we can do one or both of the following:

1. Act as a counter-part to a micro-finance organization by helping loan recipients maximize the value of the money that they’ve received.

2. Partner with organizations active in conflict zones, where the struggle over scarce resources has lead to violence and repression

Generally, our engagements involve members advising entrepreneurs on business fundamentals, from marketing to accounting to strategy. We advise on go-to-market strategies, assist with the creation of business plans, provide simple business training, and help write marketing plans. Our engagements can involve in-country work and remote work. In country, we work hand-in-hand with the NGO, MFI, or entrepreneurs themselves. When working remotely, we form virtual teams, which telecommute from around the US and bridge the gap of geographic distance through the use of email, web chats, and Skype.

The objective of each engagement is to provide entrepreneurs with the tools & skills they need to improve their own situation, to find ways to work with those previously viewed as competition for scarce resources, and to identify better ways to help themselves. At its simplest, the goal is to “teach a man to fish” while creating a more productive industry.

Before an engagement can start, a small IBC committee evaluates potential partners and, through a due diligence process, defines what the project should look like, and what the ultimate deliverables should be. Once the project is defined, the IBC’s membership is notified of opportunities for involvement, and a team is pulled together to execute on the engagement. A typical engagement can last 2-4 months and, depending on the project, could involve a trip to visit the entrepreneur or organization with whom the project team is working. Previous teams have traveled to Haiti, Cambodia, and Central America.

International Business Council

Social Enterprise
• Consulting engagements
• Partnership development

University Relations
• Mentoring
• Liaison
• Recruiting

Operations
• Marketing (promotions, branding, web dev, social media)
• Recruiting
• Fundraising
• Event planning

These projects are contained and managed within the IBC’s Social Enterprise Division. Besides the Social Enterprise Division, members have opportunities to advance the mission of the IBC by participating in the University Relations and Operations divisions. University Relations engages partner universities, today the University of Notre Dame, the University of San Diego, and Benedictine College, to mentor students and foster cross-pollination of ideas.

The Operations group is responsible for recruiting, fundraising, and promoting the IBC. Division members develop marketing materials, develop and maintain the IBC’s website, and plan and promote annual events held around the country to provide networking and social opportunities for members and the community.

The IBC is small but growing rapidly and actively seeks people interested in taking leadership roles in global economic development and cooperation. More than any other organization I know, it gives business professionals opportunities to volunteer their time in the most fundamentally valuable way—by using their professional skill set to train and advise others. These teams of professionals create knowledge sharing arenas and provide opportunities for unlikely partners to learn from each other in a non-paternalistic and professional manner.

Go beyond on-line activism… Join us and help create change in the world!!!

Contribution By
Daniela Papi

When running a start-up organization, you are always looking for volunteers, people who are willing to share their time and their knowledge with you to get your work off the ground. At first you are hanging on every word that people share with you as you learn about accounting, business plans, marketing, and all of the pieces that come with starting a new venture. You are willing to take any volunteer who is willing to give their time and you charge full-speed ahead into your work using their ideas. Then there comes a day when you start getting have to start saying no to volunteers.

This has been our same story as we developed our hybrid organization, PEPY: an education non-profit organization working in literacy and leadership, as well as an edu-venture tour company which helps to fund the programs. There came a point where we started to be more discerning about the help we were able to take. Many people contacted us saying that they were willing to volunteer. We have taken some of those who were not able to come to Cambodia but instead offered their services virtually, but usually there are problems with:

•Finding the exact right match of skills and needs. When volunteers are far away from the problem, it takes a long time to get to understand how their skills can fit with your organization.

•Time. It takes a lot of time to construct that match, to follow up with virtual volunteers, and to share the work that they do with the rest of the team.

•Conflicting ideas. When people are outside of the company, it becomes difficult for them to keep up to date on the daily developments of the organization, so sometimes it can result in the repetition of work of a work product or work which misses the mark.

At PEPY, we have worked with groups of volunteers in the past who have taken more time than the value they have added. I commend the IBC and the process used to support PEPY Tours this year, as it is a good example of what can be possible using virtual volunteers to assist an organization.
First, I want to comment on past IBC support initiatives. I was involved in the first IBC delegation to go abroad to “help”. There were three of us who went down to visit projects, McKinsey professional Maggie Durant, a current State Senator of New Mexico, and myself. We were probably a smart enough group to work on a feasibility study of the IBC’s impact, but there was one big flaw: we weren’t prepared to help in a way that would make sense for the program. We had not understood how to do the proper research before we left, which would have all pointed to the signs saying: you can’t help if you are only committed to the short term. The issues we were looking to “advise” on were extensive: business development in a multi-culture environment, agricultural cooperatives looking for market analysis. . . in GUATEMALA and HONDURAS, places we knew little about. During our week-long visit, we took a lot of people’s time and set expectations that we quickly realized we were not able to fill. Tim, Maggie and I all agreed – this was a learning experience, and we needed to find a different way for the IBC to promote its social mission.

The next group I came in contact with through the IBC was a delegation that was sent to Cambodia, the country I have been working in since 2005. This group did extensive research before coming out to Cambodia to work with a microcredit organization. There are many costs associated with traveling abroad, as in both of these projects, and issues related to translation and cultural understanding can often add further set-backs.
So what can we do to move forward? Work hard to find the right match. I was grateful that the IBC reached out to us at PEPY last year and offered virtual support, and I was been even more delighted when we saw the match was a good one. A group of IBC volunteers including Ryan Jochum, Kate McDermott, Matthew O’Connor, and Steve Wierema, helped PEPY virtually for nearly three months. Weekly conference calls kept everyone on track, and the team was led by Evan Lintz, who kept everyone on track and organized, and Tim Rann, a former PEPY intern. With the system they set up of managing the volunteer team, there was very little time taken away from full-time PEPY staff while also ensuring a strong understanding of the work PEPY does which made their final work product very valuable.

The group analyzed PEPY’s tour offerings when compared with competitors, gave advice on the marketing and branding strategies of the organization, and analyzed industry trends. Their final project will continue to be very useful for our organization for many years to come, and we thank the team for giving us their time and their knowledge.

If any of you is looking to volunteer your time virtually for an organization, you can learn a lot by following in their footsteps:

•Spend the time to find a good match between your skills and the organization’s needs.

•Be willing to do the “boring” stuff.

•Be organized and give your feedback in a well documented fashion so that the partner not only knows what you did, but how you did it. This builds up the organization’s capacity by helping the staff to continue the process in the future on their own.

•Provide connections to new ideas and new people to gather other interest and support for the work you are now a part of.

The IBC team working with PEPY did all of these things, and for that we are very grateful. Hopefully the fruits of their labor will show as we continue to develop our product offerings at PEPY Tours and now have a well outlined path for further improvements.
—–
Note: After this process, Tim Rann decided to come back on to the PEPY Team and will become CEO of PEPY Tours from April, 2010. Congratulations, Tim!

PEPY is a hybrid organization with two parts: PEPY Cambodia, an educational development organization and PEPY Tours, a travel company focusing on educational adventures.

Daniela Papi studied economics at Notre Dame and graduated in the class of 2000. She was a member of the SIBC (then the NDCIBD) and worked in London through the SIBC internship program. She has lived in Asia for nearly 8 years, the first three in Japan and since 2005 in Cambodia. She welcomes any IBC members to visit her at the PEPY office in Siem Reap, Cambodia. You can read more about her thoughts on development and tourism on her blog: www.lessonsilearned.org

The International Business Council (IBC) dates back to the formation of the Student IBC (SIBC) at the University of Notre Dame in 1990. That is, it was our brain child then. From the very beginning, we realized that to sustain itself and maintain the integrity of the SIBC, the IBC had to provide the essential support needed. The IBC must have as a primary goal the policing of the SIBC in a manner that will keep the organization and its endowment on track. It was also expected that the IBC would be the greatest source of internships, speakers, and general information. This would occur over a considerable time period, as the first members of the IBC had to graduate and become established and influential IBC members.

The Peace through Commerce theme had been used prior to World War I. Still, it did not produce the full meaning of the phrase until recent years.  Honest, good products must be sold at all times. The integrity of the contracts with each other in the corporate world must be an essential element of the product and the products link with the consumer. The phrase therefore expresses action not theory.

To be a person who promotes peace through commerce starts with the integrity of each person in the chain of commerce. If there is a breach in that chain, peaceful resolution becomes a question. What better place than Notre Dame to promote and share this concept with the world at large. This was the philosophy that led to the SIBC’s, and thus, the IBC’s, creation.

Over the years, I have noticed that each SIBC board contributes in a unique way.  Each board is an improvement on the last. The same is true of the IBC. There is always progress, but I would rather see fewer numbers in the IBC of people who “build” than a large number that does little. The same is true of the SIBCs.

Frank Potenziani

14 January 2010

Mike Mellace, the CEO & founder of Mellace Family Brands, a manufacturer & marketer of a diverse product line that includes nuts, snack mixes, and chocolate items, was the IBC’s guest speaker at the 2010 Annual Summit. Mellace’s earmarks 2% of their revenue for corporate social responsibility causes, not because that’s the current fad but because it is integral to Mike’s personal philosophy & the company’s corporate mission. Mike introduced us to his company & some of their projects during his talk held on the campus of the University of San Diego.

Most interesting to me was the company’s partnership with their farmer suppliers in Africa. Mike recognized that one of the reasons these farmers are stuck in a cycle of poverty and desperation was that they were an inactive participant in their own supply chain, even though without them, there would be no supply chain. Because of a lack of information & knowledge as well as the inability to perform some of the higher margin food processing work that occurs with all agricultural products, farmers are at the mercy of ‘coyotes’ from whom they must take the price offered for their crops.

The rich world’s ’solution’ to this problem has been Fair Trade–the artificial raising of the price paid to the farmers for their crops, what advocates of the movement call a “fair” price. Unfortunately, this artificially high floor price is unsustainable in the long term and usually results in negative externalities that offset the benefits provided by the higher prices. Specifically, what often happens when the free market is circumvented in this manner is that farmers begin to grow crops, coffee for example, that they otherwise would not have grown because at the free market price it was not profitable to grow on their particular plot of land or they did not have skills to get the yield required. This crowding of the market creates a supply that exceeds the demand, but because of the “fair price” floor, prices are not allowed to naturally fall to lower supply. In addition, crops that otherwise would been grown, corn for example, are not planted, even though they likely would have yielded more crops for those farmers who converted their fields to coffee. None of this is sustainable.

Mike & his company understand this and thus do not participate in Free Trade buying. Instead, they’ve partnered with mobile phone companies in Africa and with the farmers to increase the transparency of the supply chain & transparency of information. Farmers are supplied with mobile phones as well as information on crop pricing, supply, and demand so that they can then be an active participant in their supply chain. In return, they provide Mellace’s with information on their crops, location, yield, etc as well as personal information on their family and community that can be used to put a personal face on the products that Mellace’s sells. Ultimately, you’ll be able to buy a bag of Mellace’s delicious organic cashews and enter a code from the package online & find out where your cashews came from, who grew them, and a little about the farmer’s life.

This is a true example of fostering peace through commerce. Rather than giving the farmer the unsustainable handout that is Free Trade, Mellace’s is improving their access to information which allows them to become a much more active participant in their business & to ultimately realize greater profits by producing more at times of low supply & less at times of high supply.

Mike’s talk was followed by a lively question & answer session from the group in attendance. Many thanks to Mike for spending his beautifully sunny San Diego Saturday with the IBC.