Do local governments monitor communications from foreign embassies

Politics & Communication

The Berlin representative offices of German multinational companies maintain relations with foreign governments through diplomatic missions. The value of this contact work can hardly be overestimated.
Multinational companies interact with a variety of different stakeholders in their investment target countries. Usually their interests differ markedly, sometimes they also collide with each other. The distribution of resources - and thus market access - is, however, largely determined by the political processes and balancing of interests within the host country. Public affairs activities should therefore primarily take into account the particularities of the foreign state, such as its power relationship with the private sector, its trade and industrial policy and its attitude towards reference groups in civil society.

Because companies have to reckon with a number of conflicts in their foreign government relations, such as the imposition of local content regulations that stipulate shares of value added domestically, or restrictions on the transfer of profits to the home country. Globally operating companies consequently continuously have an increased need for information about the particularities of the regulatory regimes of each individual target country, but above all about the vicissitudes of the political process and the details of the legislative and standardization procedures. Taking this into account requires systematic political monitoring that is based on extensive knowledge of the host countries and creates a well-established flow of information between public affairs departments at corporate headquarters and all company representative offices that communicate with foreign officials or political decision-makers.

Diplomatic missions as gatekeepers

As part of the administrative apparatus of a state, diplomatic missions are often at the center of the technical influence on their governments. They fulfill a gatekeeper function by shaping political decisions at an early stage through the preselection of information and decision alternatives. Through their economic attachés, states also offer information on the regulatory framework for market entry, tenders for public contracts, access to strategic resources, environmental and quality standards or CSR requirements as a public good. Through diplomatic missions, you can not only lobby for existing regulatory and administrative concerns with foreign governments, but also find ways to plan and control the costs of targeted direct investments.

However, a large majority of German companies only give their representatives in Berlin a unilateral lobbying assignment vis-à-vis the diplomatic missions. Your task is then mostly to draw attention to the company's interests, to engage in order lobbying and to try to influence regulatory decisions selectively. At best, they are only used marginally for the targeted acquisition of information or the political analysis of current developments and trends in the investment target countries. Rather, the central public affairs departments seem to be responsible for this by drawing on feedback predominantly from the regional corporate offices.

At first glance, this constellation appears to have the character of best practice. Finally, the regional offices are much closer to the host country's political and regulatory bodies and can observe firsthand socio-political developments. Such best practice assumptions could, however, prove to be a fallacy. Because the regional representatives are seldom full-time or specially trained policy officers. Instead, they are often employees who combine the task of representing political interests with their work in sales, marketing or plant management. Whether they have the necessary resources - not to mention the sensitivity to political and social harbingers of future discontinuities or business opportunities - is an open question.

Information is the greatest strategic asset

The Berlin representative offices have a special position. Based in the capital of the home country of their parent company, they have valuable contacts to embassies of investment target countries. Why are they so little involved in the foreign political analysis work of their group? After all, information is perhaps the most important strategic resource for action by economic actors in their political environment. Economic diplomats in particular can provide a multinational company with valuable insider knowledge - or at least privileged access to their networks, through which this knowledge can be tapped. Foreign direct investment requires a company to make operational as well as political, evidence-based decisions to a high degree. In this context, to unilaterally commit the Berlin capital city representations to lobbying work means to forego potentially valuable knowledge. Frictional losses in the transfer of information between the regional representatives, the central departments and the Berlin offices only threaten to adversely affect the lobbying work.

In order to prevent such systemic deficits, it would above all be necessary to completely professionalise all public affairs units in the foreign locations. In addition, the scope of the mandate of the Berlin representative offices should be expanded to include political monitoring abroad - in the sense of their self-image as targeted information gatherers within the work meetings that they already have regularly with the diplomatic corps. In order to ensure this satisfactorily, the representative offices would have to be provided with sufficient funds to be able to comprehensively support issues and regulatory issues in the target countries. This would make it possible to implement the location advantage of the Berlin representative offices efficiently and profitably.