Renault spy case shows rising economic conflict

From what France calls “economic warfare” as it probes a Chinese link to industrial espionage at Renault to currency confrontation and commodity rivalry, economic conflict is increasingly impacting businesses. President Nicolas Sarkozy’s office has asked French intelligence to probe suspected industrial espionage at the car giant.

Renault suspended three executives at the start of January including a member of its management committee, with a source telling reporters the firm was worried its flagship electric vehicle programme – in which Renault together with Nissan is investing €4bn – might be threatened.

French industry minister Eric Besson told journalists the expression “economic warfare” was appropriate.

“What you’re seeing is a change in the nature of what war itself means,” Ian Bremmer, president of political risk consultancy Eurasia Group, told Reuters. “It’s not going to be so much a matter of bombs and missiles as deniable cyberwarfare, corporate espionage, economic struggles. That’s going to be a particularly difficult environment for Western corporates.”

Ultimately, he believes it will drive Western firms to build closer relationships with governments for protection to survive the rise of “state capitalist” powers like China and Russia.

Renault is far from the only suspected case. US cables released by WikiLeaks show diplomats blaming China for hacking into Google systems that prompted the internet giant to briefly quit mainland China.

Some analysts also suspect information theft may be helping China close the gap faster than expected as it builds a “stealth fighter” to rival Lockheed Martin’s F-22. Images posted on a number of websites showed what appeared to be a working Chinese prototype, although the US says China may still be years away from a truly working model.

Currency, commodity rivalry
Government-backed corporate espionage is nothing new. France itself has often been accused of doing much the same thing, including allegations of bugging business class seats on Air France jets in the 1970s and 80s. But the rise of emerging powers is seen quickening that trend.

It comes as the world’s emerging and developed nations continue to face off over relative currency strength and as growing demand for natural resources pushes food prices to record levels and oil back towards $100 a barrel.

Major powers are seen in increasing competition for resources. China – 4and to a lesser extent other emerging powers such as Russia, India, Malaysia, Brazil – have been expanding particularly in Africa. Beijing also says it will cut export quotas for its rare earth minerals vital to the production of much electronic technology, sparking a worldwide hunt for new sources. China produces some 97 percent of the world’s rarest elements, and the cut sent shares of producers elsewhere rising sharply.

While in state capitalist countries such as China and Russia the private sector, governments and intelligence agencies may be so close as to practically overlap, in western states they are much more divided.

“There is more attention being paid to the economic damage to national security but there is something of a disconnect between the US government and the private sector,” said Nikolas Gvosdev, professor of national security at the Naval War College in Rhode Island.

“The perception is (still) that the government handles ‘defence’ and the private sector handles ‘economy’.”

Corporate espionage “easy” for spies
Others say that while the rise of new economic powers will mean intelligence agencies shift some focus towards them, the main effort will remain preventing militant attacks rather than on corporate matters.

“I doubt this will become a priority for UK agencies other than defensively,” said a former senior British intelligence official on condition of anonymity.

“The UK is not by tradition state corporatist and there is likely to be little inclination to do the private sector’s work for it. Hard to say for other Western states as it is more a matter of political philosophy than capabilities – corporate espionage lies at the easy end of the spectrum.”

The WikiLeaks saga in which it is alleged one youthful US Army private managed to download the entire war logs for Iraq and Afghanistan as well as more than 250,000 diplomatic cables shows how the information age makes secret data easier to steal in vast quantities – particularly if one has an inside source.

Emergent Asset Management – one of the first funds to start buying up farmland in Africa to tap rising food prices – believes rising tensions will ultimately lead to war. It is launching a new fund later this year to track political strains.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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