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Pick the tyrant

WHEN FOREIGN Secretary Robin Cook declared that Labour's foreign policy would have 'an ethical dimension' most observers reacted with a weary cynicism born of decades of 'pragmatic' diplomatic relations with countries like South Africa, China and Indonesia. That cynicism seemed justified as arms deals were approved and human rights underplayed on trade missions. Then General Pinochet was arrested in a London Hospital after an extradition request from Spain and it seemed possible that Cook had meant what he said.

It is now in the hands of his Cabinet colleague, Home Secretary Jack Straw, to decide Pinochet's fate. But according to sources in Chile, significant damage has already been done to relations between the ex-dictatorship and the UK (see News).

The Pinochet affair raises some difficult questions for British civil engineering firms, particularly the large consultants, most of whom earn over 50% of their fees overseas. There does now seem to be clear evidence of the 'ethical dimension', but it appears to be being applied in a largely haphazard manner.

Anyone who has seen Ariel Dorfman's play Death and the Maiden will be in no doubt of the physical and psychological terror spread by Pinochet. But his record is no worse than Indonesia's current regime. If General Suharto, who recently 'stepped aside' as the South East Asian country's president, visited the UK, would he too be slapped in jail?

Probably not, but the Government's decision would be based on diplomatic intelligence not available to most (either that or they'll flip a coin).

Leaving aside the moral question of whether you should work in a country like Indonesia, firms must now conclude that the political risk of working in states with dodgy human rights records has been pushed up a notch or two.

Luckily for them, the best way to reduce this risk also makes good business sense. In the midst of any political controversy, it is the foreign firms most uninvolved with the host country that suffer the worst. Those working with an indigenous joint venture partner or employing a high proportion of local staff, particularly at a senior level, are most able to ride the storm. This tactic can reduce earnings, but probably not long term. It is often the only way to get work in the first place anyway.

In future, firms will have to keep an eagle eye on the Government's international strategy. If the ethical dimension does kick in hard, they too could face decisions as tough as that confronting the Home Secretary.

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