The Past Speaks

As someone who is interested in constitutional political economy, any newspaper article that deals with the relationship between constitutions and business is of interest to me. No, this post isn’t about the constitutional aspects of the U.S. Supreme Court’s ruling in the case of the Hobby Lobby corporation. Instead, I want to direct your attention north of the Canada-US border to the constitutional issue of Canada’s relationship with the British monarchy.

Queen Elizabeth is Canada’s head of state. Public opinion polls show that while a majority of Canadians feel this state of affairs is slightly anachronistic. Actually,  many Canadians who are non-British ancestry (now a majority of the population) are mildly hostile to the monarchy. However, there is no burning desire to invest political resources in amending the constitution to become a republic. Most Canadians feel that the issue of the monarchy is of little practical importance. In an article that appeared in the Globe and Mail on Canada Day, Paul Heinbecker, a distinguished Canadian diplomat, explains why the monarchy issue is important. [Note: You can read the full paper here.] Canada has a great reputation, a great brand around the world precisely because it isn’t associated with imperialism and colonialism. None of the other G7 countries can say the same. British firms dealing in, say, India, have to confront the social memory of colonialism. This historical baggage was very much in evidence when David Cameron visited the Indian operations of Unilever.

Heinbecker describes, with evident pride, Canada’s reputation in the world:

As a career Canadian diplomat, I have seen Canada as others see us. When I was Canada’s ambassador to the United Nations, I was invariably given a respectful hearing because of the people and the values I represented, and because of the constructive foreign policy carried out in their name. Canada was regarded as a model global citizen that made diversity a strength, while safeguarding equality before the law and protecting the interests of our minorities, albeit with some disappointing failures with respect to aboriginal Canadians. As Prime Minister Brian Mulroney’s foreign-policy adviser, I saw the high regard with which Canada was held in opposing apartheid in the eighties and in promoting German unification in the nineties, both against London’s druthers. As Canadian ambassador to the UN, I witnessed the respect Canada enjoyed when Prime Minister Jean Chrétien withstood British (and American) pressure to join in the catastrophic 2003 Iraq war.

Canada’s reputation is a great advantage for Canadian companies operating in overseas markets. That’s why the decision of the current Canadian government to display the symbols of the British monarchy in Canada’s international airports, and in Canadian embassies and High Commissions abroad, is so stupid: it involves associating Canada with a country that has a lot of historical baggage.

During the many years in which the Liberals were in power in Ottawa, Canadian diplomatic offices overseas strove to cultivate a distinctly Canadian image. They did so by having lots of painting of stereotypically Canadian landscapes, some Inuit art, and, of course, the flag introduced by a Liberal government in 1965 displayed everywhere. Under the Harper government, the paintings of boreal forests have been replaced by portraits of Queen Elizabeth. [I can attest that this is certainly the case inside the front entrance of the Canadian High Commission in Trafalgar Square. The same change in artwork has been made in Canadian embassies around the world]. The websites of Canadian embassies and High Commissions are no longer in the colour scheme of the Canadian flag: instead, they are in the colours of the old union Jack—red, white, and blue. Although all of the right-wing politicians who fought against the introduction of a distinctively Canadian flag back in 1965 are dead, they are doubtless smiling right now. In 2012, the Canadian High Commission in Trafalgar Square displayed a banner celebrating the Royal Diamond Jubilee for basically the entire year, which was really trying too hard since the Diamond Jubilee bunting in the rest of the UK was up for only a few days.

Please note that I attribute the desire of the current Canadian government to symbolically associate Canada with Britain through these actions is motivated by simple ignorance of how Britain is viewed in much of the world rather than actual malice towards Canada’s export industries.

Heinbecker’s piece in the Globe and Mail shows that the claims that the Queen is really Canada’s Queen too are invalid: in the eyes of people in, say, Germany or the US, Elizabeth is the Queen of the UK, not Canada or Belize. When members of the British Royal Family travel abroad, they are expected to promote the interests of British exporters, not companies based in the other countries that have Queen Elizabeth as their nominal head of state. Heinbecker tried a little experiment when he was Canada’s Ambassador to West Germany. He writes:

The royal family themselves are under no illusion about who they are – British; where they live – Britain; and what they represent – the United Kingdom. When I was posted to Bonn in the nineties, Queen Elizabeth paid an official visit to Berlin largely to promote British industry. Ambassadors from Commonwealth countries were convened to Berlin, at their countries’ expense, to greet the Queen (in reality a photo-op). Because there were Canadian firms in Germany that could have used some high-level support, and because my credentials said that it was in her name and on her behalf that I was accredited as the Ambassador of Canada to Germany, I decided to test what the Monarchists’ assertions – that she is our Queen, too – meant in practice.

Not much, as it turned out. I asked an aide at the photo-op whether while promoting UK business her majesty might put in a good word for Canadian business too. It was evident from his reaction that such an idea was as unwelcome as it was novel. Years later, Kate and William, following their rapturous welcome in Canada, headed to Hollywood where they promoted British artists.

I’m very sensitive to this issue because I’m currently writing an academic article that examines how a British multinational bank worked hard in the 1960s and 1970s to shed the legacies of colonialism: the bank’s executives understood that being associated with a defunct Empire wasn’t going to do the bank any favours in former colonies. Indeed, banks based in the old colonial powers (e.g., the UK, France, and the United States, which practiced its own form of imperialism) are at something of a competitive disadvantage in emerging markets. Banks based in countries such as Switzerland and Sweden don’t have the same historical baggage.

We should not forget that Britain has a unique place in world history. In the 19^th century, London really was the capital in the world. The other European colonial empire were much smaller than the British, which is something that comparative historians of Empire sometimes forget. Unlike the other colonial powers, the British Empire in its heyday was able to project power to every continent.[1] The sheer extent of the old British Empire has important implications for business in the present.

France is now resented in its former colonies, most of which are in Africa. The Dutch and their companies aren’t terribly popular in Indonesia. The uniquely global reach of Britain’s formal and informal empire means that resentment of the British Empire is now felt in every corner of the globe. In contrast, global banks based in the other former colonial powers have to deal with the social memory of colonialism in only some parts of the world.  For instance, while US imperialism is deeply resented in Latin American and the Caribbean nations, most people in India have a neutral or positive view of that country. Germany’s national reputation is generally positive in global surveys, notwithstanding lingering resentment in Israel and some European countries.[2] (Volkswagens actually sell well in Israel, but they initially had a marketing challenge in that country).

If you look at this list of the world most important banks, which was prepared by the International Financial Stability Board back in 2013, you will note the absence of any Canadian banks. There are, of course, many reasons for this state of affairs. I should point out that Canadian banks have, of course, long been international players, particularly in the Caribbean and Latin America.

Banks Ranked According to Importance in Global Financial System[3]

There are many things the Canadian government can do to help Canadian banks to succeed in global markets. Associating Canada with the empire responsible for such accomplishments as the Sykes-Picot agreement, the Amritsar massacre, and the Opium Wars surely is not one of them. I don’t want to overstate the importance of political symbols in international business, but they do matter, at least at the margins.

Heinbecker’s newspaper article outlines a workable and sub-constitutional solution to this problem. Canadians should follow his advice if they really want to help Canadian companies to succeed.

[1] John Darwin, The Empire Project: The Rise and Fall of the British World-System, 1830–1970 (Cambridge University Press, 2009).

[2] Reputation Institute, “The 2013 Country RepTrak™ Study” http://www.reputationinstitute.com/frames/events/2013_Country_RepTrak_Press_Release_Final.pdf 27 June 2013.

[3] International Financial Stability Board, “2013 update of group of global systemically important banks”

(G-SIBs) 11 November 2013 http://www.financialstabilityboard.org/publications/r_131111.pdf