Commercial Diplomacy: The Ambassador’s Role in Boosting Economic Competitiveness

Despite high rates of connectedness within global financial markets, and stability within currency rates and GDP projections, geopolitical uncertainty remains a business risk. Commercial diplomacy is the process of advancing economic interests while also promoting international cooperation – primarily through diplomatic channels – to help facilitate business opportunities.

Global ambassadors and embassy staff play a little-known but vital role in facilitating international business expansion. Diplomats have the ability to enhance economic relations between countries, including working to remove trade barriers, maintain stability, and create opportunities for the private sector to establish itself in new markets.

“Embassies in foreign capitals almost function as whole mini governments, as many different agencies and departments – including defense, agriculture and energy – are often represented,” says Pete Nonis, Vice President of Marketing and Communications at BCIU.

While conducting political and national security affairs – along with cultural exchanges and promotion – typically takes priority for ambassadors, forging economic ties and expanding bilateral investment continue to become growing job functions. We spoke with U.S. Ambassador to Kenya Meg Whitman and Norway’s Ambassador to the U.S., Anniken Ramberg Krutnes, about the role ambassadors and embassies play in economic affairs and how that role has expanded over time.

Understanding the Role of Ambassadors

C-level executives and business country managers are often unaware of an embassy’s effectiveness in advising on market expansion options or working to remedy overseas operating challenges. Ambassador Whitman, who served as the CEO of eBay from 1998 to 2008 and later as the CEO of Hewlett Packard, says she wished she had a deeper appreciation of the capability and effectiveness of the diplomatic network as a resource while in her private-sector roles. For example, the network can help the private sector de-risk projects and even secure funding and financing, such as through U.S. Agency for International Development (USAID) and U.S. Trade and Development Association (USTDA) support.

“The role we play is significant,” says Ambassador Whitman. “Almost like venture capitalists, we invest in companies here that aren’t on the radar of more traditional VCs. In my tenure, we’ve announced between 10 and 15 USAID and USTDA deals, and all of those can be turbocharged if we put a greater role on economic diplomacy.”

Ambassadors are tasked with helping businesses in their home countries make more informed global investment decisions, reaching the proper governmental decision-maker or private-sector partner, and navigating solutions to potential operating challenges or disputes. Ambassador Whitman highlights Nairobi’s burgeoning technology community, emphasizing the Kenyan government’s interest in positioning the capital as a startup hub. This vision underscores a concerted effort by the Kenyan government to attract inward foreign investment.

“Nairobi’s vibrant technology community is already known at the Silicon Savannah,” Ambassador Whitman says. “The Kenyan government is committed to establishing Nairobi as the premier destination for tech sector investment and innovation in Africa.”

A View From Europe

Ambassador Krutnes considers one of her and the embassy’s most important responsibilities to be commercial relations targeted at improving the conditions for trade and working to inform trade policy on a global scale. The embassy also works in cooperation with other organizations, like Innovation Norway (the government organization for promoting entrepreneurship in the country), the Norwegian-American Chamber of Commerce (NACC), and INVESTIN, an organization to promote investments in Norway.

“Historically, facilitating trade and commercial relations in general has been a cornerstone of international diplomacy,” says Ambassador Krutnes. “This is probably truer than ever, since we can see that global trade is affected by geopolitical tensions, the climate crisis, the aftermath of the pandemic and national security concerns.”

Country assignment comes into play as to how ambassadors evaluate the role they might need to take. Business opportunities and challenges vary significantly between established markets and emerging economies. Because Norway already has a stable trade relationship with the U.S., Krutnes acknowledges that her priorities are going to focus more on trade facilitation, regulatory alignment and fostering strategic partnerships, rather than overcoming fundamental barriers to market entry. The Norwegian Embassy in the U.S., for example, is focused on new commercial deals in the defense sector, seeking a critical minerals agreement with the U.S., and efforts in the energy and the environmental spaces, including oil and gas and clean energy technology.

“I always say we went into this oil and gas era together, and now we want to go into the green era together,” she says. “Norway is a very interesting market because we have a good economy and we are early adopters. Norway is a good market to test out new things.”

In a dynamic landscape of international trade, the power of commercial diplomacy emerges as a crucial tool for navigating the complexities of a globalized economy. Embassies and ambassadors serve as linchpins in fostering economic cooperation while advancing the interests of their respective countries. This growing convergence of economic factors in international affairs and national security policy underscores the significance of cross-border investment in promoting global peace and positive relations between countries, both in the U.S. and around the world.