07 Oct 2010  Working Papers

The Profits of Power: Commercial Realpolitik in Eurasia

Executive Summary — The concept of good old-fashioned realpolitik-politics primarily shaped by practicality and power-has returned to Europe, clashing with the traditional ideologies of the European Union, says Harvard Business School professor Rawi Abdelal. Citing supporting evidence from the Russian gas giant Gazprom, he argues that scholars need to pay better attention to the role of large corporations in international relations. Key concepts include:

  • Corporate firms, not states, are responsible for the return of realpolitik in Europe.
  • The international political economy needs a better understanding of the role that these firms play in world politics.

 

Author Abstract

Old‐style realpolitik - bilateral, sentiment‐free, and organized by great powers - has returned to Europe, thereby wreaking havoc on traditions of solidarism and multilateralism in the European Union. The renaissance of the Russian state and the rise of Gazprom, Russia's natural gas monopoly, have produced patterns of international politics that seemed almost inconceivable just a few years ago. Three of Europe's major powers - France, Germany, and Italy - have cultivated bilateral energy relations with Russia at the expense of a common stance on the continent's dependence on Russian gas, and much to dismay of other EU members. This pattern of international relations carries profound implications for theory and practice. I argue that the obvious theoretical conclusion and conventional practical understanding of these politics are both wrong. The roots of this realpolitik cannot be found in realist theory. Europe's realpolitik has, instead, fundamentally commercial and ideational origins. Firms, not states, have literally conducted this realpolitik. The empirical puzzles presented in this paper imply a theoretical challenge for international political economy, which has, as a field, failed to understand deeply how firms work and what kinds of roles they have come to play in contemporary international relations. In this paper I propose some theoretical foundations for a better understanding of commercial realpolitik: great‐power politics based on the profit motives and shared ideas of firms.

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