Why People Trust Brands More than Consuls

It is safe to say that the arrival of Pizza Hut in Erbil’s Majidi Mall generated more buzz than the announcement that a Dutch Consulate was opening in Kurdistan. This is not because locals love Pizza, or that they have a problem with the Dutch.  It is because we live in a world where companies rival the power of nation states.

Typically, this is “soft power:” symbolic or cultural influence.  But in some cases companies offer economic, political and even military services that governments are unwilling or unable to provide.

This is not anything new. The British and Dutch East India companies, chartered in 1600 and 1602, respectively, established colonial rule on the Indian subcontinent using private armies before royal forces ever arrived.  In the 19th century, the British company forced Indian opium into Chinese markets, leading to two wars with the Chinese Emperor. The result: Hong Kong was awarded to Britain, and opium was legalized in the Chinese empire. 

Pizza Hut may employ a few security guards in Kurdistan, but their power is largely nonmilitary.  The restaurant is a mission of sorts for its parent company, Yum! Brands, the largest fast food restaurant firm in the world.  The international firm, which also owns KFC and Taco Bell, has more branches than Liechtenstein or Monaco has citizens.  It operates in 125 countries; few states (including the Netherlands) have embassies or consulate generals in as many. 

Kurds are happy to see Pizza Hut, even if they prefer kebab, because it is a tacit endorsement of the future of the region. Companies that rely heavily on their branding, like fast food chains, tend to invest in countries once they are considered politically and economically stable.  They devote considerable resources to risk analysis.  If the news cycle offers uncertainties -- delayed cabinet formation, delayed budgets, a delayed national hydrocarbons law -- international pizza is tangible proof that well-paid analysts across the world see security in the region’s future.

Of course, the arrival of the Dutch is also a great thing: More consulates in Erbil means governments around the world think the region is safe enough to establish bilateral trade and some form of investment. 

What makes the arrival of brands more powerful to the public imagination, however, is that they do not require security details and barbed wire fences for protection. Consulates can come to poor countries, quietly facilitating the extraction and export of natural resources. Brands, by contrast, require an environment where they can operate unprotected. They also require consumers wealthy enough to pay for their products. Unburdened by colonial legacies, they signal that the country is part of a global community.  No wonder there is a Facebook group titled, “We Want a McDonald’s in Hawler-Kurdistan,” and not one calling for a Dutch representation.

Thomas Friedman famously developed the “Golden Arches Theory of Conflict Prevention,” stating that no two countries with McDonalds would engage in war. It boils down to this: Countries that have McDonalds have significant middle classes that do not care to fight. Friedman later updated his theory to the “Dell Theory of Conflict Prevention,” where two countries that are members of a global supply chain (like Dell) avoid endangering their material interests.  According to him, this is why China and Taiwan resist the temptation of war.

Pay no mind that neighboring Iran, Syria, or the rest of Iraq are not “McDonald’s countries.” What attracts the interest of Starbucks and Burger King (both set to arrive soon) is the region’s rising middle class and its ever-increasing economic ties to Turkey.  Given Turkey’s interests in Kurdistan (importing hydrocarbons and exporting everything else), it has every reason to keep the region’s Pizza Huts safe from extremist Islamic groups like ISIS.

Oil and gas exports make Kurdistan part of a global supply chain, where far more parties will count on Kurdistan’s success. 

Not all of these are states.  Steve Coll’s 2012 book ‘Private Empire,’ paints a striking portrait of ExxonMobil.  If it were a country, the Texan oil company would be amongst the 30 richest in the world. It has its own “state department” that often contradicts official US policy, and an intelligence network superior to the CIA’s in some countries.  ExxonMobil has brought its business to Kurdistan, disregarding Baghdad’s threats to pull the plug on its southern Iraqi operations.  The “supermajor” oil company’s lobby in Washington includes 20 former senators and other political elites. 

For centuries, landlocked Kurds have been boxed in by hostile neighbors. Leveraging their natural resources, Kurds forged a friendship with Turkey -- a country that once denied that Kurds even existed -- and gained a corridor to the outside world.  Kurds eschewed nationalization of their oil, attracting energy giants with business-friendly production sharing contracts (PSCs).  These companies do not merely bring riches. They enter Kurdistan into global supply chains, and earn them powerful allies in governments across the world.  The Kurds have done their best to bring powerful friends into the neighborhood. 

Yet oil majors have not been able to stop chaos from spreading in Libya. Energy suppliers are notoriously vulnerable to economic underdevelopment.  Perhaps Kurdistan’s biggest success is building on its energy wealth to attract other types of multinationals, ones that require a safe and prosperous middle class.  This is why big-name junk food is something to celebrate. 

Alexander Whitcomb is a graduate of Columbia University and holds a Masters in Advanced International Studies from the Diplomatic Academy of Vienna. He is a staff writer for Rudaw specializing in Political Economy.