Honduras - Combining Security and Business Toward Long-term Stability

Combining Security and Business Toward Long-term Stability

US Army Special Operations Command

You just can’t shoot your way out of some of these problems.” 
General John F. Kelly, Commander, United States Southern Command

With its drug cartels and gangs running lucrative operations, Honduras has become one of the most violent places in the world.  Further, the success of US Armed Forces operations in the Caribbean has pushed narco-traffickers to adopt strategic land transportation routes through Nicaragua, Honduras, Guatemala and Mexico, leading to high levels of gang violence in San Pedro Sula and instability in key areas including the Aguan Valley.   

What was the problem?

The US Army Special Operations Command chose its civilian partner because over the last 8 years and across over twenty countries, the students and faculty from Notre Dame’s interdisciplinary Business on the Frontlines (BOTFL) program have worked with local companies and multi-national corporations such as General Electric and Newmont Mining, international humanitarian organizations such as Mercy Corps, and World Vision, and the local Catholic Church to harness the dynamism of business in rebuilding war-torn societies before they tip back into conflict.  Although other business schools work in developing economies, only Notre Dame’s Mendoza College of Business focuses on the business and economics of conflict, asking more of business to build peace and prosperity.  To this unique partnership with USASOC, BOTFL faculty and civilian volunteers brought their expertise and relationships from their employment at Intel, Amazon, United Airlines, PWC, private equity/venture capital firms, and the Special Olympics to jointly problem-solve with their military teammates.  USASOC Commanders asked the joint team to explore possibilities for combining security and business in novel ways toward long term stabilization outcomes in Honduras.

What did we do?

The pre-mission preparation for the 13 soldiers and 8 civilians was very different from conventional approaches: cross-disciplinary, not only eroding traditional boundaries within the US Army, but also consciously blurring the lines between military and civilian teammates.  Although it is not unusual for Special Forces, Civil Affairs, and Psychological Operations soldiers to work together on deployments, they rarely conduct mission preparation jointly.  Soldiers immersed themselves in introductory finance, accounting, operations, marketing at Notre Dame, as well as international law and peace studies.  The team then proceeded to Silicon Valley where they utilized immediately their new business skills to work with senior high tech executives on a consulting project, and to launch their own e-commerce businesses, ultimately pitching their products and business ideas to venture capitalists.  One key learning from this experience was that most Soldiers have limited experience with the inner workings of what it takes to run a successful business.  As one seasoned Silicon Valley private equity investor relayed after meeting with the Soldiers, “Their dedication, commitment and hard work immediately earned my respect.  But their questions on business were beyond naïve.”  Without a better understanding of this major part of society, Soldiers will not imagine the possible common ground with potential business partners during their toughest deployments, let alone possess the language and facility to build necessary relationships.

Tasked by the US Theater Special Operations Command to address the security threats presented by narco-traffickers and criminal gang networks in Honduras, the joint team spent real time together developing a common language and approach to identify opportunities.  The soldiers brought their security expertise, while the business perspectives from the civilian volunteers contributed to breaking down deeply-held assumptions.  Commanders gave the joint team the freedom to identify knowledge gaps and then seek expertise to address those gaps.  Recognizing their own ignorance regarding the inner workings of the major gangs who have a strangle-hold on commerce in Honduras, the joint team interviewed incarcerated gang members in Los Angeles prisons and the Catholic priests who are working toward rehabilitating them to society.  The soldiers traveled to Los Angeles thinking about security threats, while the business civilians were simultaneously thinking about jobs for young uneducated men.  The interviews revealed how both possessed an inaccurate lens to analyze the underlying problems.  To illustrate, gang members described how their criminal participation revolved far more about identity, which the Catholic priests further corroborated by describing tattoo removal as the highest priority for rehabilitation.  And thus, the joint team uncovered opportunities that would have proven fundamentally impossible for either business or the soldiers independently.  The combination of the soldiers and business could make security a variable cost for companies rather than a fixed cost, thereby opening up previously unviable investment opportunities in such complex, threatening environments.    

What was the turning point?

Despite all the violence in both regions, there are opportunities for new business ventures, which could provide stability to the region and offer an alternative to gang life.  The problem lies in the risk-reward structure facing potential investors.  Investors interviewed acknowledged being willing to risk capital on the business opportunities in the area, but the non-business risks associated with operating in either region essentially prohibit investment.  As one potential investor put it, “Why invest in a business when any extra profits will just be extorted.”  A junior police officer in San Pedro Sula shed light on the equally complex security challenges, “When my wife and I both have to go to work, the girlfriend of the gang leader next door looks after our kids.”  The region presents a catch-22.  Businesses can provide stability and economic alternatives to the illicit-drug trade, but the regions needs stability and security in order to entice investment.   

What did we recommend?

We suggest that business represents a significant untapped resource to complement well-established US security strategies.  Leading scholars have shown how economic growth diminishes the threat of war, while poverty and hopelessness create the underlying conditions for conflict.  This is because business provides an inherent stabilizing force.  One of the multiple ways it does so is that large scale economic activity absorbs disenfranchised young men who may otherwise gravitate toward violence in the absence of other viable opportunities. Thus, the greatest under-utilized tool in the US arsenal against its adversaries may in fact be its world beating business sector. 

What the joint team found was that although the basic investment equation is correct, the math is wrong.  Through creative and collaborative approaches that reinforced the security, infrastructure, and information transparency of basic markets, soldiers and businesses could make the cost side of the equation variable.  As a consequence, investment opportunities may become more attractive than business leaders currently believe.  Should this approach be proven further, then domestic and multi-national companies may be leaving money on the table.  The joint team’s insights reveal the key unrealized benefits for both business and the US Armed forces associated with such potential unorthodox collaborations.  For businesses, those who develop ways to operate in such unstable environments will earn the first mover advantages.  For the US Armed Forces, these businesses represent potential partners who embody a persistent presence and stabilizing force.

To test these insights more further, the joint team proposed novel mission plans: first, launching innovative security + business initiatives to take back one barrio in San Pedro Sula in a sustainable fashion from criminal gang domination, and second, leveraging agriculture and tourism opportunities in the North coast region on Honduras to strengthen the campesinos to withstand pressure from sophisticated nacro-trafficking organizations.  Indeed, before embarking upon this unique effort, few military leaders would have predicted that soldiers would be working alongside foreign investors in the tourism industry, for example.  Nevertheless, tourism and soldiers share critical common ground around stability and security.

In San Pedro Sula, the focus was on tying the existing points of light in Honduras society like vocational training, micro-lending, civic and religious organizations together to support the safety, functioning and transparency of markets for goods, services, and lending.  Solidifying and extending the local market for labor quickly became a clear priority, to enable the private sector to hire suitable young men, giving them a reason to invest in themselves and their communities.  Yet, over time, the joint team’s thinking evolved regarding how to undercut the appeal of gangs and narco-traffickers, discredit their messages to young people, expose their motives, and convince the rest of the population to voluntarily hand over, or at minimum, isolate those who intimidate them.  The expertise of Special Operations Forces became critical to work with local law enforcement to bring basic order, particularly to protect those members of Honduran society who have turned away from crime.  These efforts then designed tentative steps toward justice to make stability more sustainable, although these efforts were constantly daunted by local corruption.  The ultimate competition in this Clausewitz “clash of wills” focused on changing the intentions of the Honduran people.  Hondurans themselves need to risk alternative ways of life, as measured by their decisions to accept or resist criminal coercion.

In the North coast region, almost no amount of international or Honduran economic development aid would improve the campesinos current prospects. Tourism investment would not expand without improved security and infrastructure.  Further, local farming was dominated by a single unprofitable crop.  The recent large entrance of new supply into the global markets for this commodity pushed the worldwide prices down to below what the campesinos needed to feed their families.  Given the deep-water port in Trujillo, the race was to tie the campesinos into the global food supply chain by building relationships with US agricultural multi-national companies to enable their transition to new, more profitable, export crops.  

It is critical to stress that in this process soldiers would not pick business winners and losers.  The soldiers spent zero money, unlike millions of dollars spent through the Commanders Emergency Response Program in Afghanistan.  Rather, the value of this initiative was in the diagnosis of the root causes of problems and then proposing solutions to test.  As befits the world of grey in which the joint team operated, its solutions were far from elegant.  They were messy, precarious, pragmatic. All depended on the trust developed with local Hondurans based on working side by side.  Local and international businesses prove quite willing to “fail fast.”   They experimented with new initiatives, rewarded those employees who identified failures quickly and then remedied them on the ground.  No short amount of time, patience, and explanation, however, were required for the civilian teammates to teach the business “fail fast” mindset to the soldiers and then their Commanders.

Ultimately, business demands simple metrics to track its own success in the marketplace.  By analogy, the success metrics for this joint team and its successors (as multiple teams would be needed to execute this novel mission) were straight-forward: in the barrio in San Pedro Sula – reduction in violence and increased employment of young men; in the North coast region – enhanced campesino livelihoods and increased employment of young men.

What actually happened?

The Request for Forces for the Honduras mission was rejected nine times under nine different legal authorities by the US Southern Command’s Judge Advocate Generals.  The legal consensus was that there is no specific deployment authority for persistent conflict prevention missions nor for US military deployments to support current US government development programs overseas.

In the future, legal authorities must underpin such novel missions and their engagement with business and academic leaders.  The approved language in §1013 of the 2016 NDAA expressing the sense of Congress that the Department of Defense should support US government stability and development activities in Central America is an indicator that such a special authority is possible, perhaps through a “special pilot authorization” tied to the National Defense Authorization Act.  This is not a short-term Fight.  Such missions should run a minimum of two to three years to begin to have impact on the metrics identified, particularly regarding not only reducing violence but also substantially increasing young male employment through sustainable businesses.  Nevertheless, to even have a shot at achieving US Special Operations Command’s strategy goal, the military will need to internalize the lessons learned from this collaboration, particularly in having its soldiers imagine new and different possibilities as they engage in campaign planning.  To capitalize on these novel opportunities, the US Armed Forces will need to invest in unconventional capabilities and new partnerships with non-traditional allies like business.