Top 10 World Changing Negotiations for 2020

When parties sit down to negotiate, there is hope. Having advised countless negotiations over the years, I have learned that great managers, entrepreneurs, and statesmen regard a “no” as an opening offer. They work things out, overcoming obstacles and even hatred to the benefit of both sides Those who refuse to join the negotiation are usually the ones scared to be pushed over, and those who leave prematurely leave countless options on the table. Sometimes, the key ability of a great negotiator is to make the other party stay.

In this list, you will find the 10 deals that have a crucial impact on 2020. There are successful negotiations, failures, and – particularly – deals that are still being negotiated in 2020.

10. The Deal Illusion – Civil War in Yemen 2.0

After a four-year civil war that has cost tens of thousands of lives and has brought Yemen to the brink of a famine, a deal has been signed between Yemen’s government and southern separatists in Riyadh. This is not a deal to end the war, but just one that changes a three-party to a two-party civil war. It will make it less complicated but not less bloody.

The negotiation was hosted by Saudi Arabia’s crown prince, Mohammed bin Salman and included Yemeni president, Abdu Rabbu Mansour Hadi; the Southern Transitional Council leader, Aidarous al-Zubaidi, and the UAE’s crown prince Mohammed bin Zayed. The Houthi rebels, backed by Iran, were not present.

There are three parties involved: the Yemenite government, backed by Saudi Arabia, the Houthi rebels, which are Shia Muslims backed by Iran, and the Southern rebels, backed by the United Arab Emirates.

This deal united the Southern rebels with the government forces, both Sunni Muslims. A new cabinet is to be formed including the Southerners and granting them more representation. No deal was struck with the Houthis, who took over the country’s capital, Sana, in 2014. The joint forces will now focus their efforts against the Houthis in the north.

Saudi Arabia’s crown prince, Mohammed bin Salman lauded the deal: “This agreement will open, God willing, broader talks between Yemeni parties to reach a political solution and end the war,”. US President Donald Trump commented on Twitter. “A very good start!” Please all work hard to get a final deal.”

For now, the fighting will merely go on among two instead of three parties. But there is hope that the deal will have changed the power balance in a way to have the new allies negotiate with the Houthis.

9. Singapore on Thames – The Exit Of An Empire

Finally, light at the end of the tunnel – or at least a lit tunnel regarding Brexit: after a landslide victory in the UK elections, Prime Minister Boris Johnson can now “get Brexit done.” He won with 46 percent – the largest Conservative majority since Margaret Thatcher.

However, the country is still divided, as 52 percent of the votes went to parties opposing or rethinking Brexit.

With Prime Minister Johnson however, revoking or postponing Brexit is off the negotiation table – the UK will leave the European Unit by January 2020. However, there is a one-year transition period in which the UK will treated as a de facto EU member.

Things are getting very interesting as there are, in essence, two possible negotiation outcomes: if there is no agreement or an agreement to decouple, the UK and the EU would trade on World Trade Organization rules. This would lead to massive difficulties in transactions, but the UK would be free to impose its own taxes and tariffs. If there were a deal, the UK would be a junior partner, enjoying the liberties and securities of the EU but having to play by EU rules.

Brussels will do everything it can to prevent a competitor at its doorstep. The EU’s chief negotiator Michel Barnier made it clear that if the UK started to deregulate, it would face a “proportional” response from the EU. He uses the classic technique of increasing his leverage with a higher authority, namely the other member countries: “Don’t underestimate the difficulties of the process of ratification…If it is not ratified, we return to zero.” Ursula von der Leyen, the president of the European Commission, made her goal very clear “zero tariffs, zero quotas, zero dumping.”

Boris Johnson is balancing his options: turning the UK to a “Singapore-on-Thames”, a lightly regulated tax haven, or being a de facto EU member without the rights.  Will the UK stay close to the EU or to other allies, particularly the US?

All eyes are on Johnson.  Will he keep hardline Brexiteers, such as foreign minister Dominic Raab – co-autor of “Britannia Unchained” or move toward EU alignment? He must also be careful about Scotland and Northern Ireland, who strongly opposed Brexit and could use this to fight for sovereignty. Negotiations between the EU and the UK are scheduled to start on February 1, 2020.

8. Talking While Fighting – The China-USA Trade War’s ceasefire

China and the US have reached what China’s commerce ministry labels a “consensus on principles”. The two-year trade war, however, seems to be a ceasefire, not an end of the trade war.

The White House said that the two parties “made progress in a variety of areas and are in the process of resolving outstanding issues”. According to the US government, China has agreed to increase annual US imports to US$200 billion, specifically promising to buy US$50 billion worth of US agricultural products.

What do both sides want? The United States, represented by US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, wants to reduce the heavy $419.2bn trade deficit and wants China to stop subsidizing key industries and forcing foreign investors to transfer their technology.

China, represented by Vice-Premier Liu He, wants to keep the trade deficit as high as possible and has been rather reluctant to meet US demands.

Trump used tariffs to exert power and China was badly hurt – which was especially painful in a time when the country is facing its slowest economic growth in almost 30 years, due to a shrinking manufacturing sector and an aging society.

As Fan Gang, director of the Beijing-based think tank, the National Economic Research Institute points out, this pre-deal will lead to a very fragile peace: the US, the world’s technology power, is making the Chinese buy goods that are typically exported by less developed countries.

Given the different tensions both superpowers have all around the world, it appears as the two parties are  moving away from each other with US companies moving facilities out of China. The upcoming negotiations will become very interesting, particularly in the face of the upcoming US Presidential elections. 

7. “No breakthrough, no failure.” Saving the Ukraine from a Civil War (With Russia)

Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin have finally started negotiating about the future the Ukraine, which has been in constant turmoil since 2014, when Russia annexed Crimea. It is the bloodiest conflict in Europe since the Balkan-War, having resulted in almost 14 000 deaths.

The negotiations started in December 2019 and were hosted by Emanuel Macron and brokered by France and Germany. It was the first time Putin and his Ukrainian counterpart met face to face.

There is a ceasefire, but both sides accuse each other of breaking the deal. In October, Zelensky agreed to the “Steinmeier formula”, named after the former German Foreign Minister, according to which the people of the Donbass region can vote whether to be autonomous.  After heavy protests Zelensky added that there would be no elections until the Russians have left. Zelensky is under pressure in a country that is deeply divided between nationalist and pro-Russian sentiments.

Russia, on the other hand, still suffers from EU sanctions that are in place as long as there is no deal with the Ukraine.

The EU wants peace at its borders – and an undisturbed flow of gas from Russia to the Ukraine – in a 2009 dispute, Russian Gazprom had cut off its gas supply via Ukraine.

Zelensky, who – against his will – became a central figure in the impeachment inquiry against US President Donald Trump, is a former comedian and has just resumed office in May 2019. The question is whether he can deal with a negotiator as tough and seasoned as Putin. However, he stood his ground in the first round, in a result that the Russian Broadsheet Vedomosti summed up as “No breakthrough, no failure.” This is a negotiation to watch as it will decide the faith of a country.

6. The Sino-British Joint Declaration. Britain’s Lose-Lose Scenario in the Hongkong Question

A negotiation that took place over 30 years ago is becoming crucial for today’s Hong Kong, which has been in turmoil since June, when an extradition bill was introduced that could have Hong Kong criminal suspects sent to mainland China to face trial. The bill has been withdrawn, but heavy protests continue.

The Sino-British Joint Declaration from 1984 was the result of negotiations between Chinese leader Deng Xiaoping and British Prime Minister Margaret Thatcher, regulating the future of Hong Kong. The UK, which had occupied Hong Kong since 1840, agreed to hand it over to China on July 1, 1997. The declaration states that China’s policies regarding Hong Kong “will remain unchanged for 50 years”, and that particularly Hong Kong’s legal and judicial system would be untouched until 2047.

The Chinese regard the agreement as void as it only covered the period from 1984 to 1997. Chinese diplomat Lu Kang stated unambiguously: “We would like to repeat again that, since July 1, 1997, the UK has had no rights whatsoever in relation to Hong Kong.”

Dominic Raab, British Secretary of State, holds on to Britain’s position that the deal is“a legally-binding international treaty that remains in force today”. Indeed, the treaty explicitly mentions dates after 1997. Raab points out: “As a co-signatory of the joint declaration, the UK takes these commitments seriously and supports their implementation through the ‘one country, two systems’ framework.”

Margit Thatcher pledged that Britain would not accept any breach of the Sino-British Joint Declaration. And pro-democracy politicians just won 17 out of 18 districtsi n Hong Kong. Also, US President Trump just signed the Hong Kong Human Rights and Democracy Act of 2019, enraging China.

But the UK is not the US – it just doesn’t have the leverage. With EU backing, Britain’s position would have been stronger but now, the UK is on its own. Ruining the relationship with China over an issue that could not lead to anything, would be unwise, particularly as the UK is in search of allies.

5. Breakfast At LVMH – And Other M&A Deals 

Mergers and Acquisitions can fail miserably, but they can create value and make companies better and more profitable. According to BCG’s M&A report, M&A transactions went rather well in the recent past. There were fewer but larger transactions in 2019, with the average deal size rising from $380.1 million to $424.6 million in 2019.

There was the $74 billion acquisition of Celgene by Pharmaceutical giant Bristol-Myers Squibb and a $57 billion transaction in mid 2019, when Occidental Petroleum Corporation acquired Anadarko Petroleum Corporation. With backing by Warren Buffet’s Berkshire Hathaway, Occidental outbid the much larger competitor Chevron.

A good example of value creation is the complimentary portfolio of the aerospace company United Technologies merging with the defense company Raytheon to create Raytheon Technologies, with a market value of about $125 billion.

LVMH acquired Tiffany for $16.2 billion or $135 a share in cash, after Tiffany had turned down LVMH’s offer of $120 per share. The transaction is to close in mid 2020, if regulators and Tiffany’s shareholders approve.

While LVMH’s $16.2 billion acquisition of the US jeweler Tiffany’s is far from being the largest transaction of the year, it is the largest deal in luxury history. The luxury industry is a mirror of consumer preferences in a world that is getting richer and in which consumer taste merge in the age of social media.

Tiffany was founded in New York in 1837 and rose to an iconic status through cult classic “Breakfast at Tiffany’s”,  becoming the epitome for sophisticated US luxury. Yet, Tiffany had severe problems until a turnaround in 2017 and the expansion to Asia, particularly to China, is highly volatile due to the US-China trade war. 

The French luxury giant LVMH owns brands such as Louis Vuitton, Moët & Chandon, Dom Perignon, Givenchy, and recently acquired the luxury hotel chain Belmont. With a market capitalization of more than 200 billion Euros, LVMH is the world’s largest luxury companyand Europe’s second-most valuable company after Royal Dutch Shell, the oil and gas company.

LVMH’s founder, chairman and largest shareholder Bernard Arnault, Europe’s richest man with an estimated fortune of $106.9 billion, applied the MO of the 1980s corporate raiders of Wall street to the luxury industry. You will barely know any of the label’s designers – there are no Tom Fords working for him. It is his philosophy of strengthening the brands in his portfolio, not making stars. In a world where the luxury sector is constantly growing, his idea created an empire and this deal is yet another cornerstone. It is a deal that will make Tiffany stronger.

4. Waiting For Negotiators – Saving Venezuela From Civil War

Venezuela, one of the oil-richest nations in the world, is broke. Another failed attempt of socialism that was launched by the late President Hugo Chávez, with laws such as the “Law of Land and Agrarian Development” under which the government can take private lands if it believed they weren’t being used to their maximum.

After Chávez’ death in 2013, Nicolás Maduro became interim president, and has remained in office since. After an election in 2018 that was widely criticized as illegitimate, the opposition swore in Juan Guaidó as a rival interim president, who has since been recognized by most Western states. Guaidó accuses Maduro of not having met negotiating agreements from 2016, that asked for free elections, and the opening of a humanitarian channel. Maduro, on the other hand, considers him a US puppet.

In early 2019, Four Latin American and eight European countries formed the “Contact Group on Venezuela” to mediate the country’s future, calling for new elections. A subsequent UN Security Council resolution that called for free and fair presidential elections, however, was vetoed by China and Russia. 

The two sides finally began negotiations mediated by the Norwegian Centre for Conflict Resolution. Several rounds of negotiations in Oslo failed. According to Guaidó: “The dictatorial regime of Nicolas Maduro abandoned the negotiation process with false excuses.”

In the summer, The United States tightened sanctions and thus manifested the West’s support of opposition leader Guaidó, while Maduro is still being supported by Russia and China. On April 30, Guaidó led a coup to overthrow Maduro but failed spectacularly. Since then, his negotiation leverage is dwindling: not only did he fail but his Western supporters were alienated by his attempt of a military coup. Negotiation leverage shifted toward Maduro.

Dag Nylander, who heads international peace efforts at Norway’s Foreign Ministry made clear that Norway is ready to mediate negotiations when the two parties are ready to return to the negotiation table. A deal would be vital to save the country from a disastrous civil war.

3. Make Or Break It – Why Greta Couldn’t Save The Deal

The much anticipated United Nations‘ COP25 climate talks, held in Madrid from December 3, concluded after 13 long days, but the deals reached amounted to almost nothing.

This is surprising in light of the attention this topic draws – which is rather recent. When I worked on climate change for the German delegation to the United Nations in New York in 2009, it wasn’t necessarily a hot topic (excuse the pun). Now, with teenage activist Greta Thunberg having reached superstardom and hundreds of thousands marching on the streets of Madrid during the conference, one would expect results.

The goal of the negotiations was to discuss the implementation of the Paris Agreement from 2015, in which 200 countries agreed to limit global warming to less than 2 degrees Celsius.

Among the key negotiation items was Article 6, dealing with the global trading of carbon credits, which can “make or break” the entire Paris Agreement.

One of the questions is whether countries can use “carryover” carbon credits from the Kyoto Protocol to meet their commitments for the Paris Agreement. Critics fear that these emission trading could allow targets to be met on paper but not in the atmosphere. Supporters regard Article 6 as a way to make the entire world make deals on behalf of the climate.

On day one of the conference, a negotiator commented that success on Article 6 would be a “miracle”. Well, miracles could happen but none happened at COP25 – there was no deal. The Association of Small Island States (AOSIS) particularly blamed China, India, and Brazil.

The only agreement to reduce emissions made during the conference wasn’t even part of the COP25 talks, but a pledge of EU leaders to eliminate their carbon footprints by 2050.

With over 27 000 delegates from over 190 nations, forming countless alliances, this is as complex as a multi stakeholder negotiation can become. Many countries failed to take action, with the US even moving out of the agreement.

Much time was wasted on procedure, arguing on how to label negotiations. They are now called “multilateral informal informals with co-facilitators”. Don’t ask.

António Guterres, UN secretary general was highly disappointed with the result and tweeted: “The international community lost an important opportunity to show increased ambition on mitigation, adaptation, and finance to tackle the climate crisis. But we must not give up, and I will not give up.“

Hopefully, COP26 in Glasgow in 2020 will reach a better deal, as it will be only weeks before the Paris Agreement’s start date. Time pressure can work wonders to the dynamics of a negotiation.

2. A new Camp David Deal? Negotiating with the Taliban

US President Donald Trump made a surprise visit to US troops on Thanksgiving where he announced the continuation of the peace negotiations with the Taliban: “the Taliban wants to make a deal. We’ll see if they want to make a deal. It’s got to be a real deal, but we’ll see. But they want to make a deal.” The Taliban quickly replied that they were “ready to restart the talks.” And indeed, the talks between the Taliban continued from where they ended.

The US wants the Taliban to end violent attacks and a commitment not to shelter terrorists. US secretary of state MikePompeo and his chief negotiator, Zalmay Khalilzad would in turn offer the Taliban the withdrawal of US troops.

Last year, after nine rounds of thorough negotiations in Qatar between the US and the Taliban, a deal was almost finalized. President Trump’s invited the Taliban leaders to Camp David, the iconic presidential retreat, just a few days before the anniversary of the 9/11 attacks to dramatically finalize the deal with himself as the dealmaker. However, when a Taliban-claimed car bomb in Kabul killed a US soldier and eleven others, Trump canceled the peace talks. Negotiations were on ice – but not over. US officials continued making small deals with the Taliban, such as prisoner swaps, to keep communication channels open. The Taliban, on the other hand, kept rather quiet about Trump, which demonstrated their willingness to negotiate.

Back at the negotiation table, Trump uses his old negotiation tactic of not showing much interest in the Taliban’s willingness to make a deal: “If they do, they do, and if they don’t, they don’t. That’s fine.”

However, a political solution is the only way out for America from an 18 year long war – America’s longest war, even outlasting Vietnam or both World Wars combined. In fact,  world powers have a tradition of failing in Afghanistan: at the peak of their power, the British as well the Soviet empires both failed to conquor Afghanistan and lost men, money, and morale. The Taliban, of course, are aware of the US public’s tiredness of the war effort and they know that Trump tends to withdraw US troops from foreign wars. However, a mere withdrawal of US troops would diminish US leverage and could lead to the Taliban taking over the entire country.

The Afghan elections just confirmed Ashraf Ghani as President but the Taliban still refuse to speak with the Afghan government, viewing it as a US puppet. Yet, ignoring Ghani would be a great insult to the head of a state, which is why Trump met with him on his Thanksgiving trip.

Facing US Presidential elections, ending the modern era’s Vietnam War would be most favorable for candidate Trump. The New York Times analyzed why closing this deal would be a matter of heart for Trump: “the yearning ambition for the grand prize, the endless quest to achieve what no other president has achieved, the willingness to defy convention, the volatile mood swings and the tribal infighting.”

Inshallah. Whatever the motivation, this deal could finally end a long and bloody war.

1. The Syrian Comeback – How Turkey And Russia Could End A War

 The Syria peace talks are a schoolbook example of the effects of changing leverage in negotiations. And an example of the real deal happening away from the spotlight.

The official Geneva negotiations– the fourth attempt – under the auspices of UN special envoy for Syria Geir Pederson, includes 150 official representatives: 50 delegates loyal to the Syrian government, 50 members of the opposition largely supported by Turkey and Saudi Arabia, and 50 civilian representatives.

However, the opposition block known as the ‘Syrian Negotiation Commission’ barely has any military leverage and is deeply divided, yet still asks for Assad to leave office and the introduction of a new constitution. As the Syrian government gained back control of almost the entire country,  the opposition co-chair, Hadi al-Bahra opened the Geneva talks humbly:  “It is time for us to believe that victory in Syria is achieving justice and peace, not winning the war.” Assad made clear how seriously he takes the negotiations by making clear that his own delegation has zero authority:  “The Syrian government is not part of these negotiations nor of these discussions”.

The only force Assad takes seriously is the Syrian Kurdish militias, who still control the oil-rich north-east of the country. But the Kurds have been excluded from the talks due to a veto from Turkey, who regards them as part of the Kurdistan Workers’ Party (PKK), the proponent of a socialist nationalist state. In a request from Foreign Policy, a US State Department spokesperson confirmed support of “the populations of northeast Syria” at Geneva – which could only mean the Kurds. However, the US has given up much of its influence when it abandoned its former allies by withdrawing its troops. The US doesn’t want to ruin its relationships with Turkey over Kurdish independence.

UN envoy Pedersen asked all countries to leave the Geneva negotiations as an exclusively “Syrian owned, Syrian led process”. It’s too late, the Syrian crisis has become a struggle between the USA, Turkey, Russia and Iran.  At least, all relevant parties sit in the same room.

Assad himself is not very interested in negotiations, as time has made him stronger than ever. The Kurds are forced to work out a deal with Assad, but under his terms. This will be the one negotiation that could end a civil war lasting eight and a half years, having displaced almost half of the population and destroyed 65% of Syrian infrastructure.

As the opposition co-chair, Hadi al-Bahra rightly said: “Without a genuine political transition, Assad’s regime can’t normalize its relations with states, rejoin the Arab League, obtain relief from sanctions, or reconstruction.” Indeed, Turkey and Russia could, in fact, work out how to solve the issue – away from the 150 delegates.