How to negotiate with someone more powerful than you – 05/12/2023 – Market

The G7 summit next weekend in Hiroshima (Japan) is, in part, a deal-making retreat for leaders of different statuses. Each participant’s position derives from some combination of their country’s size, GDP, and military might, plus the leader’s charisma and electoral prospects. The biggest beast at the summit is always the American president.

Humble pack members like Giorgia Meloni or Rishi Sunak face a problem familiar to almost anyone who has ever worked a job or even shared a home: How do you negotiate from a position of weakness? How do you ask someone more powerful for something? Here are some case studies on how to do it and how not to.

If you don’t speak the language of your interlocutor, at least speak excellent English

You are insignificant. You’re not Xi Jinping, so the person you’re pestering won’t make the effort to hear your every word through the interpreter. To make a good impression, you need to sound natural in their language. Don’t be like the Dutch Prime Minister exiled to London during World War II, who, when he finally had a moment with Winston Churchill, would have greeted him with “Goodbye!” Churchill replied, “I wish all political meetings were as short and sweet.”

don’t show off

When Adam Neumann ran WeWork, he set up a 15-minute meeting with Elon Musk. He took the opportunity to tell Musk that getting to Mars – Musk’s greatest ambition – would be the easy part. The hard part would be building a community on the red planet. That’s where, Neumann said, where WeWork comes in. Musk impatiently corrected him: the hard part was getting to Mars.

do not teach

In 2015, Greek finance minister Yanis Varoufakis told European institutions and German diplomats that the austerity prescription for his insolvent country was wrong. Germany’s “medicine”, Varoufakis said, was “part of the problem”. He was probably right, but beggars don’t teach.

do it in writing

When Mikhail Gorbachev withdrew Soviet forces from Eastern Europe, US Secretary of State James Baker told him that NATO’s borders would not “move an inch east”. German Chancellor Helmut Kohl echoed this. Gorbachev should have immediately put them in writing, observes Stephen Kinzer of Brown University. Gorbachev did not. The West then silently rescinded the offer, which did not appear in the Final Agreement on German unification in 1990. The consequences still reverberate today.

Understand your own weakness

British leaders approached the EU negotiations on Brexit from the wrong premise: that it was a negotiation between equals. Was not. The EU economy is much bigger, so the UK needed one more deal. Threats to leave without a deal, or to send the EU “to hell” for its exit law, therefore lacked credibility.

The UK should have “focused on a few questions rather than resisting the EU on all counts with a mantra of sovereign equality”, writes a member of the EU negotiating team, Stefaan De Rynck, in his book “Inside the Deal”.

Convince your interlocutor that you share their worldview

When Nelson Mandela briefly emerged from prison to meet South Africa’s hardline president, PW Botha, he compared the black struggle for liberation to the Afrikaner struggle against the British in the Boer War. Botha, whose father and grandfather had been Boer fighters, was delighted, especially as Mandela said all of this in Afrikaans.

“Zoom in” on a workable order

In 2008, during one of Argentina’s periodic crises, the country’s young economy minister, Martín Lousteau, visited US Treasury Secretary Hank Paulson. Paulson was concerned about the global financial crisis. Lousteau showed him that Argentina’s economic indicators closely resembled those of the United States during the Great Depression. He pointed out that whenever Argentina imploded, eccentric nationalists tended to benefit. He said: “The outward looking group of people needs political wins. The political win we need is to renegotiate our debt to the Paris Club [credores] without the involvement of the International Monetary Fund.” Lousteau’s team had done their homework (an often overlooked precondition in negotiations) and discovered that legally the IMF could be sidelined.

Paulson agreed. Lousteau went home with his victory — only to have it overturned by its president, Cristina Fernández de Kirchner, who was returning from Europe, where she told the Paris Club that Argentina would not pay.

The hardest negotiation is usually not with powerful outsiders. It is with your own side.

Translated by Luiz Roberto M. Gonçalves