THE HIDDEN STRENGTH OF A SEEMINGLY WEAKER

PARTY: HOW NEGOTIATORS FROM DEVELOPING

COUNTRIES CAN LEARN FROM THE NEGOTIATION

BETWEEN MCC AND KJH

* Marcia Ashong

CEPMLP Annual Review - Published 2010

ABSTRACT: Due to the phenomenon of globalisation many international negotiations are carried out

between developed and developing countries. Normally it is perceived that in this type of negotiations

developing countries have less bargaining power than their developed counterparts. However, this assumption

has been proved wrong in some cases, when developing countries using tried and tested tactics and strategies

have managed to balance the asymmetry between the negotiating parties. During the dates 10 January 2010

and 12 April 2010 students from the Centre of Energy, Petroleum, Mineral Law and Policy (CEPMLP),

University of Dundee), entered into a rigorous transatlantic negotiation with law students from the Washington

College of Law (WCL) using various modes of communication namely call-conferences, videoconferences and

e-mails. During this negotiation CEPMLP students played the role of a company from an African country and

the WCL students the role of a powerful Fortune 500 Pharmaceutical Company. The following piece of research

is authored by a participant in the Negotiations from the CEPMLP side. The findings are to indicate that in all

situations the seemingly weaker party in a negotiation always has the opportunity not to be viewed as such

through strategic tactics. The results are designed to be referenced, by negotiators from developing countries

who enter negotiations mainly as the weaker of the two.

E-mail: marciakayie@gmail.com

ii

TABLE OF CONTENTS

ABRREVIATIONS……………………………………………..…………….......................iii

1. INTRODUCTION..............................................................................................................1

2. THE CONCEPT OF INTERNATIONAL NEGOTIATION.........................................2

3. THE USE OF POWER IN THE CONTEXT OF INTERNATIONAL

NEGOTIATIONS...............................................................................................................3

3.1. MCC’S USE OF STRATEGIC POWER.......................................................4

4. MCC’s AND KJH GENERAL TACTICS.......................................................................5

4.1. BLUFFING AS A MEANS TO GETTING WHAT YOU WANT.................5

4.2. ALWAYS AIM HIGH AND NEGOTIATE DOWN......................................6

4.3. DO NOT BE AFRAID OF DEADLOCKS......................................................6

4.4. SOME POWERFUL TACTICS BY KJH........................................................8

5. CONCLUSION...................................................................................................................9

BIBLIOGRAPHY

iii

ABRREVIATIONS

CEPMLP Centre for Energy Petroleum Mineral Law and Policy

IN International Negotiation

JVA Joint Venture Agreement

ODI Overseas Development Institute

SP Strategic Power

1

1. INTRODUCTION

International negotiations are complex state of affairs for all stakeholders. There are

circumstances where parties in the negotiations test their wills against formidable forces. This

test of wills is often manifested through the use of power. How power is used determines

which party in the negotiation holds the upper hand, that is, which party is the stronger

participant. Being the stronger participant or appearing to be the stronger participant is the

goal of this paper because it determines the end result of a negotiation.

The basic premise of this thesis thus, is the assumption that power is indeed essential in

international negotiations (IN). According to Sheila Page of the Overseas Development

Institute (ODI), the view that power lies at the heart of negotiations is a pessimistic and

therefore unrealistic stance,1 because in her studies which focuses on trade negotiations

between developed and developing countries the trend is that developing countries continue

to utilise negotiation despite their apparent weakness. The author disagrees with this analysis

mainly because Page challenges the viewpoint where aggregate power alone is viewed as

fundamental in IN. From this viewpoint it is easy to imagine where Page is at odds with the

position that aggregate power alone determines the outcome of IN’s, for in a situation where

one party is deemed not to have such power and the other does, it is easily assumed that no

amount of negotiation would put the weaker party in a more favourable position, looking at

the discourse from this perspective it is easy to wonder why then would developing countries

continue to negotiate under such circumstances? But it is unfortunate, that Page does not

distinguish between aggregate power and that which the author dubs strategic power (SP).

SP allows for the levelling of playing fields. It is the opportunity where the weaker party can

gain leverage in a negotiation, which allows for him to steer the path of the negotiation in a

direction it would have otherwise not be in. SP is essential in international commercial

negotiations which involve negotiators from developing countries and those from developed

countries, for the mere reason that arguably, negotiators from developing countries often lack

the aggregate power needed at the outset. SP thus, switches this position as aforementioned.

The aim of this paper is to suggest ways through which this SP may be achieved even in

seemingly dire power relations, more specifically it is designed to offer negotiation tips to the

1 Page, Sheila., Developing Countries: Victims or Participants, Their Changing Role In International

Negotiations, 3, Overseas Development Institute: Globalisation and Poverty Programme (2003)

2

weaker party (especially those from developing countries), and to find ways where this

weakness can be overturned for conditions more favourable to such participants. The aim,

therefore, is to steer those participants away from getting into “bad deals” (that is

unfavourable terms) which are often times underlined by power coercion or desperation from

the side of the weaker participant. The following conclusions are made from mock

negotiations between two institutions of which the author was a participant; one group from

the Centre for Energy Petroleum, Mineral Law and Policy (CEPMLP, University of Dundee)

and another from the Washington College of Law (WCL, American University, Washington

D.C). CEPMLP represented a fictitious African agricultural company (MCC), which was

well run but with limited resources, and WCL represented also a fictitious multinational

pharmaceutical company with immense capital resources (KJH).2

2. THE CONCEPT OF INTERNATIONAL NEGOTIATIONS

As one author so eloquently posited “negotiation is a fact of life,”3 this is accurate,

negotiations are ways through which we achieve various objectives from day to day, be it

negotiating a salary raise or merely in dealings with family members, it is engrained in us as

human beings to survive through negotiations. IN’s however, can be distinguished from this

daily ritual, in that IN’s are complex, detailed, calculated and often times there is no natural

sense of engrained feeling towards them from the point of view of the parties involved. This

is because for fear of “losing” parties often times come into IN’s with strategies (whether

well thought through or not), they involve lawyers (who may or may not complicate matter,

often they do), they involve paper work, and each participant has a role to play.

In the context of a team of negotiators from a developing country (either representing a State

entity or registered company), IN’s are often pathways at improving their country or

companies economic profile and gaining more market share through improved access to the

international markets. For a State entity in this respect, negotiators usually enter such

communications with a dire need of some level of assistance designed to be of benefit to the

country as a whole, therefore, for such entities a public policy undertone guides the

2 See the briefing of this negotiation

3 Fisher, R., Ury, William., Patton, Bruce., Getting to Yes: Negotiating an Agreement Without Giving In, xiii

(1992)

3

negotiation (or at least should do). For both parties IN is a series of bilateral communications

and “decision-making process necessary whenever [one side or both sides] cannot achieve the

same objective single-heartedly.”4

3. THE USE OF POWER IN THE CONTEXT OF INTERNATIONAL

NEGOTIATIONS

Before the discussion of any manipulation of the fundamentals of power, it is perhaps

essential to have a clearer understanding of how the concept of power works in IN’s. As

aforementioned, power in IN’s can be viewed from two main contexts: power in its aggregate

form, that is immense financial capital, mass weaponry, large armies or even sometimes large

reserves of natural resources, (for a certain school of thought the stronger party in this sense

always consumes the weak) or in its Strategic form (SP), where at the heart of it lies the will

to “win” in essence it presupposes that negotiation “if accomplished skilfully, can reduce

initial disparities in power relations and establish symmetry in relationships.”5 Zartman and

Rubin set out five conclusions of what power achieves, they are that (1) “Perceptions of equal

power among negotiators tend to result in more effective negotiation than unequal power, (2)

under conditions of perceived power and inequality the party with more power tends to

behave more exploitatively, unless certain special conditions prevail, (3) the smaller the

perceived difference the more effective negotiators are likely to function (4) the smaller the

amount of power in the system of negotiation the more effective the negotiations will be, and

(5)where powers are perceived to be equal there is a motivational orientation to be more

cooperative.6 The above list suggests that power is a concept that can be perceived, and just

like any perceptions can be influenced by behaviour, therefore the design of behavioural

tactics, would essentially determine the interplay of power relations and the possible

manipulation, thereof, hence the need for SP.

4 Thompson, L.L., The Mind and Heart of the Negotiator, 2 (3

rd ed. 2005)

5 Salacuse, J.W., How Should the Lamb Negotiate with the Lion? Power in International Negotiations, 87-99, in

Kold, D.M., (ed.), Negotiation Eclectics: Essays in Memory of Jeffrey Z. Rubin (1999) 6 Rubin, J.Z., Zartman, W., Asymmetrical Negotiations: Some Survey Results that May Surprise, 351,

Negotiation Journal (1995)

4

3.1. MCC’s use of Strategic Power

In IN’s power is manifested often at the onset in a negotiation where the party with more

aggregate power uses coercion, intimidation, and status to overpower the counterparty. In a

commercial negotiation for instance as was the case with the MCC-KJH meetings, the

tendency for any company with such market power as KJH would have been to assert its

dominant position at the onset. As a dominant party this is not so much a tactic as it is the

manifestation of the knowledge that one is in the position of strength. Where such an

opportunity is lost, it opens the door for the weaker participant to use strategy and tactics to

gain the upper hand.

In the mock negotiation with KJH, MCC seized such an opportunity at the outset (even

though it knew that it did not possess this aggregate power). Salacuse argues that weak States

often show initial weakness, because they are unable to determine what they want, as a result

they are unable to develop appropriate strategies.7 The author would diverge from this point

of view and conclude that in fact a facade of lack of understanding as to what a party wants

from a deal can in itself be a strategy. For instance, in the mock exercise the MCC team

seeing the initial performance of KJH after the first negotiation decided that instead of

throwing all of MCC’s chips on the table, the better approach would be to use the subsequent

meetings to feel KJH’s positioning, to understand clearly through the actions of KJH what

their “bottom line” was, and to use this information to guide MCC’s future proposals. It was

vital, however, that though MCC may have been perceived by KJH to be indecisive, that in

actuality MCC knew exactly what it wanted and needed, but for such information to be kept

in-house until such time as was appropriate to divulge.

The early grasp of such a concept immediately switched the balance of power from KJH

(who possessed aggregate power), to MCC, who used SP as a means of levelling the playing

field. This initial move saw KJH’s power begin to wane, this was manifested through

continuous offers of concessions as a means towards regaining control, however, MCC in

turn rejected these offers, the strategy was thus, for MCC to appear indecisive. So as a caveat

to Salacuse’s suggestions, the perception of being indecisive may not always be detrimental

7 Ibid

5

to the weaker party if the strategy is supplemented by an in-house knowledge of what the

weaker party “actually” wants, but this strategy has to be coupled with a counterparty who

does not at the onset realise this strategic move. If this is achieved power in this case in its

aggregate form will essentially be diluted. Later in subsequent negotiations MCC was to

come back knowing what KJH was willing to give (from the early concessions) and took all

the concessions previously turned down as potential “icing on the cake.” When KJH realised

their mistake it was too late.

This opportunity, however, may not always present itself in a real life negotiation between

real participants, with strong parties who often have years of negotiation experience

underlined by formidable legal prowess.

4. MCC’s and KJH GENERAL TACTICS

Negotiators from developing countries should always bear in mind that the SP process is

ongoing, so even where a more powerful counterparty asserts itself right at the onset (as is

usually the case), a defeatist mode from the weaker party should not set it. The following sets

out some of MCC’s major tactical moves:

4.1. Bluff as a Means to Getting What you Want

The above scenario will not always be an option available in any particular negotiation. Often

times the bluffing is the best option for the weaker party. The vital fact was that even with all

of KJH’s resources, there was no telling as to which party needed which the most, and in a

real negotiation this is always a tricky area. In the mock negotiation case, MCC was the only

producer of cassava whose raw materials was needed for the production of a drug patented to

KJH. There was knowledge of a potential synthetic form of the raw material to be developed

at a later stage but the grey area was in figuring out how urgent the need was to develop the

drug before any such synthetic form was available. MCC’s tactic was simply to bluff about

other options available to it. After all MCC was merely interested in profit maximization,

entering new markets, training for their employees and for a partly government owned entity,

foreign currency for the economy. This could have been achieved in many ways more than

6

one, and that knowledge needs to be made clear during negotiation8, the bluffing on the other

hand comes with the pretence that there are indeed such options available, and that KJH was

not the only company interested in the raw material in question.9

4.2. Always Aim High and Negotiate Down

It is extremely important for negotiators to keep in mind that though aiming high might seem

impossible or unattainable that most of the time doing so sets the limit for how low a deal one

party is likely to get. This tactic was manifested in several ways during the mock sessions.

Knowing that KJH would never go for a straight license agreement with MCC, the move was

to propose exactly that, knowing that starting from an unattainable point, it would then seem

like a concession from MCC to move down to a Joint Venture agreement (JVA), (which is

exactly what MCC wanted from the beginning). So keeping this in mind it is essential that

MCC did not divulge it’s wants as described earlier but rather use the time to predict where

KJH stood. The end result was that MCC did manage to seal a JVA, and KJH saw this as a

concession from MCC, which wasn’t. A lesson to learn from this is that it is not important

who perceives who as giving in, so long as the end goal is achieved.

4.3. Do Not be Afraid of Deadlocks

During the mock negotiation MCC and KJH hit a deadlock. There were several reasons for

this. After KJH realised it misstep in the earlier rounds, its team tried to get back by using the

aggressive strategy. Its negotiators came in with hard bottom lines and set ultimatums “you

either take this or leave it.” This should have perhaps been KJH’s strategy earlier but at the

point of its introduction the confidence levels of the MCC team were already high and the

strategy proved ineffective. MCC did not accept the bottom line and tried to negotiate up, but

the KJH team in asserting its dominance did not move. A weak party in this case being

desperate that the deal would fall apart (especially a State who is relying heavily on a

8 In most negotiations between developing countries developed counterparties for instance the counterparty will

not always be the only choice available to it. This is often a mistake made by governments of developing

countries who get coerced into deals because they either see no alternatives or are unwilling to see alternatives 9 This tactic has to be used wisely since it could in fact backfire

7

service), would usually give in at this point. The lesson to be learnt from MCC is that this is

not a wise move (it could lead to unachieved goals, the whole purpose of negotiation thus

defeated). If the bottom line proposed is mutually beneficial it is possible a deal can be

reached without a deadlock.

In MCC’s case the proposal of a super-majority stake (in favour of KJH) in the previously

agreed JVA was dangerous in the sense that supermajority gave KJH complete control of the

JVA and such a share could result in complete abandonment of the project once a synthetic

form of the raw material was available. From MCC’s perspective this would end up with

more adverse effect on not only the company but for the country that, would be left with

facilities it could not manage and untrained workforce.

Developing country negotiators need to be aware of this before entering into agreements.

That is would the deal in the long run be more beneficial to the country or cause more

problems in the future? It is often documented that so many deals with developing countries

have ended with the countries getting into “bad deals” which often spells more of a detriment

in the long run. A clear example is the Akosombo Dam project negotiations in Ghana which

led to the development of the country’s first hydro project. The desperation on the Ghanaian

side was obvious (a newly independent country, the aim of its leaders was to spear the

country into development and assert its control in a fast approaching cold war environment)

to Kaiser Aluminium a smelter company whose establishment in Ghana was to provide a

major source of financing for the power project. Kaiser proposed a low rate of electricity

which did not meet the minimum tariff needed to maintain the project in the long-run, though

in the beginning the Ghanaian negotiators spent months negotiating this exact issues, the

establishment of the project at the time was more important to negotiators than such matters

of tariff rates, which later was to come back to haunt the government and instead of spearing

the country ahead of development contributed to huge budget deficits, (as a large portion of

the budget had to be used to maintain the high cost dam, those costs that were not passed

through to Kaiser), needless to say the country’s dire financial crises led to the government

being ousted in a coup d’état. The principal legal Counsel in the negotiation at the time said

later that “they wanted the dam and we were the only means at achieving it.”10

This is not a

10

Documentary: Adam Curtis, Pandora's Box: Black Power, Interview with Ron Sullivan (Kaiser Lawyer on

Volta Project 1959-79), BBC (1992)

8

favourable result and should always be avoided. A deadlock needn’t always be detrimental if

both sides do not reach a mutually beneficial deal.

In the MCC-KJH negotiations, KJH returned later with offers to continue the negotiations.

This is a likely scenario, when one side needs something the other has, the likelihood of

returning back to the negotiation table is high and negotiators should expect this. On the other

hand, if the need from the other side can be achieved elsewhere there is the risk that they may

not return to the negotiation, therefore, negotiators need to be aware of their position and how

much bargaining room they have before deciding on a deadlock.

4.4. Some Powerful Tactics by KJH

Towards the end of the MCC-KJH negotiations the playing field had levelled and the end

result was a position whereby both MCC and KJH had a mutually beneficial deal. This was

all due to the fact that KJH found a way to reassert its interests on a number of occasions.

Towards the end of the negotiations MCC began to doubt the use of its tactics and because of

this slightly gave some power back to KJH who immediately seized on the opportunity. So

instead of a position whereby MCC would have been dictating the final terms of the

agreement, it was rather KJH who grasped the opportunity, it did so through back-

channelling, by using the strong negotiators to form a trust relationship with a member of the

MCC team. The back-channelling process was the most effective tool used by KJH because it

was an avenue through which ideas could bounce off to the MCC team without the

confrontation of formal negotiations. The effect was that it was through the proposals from

the back channelling that a final agreement was reached, a mutually beneficial agreement

nonetheless.

9

5. CONCLUSION

Ultimately negotiations needn’t be a one sided play of power. So often scholarly materials

have focused too much attention on arguments as to whether power is indeed important or

not. Power or the perceived power is important in IN’s but stopping at that alone almost

seems to offer an end as opposed to a means towards an end. Power is essential but the

weaker party needn’t always come out with the worst end of the deal. Page concludes that

power is not important in her analysis of international trade negotiations because weaker

States continue to come back to the negotiation table with stronger ones, but this is

inaccurate, power is essential but the reason weaker States continue to come back to the

negotiation is the realisation that power is not a static concept. It is fluid and capable of

manipulation. It is the mastery of this concept which will determine how a deal goes.

The lessons that can be learned from the MCC-KJH mock negotiations are thus universal.

Firstly, arriving in a negotiation is a realisation as stated earlier that both parties need

something from each other, keeping this in mind any aggregate power blocks can

immediately start to fizzle. Going into a negotiation knowing what one wants and needs is

essential (as Salacuse suggests) this information, however needn’t always be divulged. It is

sometimes a good strategy to be perceived as indecisive as a means of testing the other party

(this should however be used cautiously and only when an initial dominance is not felt).

Developing country negotiators need to be aware of their strengths ahead of time and always

emphasize this throughout the negotiations as MCC did, by asserting the fact that it was a

well run company with little debt and ample supply of the raw materials needed. And for all

intents and purposes negotiators from these countries need to learn to walk away from deals

that would ultimately be detrimental to the institutions of countries in the long run.

10

BIBIOLGRAPHY

PRIMARY SOURCES

No primary sources used

SECONDARY SOURCES

Books

Fisher, R., Ury, William., Patton, Bruce., Getting to Yes: Negotiating an Agreement Without

Giving In, (London, UK: Random House Group, 1999)

Salacuse, J.W., How Should the Lamb Negotiate with the Lion? Power in International

Negotiations, 87-99, in Kold, D.M., (ed.), Negotiation Eclectics: Essays in Memory of Jeffrey

Z. Rubin (Cambridge: MA Program, 1999)

Thompson, L.L., The Mind and Heart of the Negotiator, (3rd

ed.) (Upper Saddle River, NJ

(US): Prentice Hall, 2005)

Articles

Page, Sheila., Developing Countries: Victims or Participants, Their Changing Role In

International Negotiations, Overseas Development Institute: Globalisation and Poverty

Programme (2003)

Rubin, J.Z., Zartman, W., Asymmetrical Negotiations: Some Survey Results that May

Surprise, 351, Negotiation Journal (1995)

OTHER SOURCES

Documentary: Adam Curtis, Pandora's Box: Black Power, Interview with Ron Sullivan

(Kaiser Lawyer on Volta Project 1959-79), BBC (1992)