Most commentary surrounding the euro crisis has focused on the upcoming economic effects. PwC's recent paper summarises both short term risks and medium term consequences. However, there is a simultaneous and equally negative risk of prolonged civil unrest as a direct result of the fiscal crisis. In November, the UK Treasury confirmed that contingency planning for a potential Euro collapse had been set in train. Concurrently the Foreign and Commonwealth Office is understood to have instructed Embassies and consulates to begin contingency planning for scenarios of political unrest including civil disturbances. Memories of Iran are all too fresh in memories.
Social and political consequences as a result of a possible euro collapse are inescapable but the extent and scale of the impacts is as yet unclear. Under its commitments to the Lisbon Treaty and the overall framework guidance of the Common Security and Defence Policy (CSDP), The European Union organised a crisis management exercise through late November to early December. The conclusion of that process will provide a gap analysis and areas for further improvement.
The Eurozone is not an area for which political unrest and contingency planning has been a fundamental concern or priority. Social instability has been predominantly short lived and any impacts usually restricted. A prolonged campaign of violence, instability and the vocalisation of social distress will challenge any organisation operating in the Eurozone. This, coupled with the financial effects of a currency collapse should fiscal controls to stave off a breakdown fail, could destabilise and potentially render any current contingency plans meaningless in the context of a region-wide unstable outlook.
With no genuine provision for member states to leave the union in a steady and organised breaking of their “contracts” to the rest of the organisation any attempts to exit their agreements and commitments would create resentment and hostility at the political level. For the man on the street how this filters down is only a concern if it directly reduces their quality of life at an individual level. Should this transpire we should expect civil unrest to become a recurring issue.
Ultimately, regardless of how realistic you consider this scenario, the situation provides a unique opportunity to review existing resilience arrangements using real concerns. Crisis management plans and resilience will be tested in the coming months and years; a test managed by a business in controlled conditions is the chance to test the strength and weaknesses that might arise. In the next blog we will consider the explicit effects on supply change management in the context of any political instability.