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The business impact of a U.S. military strike in Syria

john kerry

Screenshot from the Associated Press' video coverage of the release of information on Syria victims

With President Obama slated to address the nation Tuesday (and to sit for network TV interviews on Monday) about the possibility of military action in Syria, it probably is time for financial writers to assess the effects of potential intervention on business and the economy.

While it feels crass to contemplate ramifications like higher fuel prices while the world  reels at harrowing images of civilians killed by their own government, there is no denying the myriad economic ripples that take place when the United States uses military force. 

First a bit of background, because we all can’t be on top of every geopolitical situation at all times:  Here’s a primer and who’s-who from WXIA in Atlanta,  and here are the answers to “Nine questions about Syria you were too embarrassed to ask,” from the Washington Post.

As this Politico report notes, the emotional effect of an unpopular Syria strike among U.S. consumers, who still are suffering from the costs and losses of the Iraq and Afghanistan military actions, could be profound and could curb nascent recoveries in consumer sentiment and big-ticket spending on items like cars and houses. There’s a myriad of ramifications for companies and workers dependent on those sectors.   Pretty much any industry or company you cover would suffer from such a downward spiral; you might consider some sort of round-up of business leaders’ thoughts about a strike and the possible implications for your region’s economy.

Energy is of concern any time the Middle East is in turmoil. Here’s an interesting CNN graphic illustrating why military action in Syria – which is not relied upon for oil production – could disrupt output, supply and prices worldwide.  That would be bad news for transportation companies, automakers, home builders and again, just about any industry.  Consumers strapped by gas prices won’t have as much fun money to spend as much at restaurants, stores and casinos.  Restaurants lay off low-wage workers who then can’t make rent payments or doctor bills… and the beat will go on.   Here’s a MassLive.com story about heating oil concerns and here is the U.S. Energy Information Administration’s website dossier on Syria, as background.

No entity wants to be the one that benefits from misery and strife, but realistically revved-up action by the United States armed forces means money for defense contractors to one extent or another; some analysts pooh-pooh the idea that a limited strike would make much difference to suppliers.  Still, Tomahawk missiles don’t build themselves, and as the International Business Times points out, that means more sales for missile builder Raytheon.  It might be interesting to find local subcontractors who contribute to the building of these guided missiles. I poked around on USASpending.gov but could not devise a straightforward search that would identify Raytheon subcontractors.  Your state probably has an association for defense contractors; call and ask for an introduction to any pertinent firm. 

Also, check out this interesting “mega directory” by the National Defense Industrial Association. It offers search-by-category for many different types of suppliers. I clicked on “missiles and rockets” and then did an advanced search for my state, and turned up some companies worth calling.  Even if you can’t find contractors directly tied to current missile systems, you might find some interesting defense contractor stories.

One last thing to bear in mind: The shadow effects of the preoccupation with the Middle East. As this Bloomberg story points out, the debate in Congress about a show of force in Syria will absorb time and energy to the detriment of other causes, from immigration to the appointment of a new Federal Reserve chair. Those delays in turn will resonate throughout the business world as well.  The Hill points out that debate about Syria will boot an energy-efficiency bill from the stage – one that no doubt was being watched closely by the building industries and suppliers, among others. So, you might want to ask companies and executives on your beat about the potential costs (or benefits) of delays in legislative matters not directly related to Syria, particularly if you’re dealing with companies with heavy lobbying agendas.  It’s an interesting conversation-starter & who knows where it might lead. 

In Beats, Economy, Energy | Utilities | Mining, Featured, Manufacturing | Large companies, Story ideas.

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