Matthew Bryza: What I do today grows right out of my diplomatic career – EXCLUSIVE

The editorial team of The Daily Baku has conducted an exclusive interview with former diplomat, former co chair, and former United States Ambassador to Azerbaijan Matthew Bryza. We are presenting the interview in parts.

“These days, I do a number of different things in the business world. I'm on some corporate boards of companies that invest in energy and real estate or simply in upstream oil and gas. I am involved in the think tank world. So I'm on the board of the Jamestown Foundation in Washington, D.C. In the past, I ran a think tank in Estonia, the International Centre for Defence and Security, and was a senior fellow also at the Atlantic Council, focussing on all the issues, of course, that I worked on in my diplomatic career. Oh, and I've been on the board of other other companies, an energy engineering company based in California, also the biggest private natural gas company in Bulgaria called Overgas. All of those experiences helped me get to the place where I am now in my favourite and main activity, and that is I am a managing director of a Houston, Texas-based strategic risk and corporate strategy and investment consultancy,” former diplomat Matthew Bryza told The Daily Baku.

“I am overseeing its operations on this side of the Atlantic, which is really the lion's share of where our projects are. So what we do is we help people or companies that are based in the part of the world where I am now and where you are, so in the greater Caspian region and the Middle East and Europe, help them figure out how to resolve complex geopolitical or political challenges and or prepare and seize opportunities for investments. And then we then participate in those investments.

Our parent company, where I'm a partner, is a venture capital company also based in Houston. So all of this work requires me to understand how the intersection of geopolitics and business works, how to help people not only understand what their political problems are, but to resolve them, even inside their own political systems, and then how to be strategically minded to see grand business and investment opportunities, but at the intersection with geopolitics. I had magnificent training to do exactly this in another job I haven't talked about yet in the U.S. government, which was when I was working with Ambassador Morningstar as his deputy on Caspian Basin Energy Diplomacy,” Bryza emphasized.

Bryza noted that the work he does today stems directly from his diplomatic career. “ So you can see that what I do today grows right out of my diplomatic career, and one of the most valuable experiences I had to set me up to be able to flourish in business now, international business, was my four years serving in the White House on the staff of President George W. Bush's National Security Council, because there I had to understand the strategy, in fact, shape the strategy for policy issues, but be very pragmatic and figure out not just what the ideas should be, but how to achieve them, which is also what I did with the oil and gas pipelines. And so that's essentially what I do today in my main activity, working as a managing director of the consultancy and then a partner in our parent investment firm. Having worked in both diplomacy and business, how do these two worlds differ in the way they interpret political risk and regional stability? In my experience, although governments, at least the U.S. government and European governments and companies, in the long run both seek stability and to manage political risk, in the short term they have radically different tolerances of political risk and or stability,” End of quote.

He noted that in some cases companies and investors can show a higher tolerance for political risk when they believe an investment will generate very high returns. “So a great example of that is, let's say, Mozambique, where Total and others, Exxon, had invested significant amounts of money in a natural gas liquefaction project, a natural gas production project, and they underestimated how high the level of political risk was. And then there was an insurgency and terrorism, and the project has been frozen for a long time. Or Russia, way underestimated its political risk in invading, recklessly invading Ukraine. And then Novatek didn't anticipate that happening. They invested billions of dollars and hundreds of billions of rubles in the Arctic LNG2 natural gas liquefaction project way up in the Arctic region of Russia. And then the United States government sanctioned that project and crippled it. So that's a huge loss of money. So sometimes companies have a higher risk tolerance, because they just don't understand what's going to happen.”

According to Matthew Bryza, there is another category in the business world as well – people who succeed precisely in risky situations or in conditions of high price volatility. “These include, for example, certain commodity traders. They bet on what will happen in conditions of high instability and can make very large sums of money by wagering that the prices of certain commodities will fall or, due to some form of instability, will rise sharply.

A similar situation emerged again after Russia launched its full scale invasion of Ukraine. That is, in 2020, natural gas prices in Europe rose to incredible levels. Many energy companies and electricity producers in Europe lost billions of euros because they failed to foresee this and did not listen to warnings from people like me that such a development would eventually occur,” Bryza concluded.