Doing business in conflict areas: recognizing risks, seizing opportunities

From sanctions to supply disruptions – how companies can build resilience and remain competitive in geopolitical sensitive regions.

The world of international business is undergoing major shifts as a result of geopolitical tensions and new trade regulations. Where globalization in previous decades was shaped by free trade, multilateral cooperation and a strong belief in economic integration, today this perspective has significantly changed. The international level playing field is increasingly defined by geopolitical rivalry, protectionist measures and rapidly evolving regulatory frameworks. The result is a fragmented global economy in which new trade blocs emerge and tariff barriers rise. Companies, large and small, face growing complexity and a mounting set of risks: from sanctions and inflation to disrupted supply chains. Therefore, businesses are challenged to critically review and adapt their international strategies, with agility and effective risk management becoming essential to maintain and strengthen their competitive position.

Geopolitical tensions and international trade

The dynamics of global trade are increasingly shaped by geopolitical interests and conflicts. Efficiency and comparative advantage have not disappeared, but strategic alliances, sanctions regimes and great-power politics have become crucial. National security is no longer a secondary consideration but a decisive criterion for market access and investment decisions. This is not a sudden change, but a structural realignment: the integrated global market is giving way to clusters of allied economies, while exchanges with rival powers steadily diminish.

At the same time, trade has taken on a broader role. Governments now use trade instruments not only for economic efficiency but also for strategic objectives – from energy transition and climate policy to technological sovereignty and human rights. Trade has thus evolved into a dynamic strategic field in which geopolitics plays the leading role.

The war in Ukraine made this shift painfully clear. Europe’s dependency on Russian energy and Ukrainian grain created acute vulnerabilities: gas prices soared to record levels, and Black Sea blockades disrupted global food markets. Elsewhere, rivalry between the United States and emerging economies intensified. Where China long dominated Washington’s strategic focus, India and Brazil are increasingly central actors, balancing cooperation with the West and closer ties to Russia and China. This has led to stricter U.S. trade measures, higher tariffs and an acceleration of “friend-shoring,” where supply chains are reorganized along geopolitical lines.

The tense security situation in the Middle East, particularly in Gaza, also has far-reaching consequences. Conflicts in the region threaten vital maritime transport routes such as the Red Sea and the Suez Canal, both essential to global trade. Incidents, including attacks on merchant vessels, raise costs and create delays, further placing pressure on already fragile global supply chains.

For Dutch exporters, this creates a dual reality. On the one hand, transatlantic ties are deepening, with growing trade between Europe and the United States. On the other hand, China is shifting from an essential partner to a long-term strategic rival, leading to supply-chain restructuring, stricter trade barriers and limited access to critical technologies. It is a landscape where trust and geopolitical alignment carry at least as much weight as price and quality.

Inflation, interest rates and financing costs

Conflicts and sanctions regimes affect not only trade flows but also the financial conditions of international business. When energy supplies are disrupted, shipping routes are redirected or access to raw materials becomes limited, prices surge. Inflation in conflict areas is therefore not an abstract macroeconomic concept but a direct result of geopolitical instability.

Monetary responses – rising interest rates – increase pressure on companies active in these markets. Exporters who must pre-finance goods, rely on long delivery timelines or operate in fragile payment environments face higher capital costs while margins are already under pressure. What might be manageable in stable markets can determine survival or withdrawal in conflict areas. Banks amplify this effect by increasing risk premiums or restricting credit to unstable regions. For companies, this means financing conditions depend not only on their own financial strength but also heavily on the geopolitical context of the markets in which they operate.

For Dutch exporters, this reality is clear: remaining active in geopolitical sensitive regions requires taking into account structurally higher financing burdens. Inflation, interest rates and financing costs have become deeply intertwined with conflict and instability, forming an integral part of the risk profile of doing business in these markets.

How exporters can adapt to challenges in conflict areas

Exporting to geopolitical sensitive and high-risk regions requires an integrated and robust approach. Dutch exporters can strengthen their position through the following strategies.

• Proactively identifying and managing risks: closely monitoring geopolitical developments and sanctions that may affect markets and supply chains.
  
• Diversifying supply chains: reducing dependence on a single region is essential. By identifying alternative suppliers and developing multiple logistics routes, companies improve resilience to disruptions such as trade barriers, political unrest or natural disasters.
• Strict compliance with sanctions and trade regulations: international trade is strengthened by transparency and compliance. Exporters should invest in expert teams and modern IT systems that track current sanctions regimes and legal requirements, ensuring all export activities remain fully compliant. This prevents legal consequences and reputational damage.
• Building strategic alliances and partnerships: cooperation with locally established firms and political allies strengthens market access and provides protection against geopolitical tensions. Exporters benefit from deeper market knowledge and improved access to infrastructure and legal systems.
• Developing flexibility and agility in operations: Exporters must be able to respond quickly to market changes, sanctions updates and logistical challenges. This requires flexible contracts, adaptable production and distribution models, and continuous scenario planning to enable timely adjustments without disrupting operations.
• Optimising financing options: exporters can strengthen their financial position by effectively using a wide range of financing instruments and facilities. These include credit lines from commercial banks, factoring and forfaiting, as well as guarantees and subsidies that reduce the risk of non-payment and liquidity issues. By choosing the right mix, companies increase the stability and continuity of their export activities, even in exceptional and high-risk markets.
• Developing flexibility and agility in business operations: specifically for Dutch exporters operating in politically and economically complex regions, Atradius DSB offers export credit insurance. These policies cover risks such as non-payment by foreign buyers and political unrest. As a result, Atradius DSB increases certainty for exporters and makes it easier to obtain bank financing, even in high-risk markets.
  

Conclusion: staying on course in geopolitical storms