Conflict Between Managers

Due to an error on my part, there was a misunderstanding between an employee from the in-country partner and my employer. The mistake resulted in a temporary loss of trust and in an escalation process to higher management. The severity of the incident was exaggerated as result of a lack of trust between the parties.
Fortunately, it is not a situation that can not be resolved among emotionally intelligent people.

The event could have resulted in an interesting phenomena that occurs more often than not: in a conflict between organizations, be that departments or companies, managers first reaction is to unconditionally support their people and go to battle against the other management or organization. The results can be disastrous.
For the perceived offending party, loss of face and discredit.
For the offended party, loss of time and credibility with the customer.

I happen to report to a seasoned and professional management team. I was asked to explain the situation from my point of view. I was asked to propose alternatives to my behaviour and to explore ways to handling the situation in a more effective manner.
Unfortunately, we have not had the opportunity nor the benefit to talk to the other side. At this point, my requests for conversation have gone unanswered prompting me to believe that there is something here that is more than meets the eye.

The end result is that the sales process is either not progressing or not taking place with the contribution of my company.

So what can a manager do in a case like this?

I propose mediation. Invite a third neutral party to call on the parties to air their differences.
The atmosphere of mistrust is typical of what Stephen R. Covey talks about in his latest book: The Speed of Trust. I won't tell you the lunch line. I urge you instead to check out Mr. Covey's website and read his book.