United Nations and Transnational
Corporations: a deadly association
by Alejandro Teitelbaum, Transnational
www.tni.org/, April 4, 2007
The United Nations is failing in its duty
to control the abuses of transnational economic power, argues
Alejandro Teitelbaum. The recent report by John Ruggie, special
representative of the UN Secretary-General on business and human
rights, represents a setback in attempts to establish international
control over the activities of transnational corporations.
I. The United Nations Organisation (UN) was created in order to
keep the peace and defend human rights and dignity. Some important
contributions towards these aims have been made, although the
goal that it set itself has never been fully reached.
Over the last decade or so however, with
the disruption of the relative balance of international power,
the UN has begun to drift in a direction diametrically opposed
to its original aims.
We do not wish to address at the moment
the role which the Security Council plays in legitimating the
imperialist and warmongering policies of the United States and
its satellites, for example right now, as they prepare the ground
for aggression against Iran.
Instead we want to discuss the way in
which various organs of the United Nations system act as instruments
of the international economic power embodied in transnational
corporations. By this we don't mean the institutions that are
specifically concerned with economic power, such as the International
Monetary Fund, the World Bank and the World Trade Organisation,
but rather other bodies whose responsibilities relate to human,
civil, political, economic, social and cultural rights.
II. With the break-up of the bipolar power
balance at the beginning of the 1990s, the United Nations began
to disband or neutralise those organs which had been attempting
to establish some control over the activities of transnational
corporations. One such organ was the Commission on Transnational
Corporations, created by the Economic and Social Council in 1974.
In 1994 the same Economic and Social Council decided that it should
be reconstituted as a Commission of the Trade and Development
Council of the United Nations Conference on Trade and Development
(UNCTAD), taking into account, says the resolution, of the "change
of orientation" of the commission. This change consisted
of abandoning attempts to establish control over transnational
corporations and instead concern itself with the "contribution
of transnationals to growth and development".
But the ever-increasing abuses of transnational
economic power, committed in the name of the expansion of the
"market economy" at the global scale, provoked a reaction
in public opinion which was also reflected within certain UN bodies.
For example, in 2004, after several years
of work, a Working Group of the Sub-Commission for Human Rights
finished a project establishing international standards with a
view to preventing and eventually penalising activities of transnational
corporations that contravene human rights. The project, despite
being fairly tame, was vigorously rejected by international organisations
representing big business, which demanded its withdrawal.
The overseeing body of the Sub-Commission,
the now-defunct Commission on Human Rights, yielded unanimously
to the demands of transnational corporations to bury the Sub-Commission's
Project. By a vast majority (49 votes out of 53) they also asked
the Secretary General of the UN to appoint a special rapporteur
to continue addressing the issue of transnational corporations.
The United States and Australia voted against, maintaining that
in no way should the commission continue dealing with transnational
corporations, not even by means of a special rapporteur designated
by the Secretary General. South Africa also voted against, and
Burkina Faso abstained.
The then Secretary General Kofi Annan
nominated his principal advisor in the Global Compact, John Ruggie,
as his special representative to study transnational corporations.
The Global Compact is the official association linking the UN
and large transnational corporations. Ruggie published a preliminary
report in 2006 and then in February 2007 presented his second
report to the new Human Rights Council.
The Commission's decision and the choice
of Ruggie represented one more setback to attempts to establish
international control over the activities of transnational corporations.
The close collaboration with transnational
corporations is institutionalised within the United Nations via
the Global Compact, an alliance between the Secretariat of the
UN and large transnational corporations, many of which have long
histories of human rights violations and corruption. The ideology
which inspired the Global Compact was clearly expressed by the
UN Secretary-General in a 1998 report to the General Assembly,
entitled "Entrepreneurship and Privatisation for Economic
Growth and Sustainable Development". The Secretary-General
said in this report that "deregulation has become the watchword
for government reforms in all countries, both developed and developing",
and advocated the sale of public corporations entrusting "the
ownership and management to investors who have the necessary experience
and capacity to improve productivity, even though this would sometimes
mean selling assets to foreign buyers".
III. The report that Ruggie recently presented
to the Human Rights Council of the United Nations was faithful
to the ideology of the Global Compact, with its first paragraph
being a profession of faith in the virtues of the market. According
to the author, the prerequisites for this are: the right to property
(without adding any commentary about the social function of this),
the fulfilment of contracts, competition (the rapporteur judiciously
abstained from adding the adjective "free" because it
is too widely accepted that free competition does not exist in
a world dominated by monopolies and oligopolies) and the unhindered
circulation of information (also nonexistent as all forms of information
are monopolised and controlled by large multinational corporations).
In paragraph 2, Ruggie states that global
markets have expanded significantly in recent decades as a result
of commercial agreements, bilateral investment treaties and, at
a national level, privatisations and "liberalisation".
He continues by saying that the rights of transnational corporations
have increasingly become enshrined in national legislation and
are better defended in obligatory arbitrations before international
tribunals, which is undoubtedly true.
The report makes no mention of the disastrous
consequences for the world's peoples that accompany such commercial
agreements, bilateral treaties, privatisation and liberalisation
policies and obligatory international arbitrations, especially
for the most economically vulnerable sectors in peripheral countries.
Ruggie continues by stating that "globalisation"
has contributed to an impressive reduction in poverty levels in
key countries that are emerging into the market economy, and a
generally higher standard of living in the industrialised world.
This assessment of the report's author
totally contradicts not only the facts and statistics, but also
the near unanimous opinion of specialists, who maintain that alongside
economic growth social inequality has vastly increased. A tiny
minority hoard a great and growing proportion of the fruits of
human labour, whilst a good part of the population is not able
to meet even its basic needs. This is true not only in peripheral
countries, but also in the industrialised world. Even the World
Bank, tireless advocate of the disastrous economic polices which
dominate the global stage, has recognised that its policies have
not managed to reduce the levels of poverty in countries which
receive its credits.
Ruggie also forgets that international
economic power, as embodied by large multinational corporations,
is not content with merely accentuating social inequality and
condemning large sectors of the world's population to a life of
poverty. The most powerful, in addition to backing coups d'etat,
aiding dictators and financing paramilitaries and anti-union death
squads, play a determining role in political decisions of ruling
elites which go contrary to human rights, both at the nation state
level and in regional and international organisations.
A serious evaluation of the role of transnational
corporations, unlike that undertaken by Ruggie, should take all
these aspects of their behaviour into account. It also should
not ignore the close relationship that exists between the warmongering,
anti-ecological and anti-human policies of the United States (the
country where a large part of the biggest transnational corporations
are based), and the omnipresence of representatives of the petroleum-military-industrial
complex at the highest levels of its government.
It is worth noting that Ruggie's report
does not make reference to the heavy influence which transnational
corporations have on the United Nations system. Institutionalised
via the Global Compact, this is also exerted through private funding
of UN programmes, projects, organs and organisations including
the United Nations High Commission for Human Rights, which receives
two-thirds of its funding from the voluntary donations of nation
states and private institutions.
Also absent from Ruggie's report is any
mention of the influence that transnational corporations have
over some aspects of so-called "civil society", for
example over some important non-governmental organisations.
It is therefore hardly surprising that
Ruggie concludes his report by adopting the focus "suggested"
by the very same transnational corporations, namely that they
should not be placed under any obligations by international law.
Instead the most appropriate course of action should be to reach
agreements between corporations, the United Nations (through the
Global Compact) and "civil society" to establish "declarations
of good intent", forms of soft law, codes of contact etc.,
whose implementation is to be controlled by the corporations themselves
alongside representatives of "civil society".
Ruggie's report is consistent not only
with the now defunct Human Rights Commission, which shelved the
Sub-Commission's project to create international standards, but
also with the more general orientation of the United Nations towards
the serious economic, political and social problems represented
by the disproportionate power of large transnational corporations.
The deadly association between the United
Nations and transnational corporations is clearly shown in the
attitude displayed by the UN to the tragedy which has been ravaging
the Democratic Republic of Congo (DRC).
IV. The January 2006 edition of the prestigious
British medical Journal The Lancet points out that the ten years
of civil war in the Democratic Republic of Congo has cost between
3.5 and 4.5 million lives. That makes it the greatest humanitarian
catastrophe since the Second World War.
It is universally recognised that the
backdrop to this tragedy is the appropriation of strategic minerals
which abound in the Congo: diamonds, gold, columbite-tantalite
(coltan), cobalt, etc. It is estimated that the DRC has about
80 per cent of the world's coltan reserves. The special properties
of coltan account for its widespread use in the electronics industry,
especially in the making of mobile telephones (one billion of
which were sold globally in 2006).
Even the Security Council, in its resolution
1493 dated 28 July 2003, declared that it "Condemns categorically
the illegal exploitation of the natural resources and other sources
of wealth of the Democratic Republic of the Congo and expresses
its intention to consider means that could be used to end it."
A report of the Group of Experts to the
Security Council Committee for the Democratic Republic of Congo,
dated November 2006, analyses in detail the connection between
armed groups and the illegal exploitation of natural resources,
and refers to a previous report which spoke of "viable and
effective measures which the Security Council could impose in
order to impede the illegal exploitation of natural resources
in order to finance armed groups and militias in the eastern part
of the Democratic Republic of Congo".
In its Recommendations Chapter the report
states: "No counterpart whose views were solicited by the
Group of Experts thought it advisable to sanction the importation
of specific commodities originating in the Democratic Republic
of the Congo. Objections were raised concerning:
(a) The inability to enforce such sanctions; (b) The risk of increasing
the price of the sanctioned commodity and thus rewarding the embargo
buster; (c) Probable economic effects, variously described as
"serious" or "probably leading to a new civil war";
and (d) The negative repercussion on the nascent investment climate
in the country."
UN bodies that deal with the DRC, such
as the Group of Experts created by a decision of the Security
Council, are completely partial in their approach to the problem.
They refer only to the illegal exploitation of natural resources
in order to finance armed groups and mention only certain local
companies that are involved in this.
No mention whatsoever is made, however,
of large transnational mining companies or the transnational electronics
industry that directly or indirectly promote of the current situation,
and end users and principal beneficiaries of the minerals that
have been extracted from the DRC at the cost of an overwhelming
massacre that has already lasted for ten years.
A document produced by the NGO Human Rights
Watch points out the involvement of AngloGold Ashanti, a corporation
headquartered in South Africa and Metalor, a Swedish firm. It
fails to note, however, that AngloGold Ashanti is linked to Anglo-American,
with head offices in Johannesburg and London, and to Barrick Gold
Corporation, whose head office is in Canada. Anglo-American control
around 45 per cent of the shares of DeBeers, the company which
has a near monopoly over the global diamond industry. Amongst
the mining companies associated with Barrick Gold is Adastra Mining,
which has bought a diamond concession along the Congo-Angola border
from Belgian mercenary firm International Defense and Security
(1998). They are also currently developing cobalt and copper concessions
in the Congolese province of Katanga (Shaba). Adastra is a member
of the Corporate Council on Africa (a body made up of large companies
operating in Africa) together with Goodworks, Halliburton, Chevron-Texaco,
Northrop, Grumman, GE, Boeing, Raytheon and Bechtel, etc.
Major consumers of the coltan mined in
the DRC are, amongst others: Sony, Microsoft, Hewlett-Packard,
IBM, Nokia, Intel Lucent, Motorola, Ericsson, Siemens, Hitachi,
One of the leaders of Anglo-American,
the mining transnational involved in the Congolese drama, is Sir
Mark Moody-Stuart. He is at the same time a notable member of
the Global Compact.
It is therefore hardly surprising that
in the Recommendations of the Group of Experts, the opinion of
these "counterparts" is reflected, who consider it inadvisable
to impose sanctions on the importation of these minerals because
it could cause a price increase that could have negative repercussions
for the "emergent investment environment of the country".
The group also says: "The Group's
consultations with a broad range of stakeholders suggest that
these problems are best addressed by promoting law-abiding industries
and responsible Government oversight."
The United Nations and large transnational
corporations have the same priorities in the DRC: continuing exports
of strategic minerals at low prices, to not discourage potential
investors, and to attempt to create a legal framework for the
plunder of the natural resources of the DRC by transnational corporations
in the name of promoting law-abiding industries and responsible
Government oversight. Meanwhile the human rights of the Congolese
people, including the basic right to life, will have to wait until
Translation by Kate Wilson
United Nations page