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Claire Provost and Matt Kennard display all the qualities investigative journalists need – passion, determination, courage, and a flair for compressing detail into a compelling narrative. On fixed-term British university fellowships, they travelled the world, refusing to be deterred and meticulously recording what they saw – and heard, from global business leaders to rural women who as children had seen their parents shot in cold blood by paramilitaries in the pay of world-famous corporates aided by World Bank money.
With excellent short introductions and telling examples, the authors argue that the world’s democracies have been overrun by corporate power, which – in a plan devised in the 1920s – creates its own institutions, including courts, on a global scale to protect corporate capitalism from almost all opposition.
The main court involved is the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), which opened in 1966, despite 23 countries’ strong objections to the privileged position that it would give to corporates; ICSID agreements between corporates and states are even called treaties. By 2021, the tribunal was getting one new case each week, with most brought by corporates against developing countries over resources, agriculture, and transport.
Sometimes, states win. In 2009, the Pacific Rim firm filed a case against El Salvador for blocking its operations; El Salvador argued that the cyanide and mercury used in gold-mining would cause further harm in a country already burdened by deforestation, natural disasters, and contaminated surface water. In 2016, the court awarded El Salvador $8 million, but the case cost $12 million. Significantly, the matter was publicised in El Salvador. Unlike courts in democracies, ICSID is confidential; its ‘treaties’ often contain clauses which remain in force long after governments revoke the treaties.
No state is immune. In 2009, the German government gave way to the Swedish electricity company Vattenfall, which claimed that its profits would be unfairly reduced by Hamburg city restrictions on water-outflow temperature from a Vattenfall plant into the River Elbe. The firm dropped its claim in return for weaker regulations.
Development aid to corporates
Even international aid is a business in which official development aid goes mainly to corporates; the World Bank’s International Finance Corporation (IFC) is a profit-driven investment bank funding larger corporates’ global operations. In 2014, receiving countries got $9.5 billion for their own use, out of a global aid total of $165 billion. Under rules made by the Organisation for Economic Cooperation and Development (OECD), even interest-bearing loans or debt relief count as aid, as do scholarships for study in donor countries.
Aid has often made things worse, not better. In Manila, 15 years after IFC-driven water privatisation, hundreds of communities lacked safe water, and connection prices were beyond ordinary people’s reach. Globally, aid funders have put about $20 billion into luxury hotels, beach resorts, shopping malls, healthcare companies which only the rich can afford, and supermarket chains with dubious records on conditions and workers’ rights. The German Lidl chain, aided by the IFC and the European Bank for Reconstruction and Development (EBRD), had prices averaging 15 per cent more than those in other Polish supermarkets, let alone street markets. In Ukraine, farmers were intimidated, often by goons, into signing long-term leases with huge agribusinesses like the IFC-aided Mironovsky Hilboproduct (MHP). The locals’ complaints to the firm and to local authorities about ‘overwhelming’ stench and noise from an MHP poultry plant were ignored. Aid looks only like welfare handouts for global corporates.
The next stage involves insulation from states’ jurisdiction. In Special Economic Zones (SEZs), laws on workers’ rights and other standards do not apply. A lawyer working in this field says the result is ‘sweatshops’ - as the authors saw in Kandla, one of India’s 500-plus SEZs. Many corporates own SEZs outright and have their own police forces; Myanmarese farmers have ended up destitute after being thrown off functioning farms to make space for SEZs, and in Cambodia 95 per cent of SEZ staff are women, who some international institutions say are ‘more “docile” and easier to control.’ Furthemore, when workers demand better, corporates move elsewhere. In 2014, the SEZ workforce numbered 66 million. SEZs also operate in non-democracies like China and Cuba; in Guangzhou, provincial officials got the police to force workers back to their factories in the Shenzhen SEZ rather than address complaints about conditions and unpaid wages.
One response consists of private jurisdictions. In India’s ‘quasi-totalitarian’ Lavasa – a US branding firm invented the name – the management company makes the rules; one US private city is on Mormon church land. This has precedents. In 1908, Belgium gave a Lever brother 67,800 square km – four times the area of Belgium - in the Congo, to run as he wished (that included forced labour and brutal punishments).
Corporate armies
Some corporates even have armies. In Colombia’s civil war, the Chiquita company admitted paying $1.7 million to ultra-right paramilitaries notorious for killing peasants and dissidents; the Dole and Del Monte firms also paid such groups. In Honduras, the Dinant company, which has its own paramilitary force, received $15 million in IFC loans. Unsurprisingly, several corporates work under shell or holding companies in tax havens like Mauritius.
For their part, private firms increasingly perform public security functions, with staff numbering about 20 million across 70 countries in 2011; a researcher says increasing inequality means the rich ‘secede’ from society. In Israel-Palestine, private security guards at the notorious checkpoints, wearing uniforms very similar to those of Israel’s army, use military weapons, often killing unarmed Palestinians and giving feedback to arms manufacturers. In the US, privatised plants hold nuclear waste; at Carlsbad, New Mexico in 2014, a drum containing radioactive waste burst open. In 2000, a wildfire near the (now Bechtel-led) Los Alamos facility was diverted, and the neighbouring Santa Clara Pueblo indigenous people lost 80 per cent of their forested land.
Public authorities, nevertheless, must agree to all this, and the authors repeatedly find that the politicians know what they are signing. Yet, resistance does work. In London’s dockside area, a public campaign apparently embarrassed corporates enough not to start in a publicly-owned private space which had been approved without public consultation, where they would have got ‘huge inducements’. Public controversy also ended a private-city plan in the US state of Vermont. In Germany, 170 municipalities had bought back their energy infrastructure by 2010. In the UK, public anger is growing over the colossal volumes of raw sewage with which the private water companies are choking British waterways (Scottish water supply is in public hands).
The authors conclude with a bleak epilogue about their own area, the media, for protecting the powerful at the expense of the rest. This complements their account of relentless planning by economists and bankers like Eugene Staley, Lewis Powell, Wolfgang Abs, and Eugene Black (all extreme anti-planning libertarians), for a total global corporate system. Going by this book, the major corporates are indifferent to states’ political systems provided they get what they want. Their decades-long takeover strategy makes any Soviet five-year plan look like a hasty sketch on the back of an envelope.
(The reviewer is a former Visiting Professor at IIT Madras)
Check out the book on Amazon here
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