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Transnational Strategies

by Nicholas Hildyard

first published 1 June 1996

Summary

Transnational companies develop extensive networks so they can fashion the political infrastructure that permits them to capture subsidies, manage demand, create new markets, centralize power, enclose new environments, and evade, digest and regulate resistance. This talk was given at the "Forum Against the G-7: quelles alternatives à la globalisation?" held in Lyon, France.

Contents

Introduction

It is many, many centuries now since environmental degradation and social injustice could be blamed solely on local actors -- though many still seek to do so.

Colonialism, the development era and now globalisation have so enmeshed local power structures into the grids of power that serve the interests of the most powerful national and international actors, that whatever problem one seeks to explain, sooner or later one is forced to look beyond the local to the national and, thence, the global.

Whether it is unemployment, deforestation, ethnic violence, racism, the oppression of women, militarism or famines, an explanation that ignores the global dimension is likely to do violence to history. It is also likely to render invisible the real villains of the piece.

Today I want to talk about the global grids of power in which local, national and transnational actors increasingly operate. And about their impacts on the local.

I want to talk in particular about transnationals. By that I mean more than simply transnational companies. I mean those at the local, national and international level who participate in and benefit from the transnational networks without which corporate executives, IMF number crunchers, global managers and the like would be unable to operate. Networks which enable transnational actors to protect and expand their economy and to deepen and extend their global reach against a constant background of resistance. And I want to talk about how they seek to contain that resistance.

Networks of Power

If transnationals have one thing in common, it is their pragmatism. Large as such industrial giants as Coca Cola, Monsanto, Bechtel, Mobil and Ford may be, they cannot by themselves open up the far flung sites of production and consumption which they seek to exploit. Nor would they be able to capture the subsidies they require to drive lesser fish out of business. Or foster a policy environment favourable to their interests. Nor would they be able to control resistance.

They need allies. And they are pragmatic about who they choose to do business with. During the colonial era, it made sense for TNCs to develop strong links with the treasuries and military in their home countries. As the end of the colonial era loomed, links with the colonial authorities were played down and the transnationals began to seek out new allies within the independence movements. When newly independent countries began to place restrictions on foreign ownership, the wiliest TNCs went underground, working through associate companies, whilst simultaneously lobbying and supporting those -- not least their own home governments -- who would impose (witness Chile) a more "sympathetic" policy environment. With the debt crisis, still other allies have been cultivated -- not only among southern elites but also within the multinational development banks -- in order to exploit the weak position of Southern governments and force through programmes that reopen Southern economies to northern capital.

There is then nothing "natural" about the economic hegemony that transnationals enjoy. It has not come about as a result of the unfolding of some mystical historical destiny.

Nor has it come about as a result of some master plan hatched up in transnational corporate boardrooms or in think tanks like the Trilateral Commission. Certainly, transnationals share common interests. Certainly they meet together and share a common culture. Certainly they join with others -- even their rivals --when they perceive they can gain from doing so-- be to share research costs, to monopolise markets, to increase their clout within international fora or to place pressure on individual national government. But transnationals are not a homogenous blob. Their rivalries will always come in the way of any global conspiracy. And the alliances that emerge when they collaborate are always contingent, fragile and eminently pragmatic.

It is the webs created by these numerous, ad hoc and constantly changing alliances -- at the national, international and local level -- that now bind industrialists to government officials, politicians to individual companies, companies to the military, the military to the state, the state to aid agencies, aid agencies to corporations, corporations to academia, academia to regulatory agencies, and regulatory agencies to industry.

And it is the existence of such networks that enable transnationals to fashion the political infrastructure that permits them to capture subsidies, manage demand, create new markets, centralize power, enclose new environments, and evade, digest and regulate resistance.

A Web of Actors1

Consultant companies, for example, help identify new market opportunities. They propose, plan and design new products and projects. They give "objectivity" to programmes which TNCs and other transnational actors would like to implement. They help to leverage subsidies and provide a link to national actors -- from government officials to potential business partners.

Industry associations further grease the subsidy mill, lobbying governments to come up with tax-breaks and other incentives, influencing environmental an labour regulations and guarding the industry's image from being tarnished by opponents, real or imaginary.

Bilateral aid agencies, though often driven by bureaucratic agendas that are at odds with those of TNCs, provide a useful source of free diplomats to ease the entry of TNCs into countries where they are unfamiliar. They are also an accessible -- and easily pressured -- source of public money that can be laundered through consultants and technical services to support the private sector. Finland's FINIDA and Sweden's SIDA, for example, have bankrolled Finnish and Swedish pulp and paper firms in planning plantations pulp mills in countries from Thailand to Nepal and Vietnam.

Other national agencies, such as Export Credit Agencies, are constantly on the look out for new outlets for the goods produced in their countries -- and ever willing to stump up concessional credits and guarantees if they help boost export figures.

A then, of course, there are the multilateral development banks, an ever handy source of yet further subsidies, advice and political muscle. In the North, too, the Bank has had to manipulate a role for itself. Over half the money lent by the International Development Association, for example, goes to the world's 10 richest nations as payments for goods and services. In the early 1990s alone, Britain received $285 million -- more than went to Bangladesh. In addition, the Bank offers massive indirect subsidies in the form of business opportunities identified through its country appraisal reports and through the research it finances.

And of course there is the "private sector-friendly" environment that the Bank and its partner organisation the IMF has helped to create through its structural adjustment programmes. Regulations have been stripped away. Tiresome tariffs removed. Barriers to investment lifted -- as, more important still, have barriers to removing investment. And state enterprises privatised, enabling TNCS to buy up ready-to-use enterprises, often competitors, which can then be integrated into their operations.

What we have in these networks is effectively a "Club of Interests". Business people know where to turn when they need help in oiling a tricky deal. And those with expertise in oiling a deal know where they can go to for clients. They swap contacts, attend each others meetings, chat about potential deals in the same nightclubs and bars, go to the same five star hotels, hang out at the same parties. It is a buddy-buddy system that seals the fate of billions.

Let's Form an Institute

And where existing networks do not exist to tackle the problem at hand, transnationals (like any other interest group) are adept at creating new ones.

When, in the early 1990s, pressure from popular movements around the world began to interfere with industry's "freedom" to degrade other peoples' homes, forests, rivers and fishing grounds, the more progressive TNCs (and never make the mistake of viewing TNCs as dinosaurs: they are always ahead of the pack) set up the Business Council for Sustainable Development. Not only did it prove instrumental in "persuading" governments at the Earth Summit not to regulate TNCs (or even mention their activities in the final text of Agenda 21) but since then it has served to expand markets for pollution control equipment and other technical fixes to a deeply political problem.

Likewise, when the project for greater economic integration in Europe appeared to be faltering, key figures in the European Commission and in the biggest European-based multinationals combined to set up a lobbying group called the European Round Table to speed up the process.

In at the start, the ERT gave Europe's corporate giants a key opportunity to shape the process of economic integration. Indeed, the group's co-founders, Wisse Dekker of Philips and Umberto Agnelli of FIAT, actually drafted the original proposal for a Single Market.

Not surprisingly, the European Union that has emerged from the Single Market is a European Union driven by business interests. And not just any business interests. The interests that it promotes are those which aspire to pan-European and ultimately global reach.

It is a Union in which the rules of trade have been rewritten to create "a level playing field" for those whose commercial interests demand untrammelled access to markets within Europe and abroad. A Union in which those who rely on local markets -- those who serve local communities and who are accountable to local people -- find the playing field deliberately inclined against them. A Union in which the interests of health, the environment and ordinary people have been subordinated to the interests of large corporations. A Union which has given multinational business interests what they have long wanted: convivial standards and the freedom to roam Europe at will. A "Union" that has split into a core and a periphery.

And right at the centre of that core remains the ERT, still working behind the scenes to ensure that business interests are listened to and taken seriously. When it brings out a new report, whole passages are simply reproduced in subsequent Commission policy papers. It is a group that few in the corridors of power can ignore. And that alone ensures what the ERT most seeks -- "access".

"Access" means -- and I quote the groups' chief executive -- "being able to phone Helmut Kohl and recommend that he read a report." It means "John Major phoning to thank the ERT for its viewpoints." It means "having lunch with the Swedish Prime Minister just prior to the Swedish decision to apply for EC membership."2

Capturing the Local

But having John Major read one's reports does not translate the reports into policy. Nor does having a government pronounce a policy mean very much unless it can implemented. The ERT's plans for a TransEuropean Network of new superhighways may now have been adopted by the Commission but they mean nothing if the roads don't get built.

Hence the constant preoccupation of transnationals with trying to extend their networks out of the corridors of power and into the streets, fields, factories, high streets, housing estates, tenements and villages where people live.

They know full well that to operate effectively at the national and international level, they must capture the local. For to lose control over the local is to become an outsider. It is to be bereft of allies and insiders who can help master and manipulate local patterns of control in ways that are friendly to transnational interests.

Indeed, historically, the creation of empires and states, business conglomerates and multilateral institutions -- whether in pre-colonial times or in the modern era -- has only ever been possible through the dismantling of local communities and harnessing the fragments to build up new economic and social patterns that are responsive to the interests of a dominant minority.

The modern nation state, for example, has been built only by stripping power and control from commons regimes and creating structures of governance from which the great mass of humanity (particularly women) are excluded.

Likewise, the market economy has expanded primarily by enabling state and commercial interests to gain control of territory that has traditionally been cherished by others, and by transforming that territory -- together with its people -- into resources.

Only in this way has it been possible to free up the commons for the industrial economy. To replace traditional with modern agriculture. And to convert peasants into labour for a global economy.

Historically, that process of "enclosure" has more often than not been carried out by force. Today, transnationals are more sophisticated in how they attempt to capture the local and manipulate its loyalties.

One strategy is to camouflage their operations. It is increasingly common for transnational to insert themselves into local political structures as apparent insiders. Where possible, large corporate giants are abandoning Fordist production lines in favour of modular production networks that allow widely dispersed, small, seemingly independent local firms to produce under their direction. In other cases, TNCs may deliberately appoint local nationals to manage their subsidiaries abroad -- a policy followed by the British mining giant RTZ.

Either way, such "decentralised" corporate structures have enabled numerous companies to present themselves as truly local companies, defending local jobs and local interests. The advantages have been huge. RTZ, for example, has routinely been able to cast opponents as "outsiders" who, unlike the company, do not have the community's best interests at heart.

Another strategy useful for capturing the local is the "good citizen" ploy. Local loyalties may be secured, for example, through funding local institutions -- be it through building schools, through giving grants to local NGOs (even hostile ones), through advertising in local newspapers (always useful: the advertising revenue ensures friendly editorials), through building roads and hospitals, or through generous backhanders to local wheelers and dealers.

Corporate Largesse

Where a market needs to be built up at the local level, corporate largesse may be useful in shaping the public's perceptions of new technologies and edging out competitors. Here the target is often not local communities per se but rather outsiders whose influence on research and training seeps down to the local level through schools and other institutions.

There are few agricultural research institutions in either Europe or the US, for example, which do not now rely to some extent on agrochemical or farm machinery companies for funding.

And as the pro-industry orientation of research filters through into the curricula of training colleges and from there into agricultural extension programmes, so the products sold by agrochemical corporations rapidly become part and parcel of the agricultural cycle.

A political community emerges in which farmers, researchers, industry personnel all share a common background and approach. This helps to maximise the chances that decisions made in corporate boardrooms and government ministries eventually reach down into the field -- and that what happens in the field does not impinge too greatly on the activities of the agrochemical industry. For it is those same farmers, researchers and industry personnel who are invited on to the committees that regulate the agrochemical companies.

A variation on that strategy is the "cuckoo in the nest" scam used by the World Bank to build up a market for its services. During its early years, for example, the Bank found itself with few clients and fewer projects. The Bank's response was to pour money into "institution building'", setting up Bank-financed state agencies that owed their existence to the Bank and would therefore respond to its proddings. In Thailand alone, $4.4 billion dollars went into establishing a string of hugely powerful state agencies -- from EGAT, the state electricity authority, to the Industrial Finance Corporation of Thailand.

And to ensure that such institutions were staffed with people who shared the Bank's values, the Bank established its own training centre, the Economic Development Institute. By 1971, more than 1,300 officials had passed through the EDI, several of whom subsequently became Prime Ministers or chief economic ministers.

This "entryism" has not only generated projects which justify the Bank's existence. It has also provided a political base for the Bank within borrowing countries, which it can use to overcome opposition to its policies.

When, for example, the Marcos regime in the Philippines refused to accept an IMF structural adjustment programme in the late 1970s, the Bank turned to its allies in the Ministry of Industry and Finance in order to bypass factions within the Central Bank that were opposed to opening up domestic markets to foreign imports.

Containing Challenges

Needless to say, the rise of transnationals and their increasing dominance has never gone unchallenged. Not surprisingly, industry and government alike show a persistent and pragmatic preoccupation with containing resistance and, where possible, turning it to their advantage.

In some cases, a community's will to resist may be blunted by bribing key individuals with money, land, promotion or promises of jobs and higher living standards. If that fails, opponents may be harassed or threatened or simply removed from the scene. Witness Ken Saro Wiwa and the eight others hanged to ease Shell's operations in Nigeria.

In other cases, transnationals may be able to use the resistance to further their own ends. Popular struggles for land reform may, in the hands of the World Bank, be turned into programmes to promote contract farming, thus providing transnationals with a dependent labour force which takes all the risks of production.

Or again, popular demands to cease environmentally destructive practices may be turned into programmes that further TNC objectives, creating new markets and new forms of control.

Underpinning Agenda 21, for example, is the view that environmental and social problems are primarily the result of insufficient capital (solution: increase Northern investment in the south); outdated technology (solution: open up the south to northern technologies); a lack of expertise (solution: bring in northern-educated managers and experts); and faltering economic growth (solution: push for an economic recovery in the North).

AstroTurf

But "many forms of resistance are much more difficult to deal with. No corporation, faced with co-ordinated, publicly-visible opposition to its products around the world can buy it off everywhere as it arises or smash it completely [through terror]."3

Rather it "must use its networks actively to colonize the society of such resisters".4

PR companies are now widely used to monitor industry critics by infiltrating their meetings (often in the guise of "housewives") or posing as journalists to gain previews of hostile research.

Industry-retained PR firms are also being used to keep files on activists, their leadership, their methods of operation, their funding sources and so on.

Funding of opposition groups is being used for the same ends. Funding means reports. It brings the possibility of a place on the Board. It enables the corporation to monitor its opponents -- and gives it access to key decision makers.

In the case of environmental resistance, another fast growing practice is to set up "fake" grassroots groups with a pro-industry agenda. In PR-speak, "Astro-turf" groups.

Through such groups, industry is able to undermine the claims of opponents by claiming a popular mandate for its own position.

Companies are also mobilizing their own employees, former employees and customers into effective corporate support groups. In the US, companies seeking to pressurise congressional leaders have even issued their workers with the text of letters they wish to be sent to congressional representatives.

Divide and Rule

Other tactics include cultivating opponents as part of a wider strategy of divide and rule.

The US public relations firm Mongoven, Biscoe and Duchin, for example, divides opponents into four categories: "radicals", "opportunists", "idealists" and "realists"

"Opportunists" are seen as relatively easy to deal with. All that is needed is to give them "the perception of a partial victory" so that it looks good on their CVs.

"Idealists" are harder. They want to change the world. So the tactic is cast doubt on the ethics of their position. They can then be "educated" into a more "realistic" position.

The so-called "realists", meanwhile, are seen as a piece of cake. They should, quote, "always receive the highest priority in any strategy dealing with a public policy issue."

Often inexperienced in the workings of power, they are particularly susceptible to industry's claim to be the "only show in town". For them the "real world" is the corporate world. They are already primed for what they see an the inevitable "trade off".

The hardest group -- and the one which industry is most fearful of -- is that of the "radicals". Their belief, quote, that "individuals and local groups should have direct power over industry" makes it "impossible to predict with any certainty what standards will be deemed acceptable."

The strategy is clear. Isolate the radical. Cultivate and educate the idealists into becoming realists. And co-opt the realists into agreeing with what industry had already decided, leaving the radicals isolated.

Power or Powers

I have used that example because I think it has a number of important lessons for those who would challenge the power of transnationalists-- whether in the MDBs, in corporations or in the European Commission.

The first is that for all their economic and institutional power, there are many other different types of power which the transnationals do not possess.

They are not all powerful. That is why they need to monitor the opposition.

They don't have the power to ensure that they act as a block.

They don't have the power to prevent competing ideas

They don't have power to control cultural tastes and values -- much as they would like to

They are not part of the social networks that enable local communities to organize against a factory or a road

They cannot control mobilization based on face-to-face conversations in dialects central actors find utterly impenetrable.

And because they don't have those powers, the "realists" perception of the world is one that need not be entertained. Power is not some blob that some people (the TNCs) possess and the rest of us lack.

Power is something we all have. Indeed the last thing industry and government assume is that the rest of us are "powerless".

On the contrary, they know that ordinary people are constantly acting in ways they cannot control. And they know that they are extremely vulnerable to the type of grassroots organizing that has blocked the opening up of coastal fisheries to industrial trawlers in India; that has blocked road schemes in the UK; that has forced industry in the US to stop landfilling toxic wastes; and that has put Cargil, Pepsi, Kentucky Fried Chicken and others on the defensive in India.

Alliances

There is one last point. We operate in an increasingly murky world. Who then do we make alliances with?

It is not enough to seek out those actors who claim to represent the "people". Or to be concerned about the environment.

In a world of Astroturf groups and fragmentation, it is not enough to simply look for expressed "common concerns". Everyone from Shell Oil to neofascist intellectuals now talk the language of "empowerment", "community", "environment" and "participation".

It is necessary to look beyond the slogans to the politics of those who espouse them. And to build up relationships of trust with those whose politics we share.

For my part I am willing to make common cause with those whose politics, like mine, are based on a rejection of all forms of oppression. With those who rejects racism. Who reject chauvinism. Who rejects patriarchy. Who reject the right of any one individual to dominate another. And who insists on the rights of local communities to control their own resources through their own institutions and to define themselves -- not to be defined by others.

And if I am here at this Forum, it is because I hope to meet others of a like mind. And finally I want to talk about reclaiming political and economic power. I want to talk about democracy.

References

1 This section is drawn substantially from Lohmann, L., "Pulp, paper and Power: How an Industry Reshapes its Social Environment", 1995.

2 Quoted in Doherty, A. and Hoedeman, O, "Misshaping Europe: The European Round Table of Industrialists", The Ecologist, Vol. 24, July/August 1994.

3 This section is drawn substantially from Lohmann, L. op cit 1, and PR Watch, www.prwatch.org

4 Ibid.