New Internationalist

It’s Democracy, Stupid

Issue 347

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THIS MONTH'S THEME
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Corporate influence / INTRODUCTION

It’s democracy, stupid
Katharine Ainger explains why corporate
lobbying has to be exposed.

New York, 1995. Exhausted government delegates gulp down coffee to help them work through the night on an international deal on climate change. One man, Don Pearlman, has been slipping negotiators of the oil-producing nations Kuwait and Saudi Arabia notes, still in his handwriting, that become their official country positions. Pearlman represents US law firm Patton, Boggs & Blow, whose clients include transnational corporations trying to kill any attempt to curb fossil fuel burning. He is so blatant that shocked government delegations complain. All lobbyists are told to leave the negotiating floor. Pearlman, bullish, refuses. He gets into a minor wrestling match of wills with a UN official, who threatens to have him forcibly removed from the chamber. Hard to comprehend that what this man does affects the lives of Tuvaluans forced to emigrate from their small island state by rising seas, or a family in East Anglia piling up the sandbags.

The activities of the corporate lobbyists inside major global meetings are rarely so visible.

For while most of us are aware that transnational corporations are the dominant institutional forces of our time, forming the centrepiece of contemporary capitalism, the way corporations actually shape global policy remains a mystery to most.

'The economic and political environment is still in the hands of governments. We need to give them a clear message. Time is short and we need to adjust quickly. The aim is to create shareholder value. The public and the governments have to understand this.' These were the words of Gyorgy Mosonyi, Chief Executive Officer of the Hungarian oil company MOL, at the 2000 Congress of the world's most powerful corporate lobby group, the International Chamber of Commerce. Globalization means there are more and more opportunities for corporations and their lobby groups to shape the rules by which we are governed.

Secrecy is their most powerful weapon. Very occasionally an NGO research group like Corporate Europe Observatory will receive leaked documents that reveal the inner workings of the corporate influence-peddlers. One recent such document showed financiers from Goldman Sachs, PricewaterhouseCoopers and other financiers in the high level 'LOTIS committee' which works closely with the British trade ministry to formulate trade policy, conspiring to counter the NGO campaign against GATS(General Agreement on Trade in Services). (On page 16 Greg Palast exposes how these rules can be used to override local and national laws.)

‘The economic and political environment is still in the hands of governments. We need to give them a clear message’

As the LOTIS case shows, states have willingly colluded in the process. For example, in the US on 26 September 2001 a Republican congressional aide sent an email to the nation's top lobbyists working for corporations. It said George W Bush's new 'regulatory tsar' John D Graham had 'asked me to convene key lobbyists to identify' regulations that business groups found overly burdensome. The 57 rules deal with health, safety, the environment, disclosure of toxic chemical use, water quality, food labelling, and medical leave. The story was only revealed after one of the lobbyists leaked it to The Washington Post.

This issue of the NI investigates the activities of some of these power-brokers, opening up specific instances of corporate politicking to much-needed scrutiny. Sunlight, after all, is the best of disinfectants.

What happened when the President of Venezuela annoyed big oil, the US government, and local business elites? Why are ordinary Argentinians bailing out international banks with their life savings? Who are the biggest corporate lobby groups? How do free trade rules undermine democracy? Why are corporations so keen on partnerships with the UN? And what on earth is George Dubya's papa doing working for a major arms trader making a mint off the War on Terror? You'll find answers to all these questions and more in the following pages.

A word of warning, though. Corporations exercise much of their power through sheer economic size - identifying specific instances of corporate-powerbroking at work can only hint at a wider systemic problem. And, as corporate researcher George Draffan points out: 'Activists seek to locate the 'mechanisms' of power, but power is not a machine. Power, the ability to make decisions and control resources, is found in the dynamics of the relationships between people.' This magazine attempts to focus on those relationships embodied in institutions such as the trade associations, lobby groups, think-tanks, and multilateral trade and development agencies, rather than individual companies. Breaking open the corporate lobby groups - fundamentally antidemocratic in purpose and intent - won't dismantle capitalist exploitation and environmental destruction. But it would make a great start.

Meanwhile, most current debate centres around whether corporations can be ethical.'Yes,' says a new generation of management gurus - and NGOs for that matter - coming onstream. They're updating the message of the man who dreamed up corporate globalization, Milton Friedman, who wrote in 1970: 'The corporation cannot be ethical, its only responsibility is to make a profit'. Many sincere people are furthering the debate about the environment within companies, while most of us have either at some point worked for, or know someone who works for a transnational. Very few are the kind of cigar-wielding corporate criminals of popular imagination, plotting to take over the world.

But the question over ethics miss the fundamental point, which is this: do we want power to decide how we organize economically for ourselves? In other words, do we want to urge corporations to be benign, or do we want to be free? The real question, then, is not one of ethics, but one of power. People throughout history have fought and died to reclaim that power. They called it 'democracy'.


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