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Click here to subscribe to the print edition. [image, unknown] new internationalist 112[image, unknown] [image, unknown] [image, unknown] June 1982[image, unknown] Click here to search the mega index.

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[image, unknown] PHARMACEUTICALS[image, unknown]

Multinational backs down

Lomotil advert. LAST June we reported on a campaign to stop US pharmaceutical giant Searle promoting the anti-diarrhoeal drug Lomotil for Third World infants. According to the British Social Audit, Lomotil does nothing for diarrhoea except ‘stop the stuff coming out’, leaving untreated the infection that caused it and masking potentially fatal fluid losses.

Lomotil is at best useless as a cure (the WHO says it has ‘no value’) and at worst poisonous to young children even in relatively small doses. ‘This is not an innocuous drug,’ warns the US Food and Drug Administration. ‘Dosage recommendations should be strictly adhered to, especially in children’. Yet Lomotil is sold over the counter in many developing countries and recommended by Searle for infants as young as three months old.

Claiming that ‘you can take it anywhere’, advertising leaflets circulated exclusively in the Third World boast that Lomotil was used by astronauts of the Apollo moon flight and was taken on the 1975 British Everest expedition. While conceding that both weightless and deer-frozen diarrhoeas are undesirable, Social Audit maintains that promotion to Third World countries is downright irresponsible.

In their new book Drug Diplomacy* Social Audit give a blow-by-blow account of their efforts to get Searle to take responsibility for their product The main thrust of the book — apart from a carefully-documented restatement of Lomotil’s dangers — is to highlight an interesting and disturbing facet of the corporate personality.

Freud would have dubbed it ‘hysterical blindness’. Social Audit’s Charles Medawar calls it ‘the pursuit of ignorance in the search for corporate bliss’. Either way, Drug Diplomacy chronicles a stubborn reluctance by Searle’s scientists and executives to accept that their product is lethal.

The story began back in January 1981 with a letter asking Searle for more information about the drug. The request was ignored. Social Audit then published their leaflet WHO says Lomotil has no value? outlining the main dangers of the drug. There followed an exchange of letters, phone-calls and meetings between the giant and the watchdog.

In most of these exchanges Searle refused to face Social Audit’s main accusation — that to market a dangerous drug in countries lacking the usual consumer safeguards is irresponsible. Instead they attempted to sidestep the accusation by searching for loopholes in the scientific evidence marshalled by Social Audit. At the same time they refused to see the weaknesses in their own experimental data.

For months the battle degenerated into a duel of statistics until in December Searle at last conceded defeat and agreed to change their marketing policies.

The watchdog won. But Charles Medawar is not satisfied, because this was just victory in one battle of statistics. And it is the establishment of a principle that he and co-author Barbara Freese are seeking. They point out that Lomotil is just one instance of abuse — just one of ‘thousands of other drugs whose effect in developing countries is mainly to turn things from very bad to very much worse.’

And until the World Health Organisation institutes a pharmaceutical marketing code with teeth (see NI 105; Antibody for ill-treatment) companies like Searle will continue to turn a blind eye to potentially harmful effects of their products and systematically misinterpret scientific evidence in order to add noughts to that all-important bottom line.

*Available from Social Audit. 9 Poland St, London W1V 3DG, UK. £3.95 + 35p p & p in UK, $8 + $4 p & p airmail outside Europe.

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[image, unknown] CENTRAL AMERICA[image, unknown]

Mexico's refugees
Guatemalans flee north

MEXICAN bishops have now called the world’s attention to the plight of 20,000 refugees from Guatemala who have crossed the border into the southern state of Chiapas. The bishops also called on the Mexican government to offer hospitality and security to the refugees and protect them from abuse by the security forces and the onerous bureaucracy.

The bishops say that the peasants have fled ‘the aggression and persecution of which they are victims in their own country.’ Many arrive in Mexico sick and starving and suffering from ‘terrible psychological traumas’ from the atrocities they have witnessed. A substantial number are still suffering from the injuries of beatings and torture.

Several thousand are housed in two government-run camps at Las Hamacas and La Sombra. A larger number have been taken in by Mexican families or have established themselves in the vicinity of existing Mexican townships.

The majority of the refugees have no resources of their own and many have been forced by their poverty to give away some of their children to Mexican families who will be better able to look after them. Some have been able to find low-paid work on coffee and cotton estates in Chiapas but the harvest is now over and they will be unable to earn sufficient to feed and clothe their families. The bishops’ report also states that although the refugees have attempted to maintain basic health standards they are being forced to drink water from the rivers Suchiate and Usumacinta, which are often polluted by decomposing bodies.

The Guatemalan army has drawn a cordon along the border and military bases, garrisons and frequent patrols harass the refugees moving out of Guatemala and make it dangerous to return.

Although Mexico has a long-standing reputation as a haven, it is not a signatory to the UN protocols on refugees. And over 3,000 peasants were deported last July.

There was such an outcry after the deportation that the government has allowed numbers to build up in recent months — although it is sensitive to the possible effects in Chiapas, which is itself predominantly Indian and very poor.

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[image, unknown] TECHNOLOGY[image, unknown]

Bullock power
India's animal resources

Bullock power! NEARLY a third of all the energy consumed in India comes from animal and human muscle power. Dr. N. S. Ramaswamy, director of the Indian Institute of Management at Bangalore (IIMB) estimates that working animals provide as much energy as the entire electrical system of the country.

But in spite of this colossal contribution. animal power remains neglected. The reason for this neglect, he feels, is the impression that animal energy is a passing phase in our economic development. that with modernisation work-animals will get eliminated.

But this is a wrong impression, argues Dr. Ramaswamy. ‘Over 50 per cent of our farm holdings are less than two hectares. These farms can never use tractors. Similarly only 50 per cent of our villages have paved roads on which trucks can ply.’

Dr. Ramaswamy’ s Institute has collected data on the importance of bullock carts to the Indian transport system. The total investment in the 13 million-odd animal-drawn carts in India has been estimated at $5 billion. This is comparable to the outlays on railways ($5 billion) and the rest of the public transport system ($3.1 billion).

And Dr. Ramaswamy asserts that a rural transport system based on bullock-carts can provide enormous employment. ‘The problem before us’, he argues, ‘is not how to get rid of the bullock cart but how to make it more efficient’.

Because of the heavy yoke the working life of the animal is often reduced by as much as one tenth. Apart from being cruel, the national loss resulting from the loss of one year of every animal’s working life amounts to about $250 million and Dr. Ramaswamy argues that even if an improved harness made a small difference, the economic benefit to the cartmen and the country as a whole would be substantial. Experiments are therefore needed to design a good suspension yoke similar to those in horse carts, which by its floating action would eliminate the vertical weight on the bullock

Rajiu Gupta CSE

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[image, unknown] MULTINATIONALS[image, unknown]

Sewing it up
Coats Patons in India

[image, unknown] THE Indian affiliate of the UK-based multinational Coats Patons has been accused of endangering the health of its employees, of conniving in the corruption of trade union officials and of causing a loss of jobs in both the UK and South India.

The accusations come in a new pamphlet published by Scottish Education and Action for Development (SEAD)* and they centre around the Indian textile firm Madura Coats, in which the Glasgow-based company is the largest shareholder.

Coats Patons is the world’s leading thread producer, with operations in thirty countries. Its ‘chain and anchor’ trade mark is a familiar sight.

Total world sales in 1980 were around $1,400 million and of its $130 million profit 79 per cent was contributed by its overseas operations. Investment in the Third World yields three times as much profit as in the UK.

Labour costs in India, for example, are 13 per cent of those in Scotland, so it is hardly surprising that the company is now producing overseas and then shipping the products back. In 1960 it employed 14,000 people in Paisley, Scotland, but by November 1981 the total was down to 1,000 and falling further.

The 1980 output of Madura Coats is substantial — it would stretch two thousand times round the world. And in all 22,000 people are employed, with a skilled worker getting around $90 a month — a good income by Indian standards.

But the management/worker salary ratios also reflect the stark discrepancies in Indian incomes. While in the UK the income ratio between the company boss and an apprentice might be about twenty to one, in Madura Coats it is one hundred and twenty to one. And on top of this the management can look forward to handouts from the company’s ‘black money’ account and subsidised housing.

Working conditions are poor. The textile industry in the UK has a bad enough health record — where workers have to put up with an atmosphere of dust, noise and chemicals. There are, however, no systematic health records kept of the workers at Madura — though one local doctor did say that there was a high incidence of TB and other lung diseases.

The trade unions offer very little help. Like many other institutions in India they are organised very much along party lines — INTUC, for example, is linked to the Congress Party. Many of the union officials are corrupt and at the annual management/union negotiating sessions the major unions are given an allocation of jobs which they can sell to potential employees at $1,000 each — the equivalent of the first three years wages. Mr. P.G. Menon, the company personnel manager, estimates that for every 100 new recruits about half purchase their jobs in some way.

The SEAD pamphlet argues that in assessing the impact of the multinational you also have to take into account the number of small home-thread producers that its highly mechanised operations have thrown out of work. The Indian government has tried to minimise the damage by restricting the number of licences to the mechanised plants — but there is little that can be done in the face of such overwhelming commercial logic.

Two advantages claimed for multinationals in the Third World is that they do at least provide capital and tax revenue for the host countries. The SEAD pamphlet points out, however, that 33 per cent of Madura Coats’ capital assets in 1979/80 were in the form of loans raised in India. And as for tax, Madura Coats has won something of a reputation in India for tax avoidance — it was actually the target of a tax raid in 1980.

‘Transfer pricing’ is one of the easiest ways for multinationals to avoid tax. If Coats Patons in Glasgow, wins a contract in Egypt for the supply of thread, for example, it can use the Indian factory to make the thread and ship it directly to Egypt. Payment will be received in Glasgow and the share-out of income will depend on where the least tax will be paid. Tax is lower in the UK so it is better to pay it there and India is deprived.

Money also passes to the UK, completely above board, through repatriation of profits — and in 1980 this came to around $2 million. SEAD points out that this is a kind of ‘Oxfam in reverse’ since it is a surplus based on the low rates of pay of Indian workers. Indeed this one company alone donates back to the UK half of what Britain’s biggest voluntary aid agency puts into India

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Sewing It Up: a Scottish Company in India
, by Alan Sinclair,
Published by Scottish Education and Action for Development,
29 Nicholson Square Edinburgh EH8 9BX.

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[image, unknown] NORTH-SOUTH[image, unknown]

After Cancun
US tight fist hits the poor

SIX MONTHS after last autumn’s North-South summit in Mexico global negotiations to restructure the world economy appear to have died a quiet death. The much-touted ‘spirit of Cancun’ has evaporated in the face of super-power brinkmanship in Poland and Central America.

The US, which was only persuaded to attend the Mexican conflab at the last minute, has proved the biggest barrier to progress. The refusal by the Reagan administration to budge on economic concerns has confirmed the view of many Third World diplomats that such international têtes-à-têtes are little more than debating societies designed to absorb energy and derail discontent.

Despite growling protests from Western allies, Washington has steadfastly refused to alter its course on high interest rates. This ‘full speed ahead and damn the torpedoes’ approach has thrown the entire world monetary system into disarray, forcing other industrial nations to follow suit and undercutting Third World efforts to patch up their already crippled economies.

American monetarism — what the US Vice-President once called ‘voodoo economics’ — has kept the US dollar strong on international currency markets, and effectively depreciated competing currencies. This has had an especially disastrous impact on poor countries. Theoretically, Third World exports are now cheaper in terms of US dollars so they should be able to increase trade. In fact, the slow-down in the world economy has damaged trade. Even where some developing countries are exporting more in volume terms, falling prices mean they are actually receiving less in total income while the prices of Western manufactured goods have either increased or remained steady.

In addition, this tacit depreciation of Third World currencies dramatically alters the global debt picture. For example, a country whose currency has lost 50 per cent of its value will now have to export twice as much to earn the same. So its debt will effectively have been doubled because of the high interest rate policy of the American Federal Reserve Board.

This body-blow to development naturally enough does little to instil confidence in President Reagan’s wide-eyed admonishments to the poor to ‘pull up their bootstraps’ and let free enterprise perform its magic.

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New Internationalist issue 112 magazine cover This article is from the June 1982 issue of New Internationalist.
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