From Venezuela to the US: People power
Goldman Sachs’ decision to bailout the Venezuelan government has, unsurprisingly, attracted widespread global condemnation. The transnational firm stands to make a potential windfall profit as Venezuelans continue to face empty shelves and government water cannons daily.
Usually it is international financial institutions (IFIs) such as the International Monetary Fund (IMF) not transnational companies, which occupy the dubious space of government bailouts. In part made necessary because the IFIs insist that government’s cannot declare bankruptcy.
With most of the 100 of the world’s biggest economic entities now companies, not states, the Goldman Sachs bailout may be a sign of things to come.
And we need to be ready.
For citizens seeking to assert their human rights the growing influence of transnational corporations raises serious concerns.
The state may still be the primary oppressor of civil society rights but businesses, particularly transnational corporations, now have a greater impact on all spheres of life than ever before. Nowhere is the resulting instability more evident than in the Global South.
New empirical research published in the 2017 State of Civil Society Report finds that the business community, especially transnational corporations are exploiting human rights and labour standards in countries with weak rule of law and regulatory enforcement.
Businesses are also increasingly embroiled in serious human rights infractions in Northern countries. In the United States, the Dakota Access Pipeline mirrors patterns of land grabs, dams and mine construction, employed by transnational corporations, governments and multilateral organizations throughout the Global South.
Like Venezuelans, indigenous water protectors protesting the pipeline have also faced water cannons, sometimes in sub-zero temperatures. North Dakota lawmakers even mulled a potential law earlier this year, which would have protected car drivers who ‘unintentionally’ ran down protestors standing in the street from prosecution.
These worrying trends in both the Global North and Global South have contributed to a situation where, according to CIVICUS research, just three per cent of the world’s population live in countries with ‘open’ civic space, meaning their rights to freedom of expression, association and peaceful assembly are not restricted.
Too often this is the result of governments taking the side of corporations over their own citizens. Meanwhile, the global proliferation of corporate tax avoidance has also contributed to a reduction in the availability of public funds, in both the Global North and Global South.
Global corporate tax avoidance is now so pervasive that it is causing essential social services to be cut and even impeding economic growth. According to Citizens for Tax Justice top 500 US companies hold an estimated US$2.4 trillion of profits permanently offshore, avoiding up to US$695 billion in tax.
Illicit financial flows leaving Africa at US$50 billion are also estimated to far exceed the inflow of official development assistance (ODA) which flows into the continent, with business seen as playing a key enabling role in this.
For those of us who seek to protect and uphold civic space, it is now essential to not only appeal to governments but also to corporations. Fortunately, there is also mounting evidence of a strong business case for protecting civic space.
Poor governance, corruption and bribery cost businesses money. According to UN Global Compact research, poor governance and corruption could be costing businesses an average of 10 per cent of the cost of doing business. The difference between operating in a low corruption climate versus one with higher levels of corruption can be as much as 20 per cent of profit, while bribery is estimated to account for around US$1 trillion a year.
In light of these converging issues, many in civil society are advocating for the creation of an international legally binding treaty on business and human rights.
The good news is that there are businesses that are committed to ethical practices. And there are areas where businesses are improving.
Indeed the overwhelming and growing support from the private sector for the Paris climate pact is a promising sign that businesses and civil society can find common ground and work together. Civil society has found many businesses even more responsive than governments to pressure around climate action. To date, climate campaigns have led to institutions committing to pulling US$5 trillion from the fossil fuel industry globally.
The 2017 CIVICUS State of Civil Society report examines how this co-operation can be expanded to new areas to provide both monetary and community benefits to business and civil society.
Yet those businesses that do seek to act responsibly can also be undermined by weak global regulations, which allow unscrupulous companies to comb the planet for the cheapest labour or lowest corporation taxes. Such a context demands both better carrots for those businesses interested in improving their practices as well as better sticks to drive compliance and accountability.
Dhananjayan Sriskandarajah is Secretary-General of CIVICUS, the World Alliance for Citizen Participation.