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It is important to recall that the United Nations has a long history of taking a strong position on multinational corporations or transnational corporations (in the terminology formerly preferred by the UN). Throughout the 1970s, and well into the 1980s, such corporations were viewed with extreme suspicion both by the Eastern bloc and by developing countries. The UN, through UNCTAD, was instrumental in articulating through many documents the abusive practices and ill-effects consequent upon the action of such corporations. This lead to numerous resolutions questioning the role of such corporations. A Center for Transnational Corporations was created by the UN to monitor their activity.
There was however a subtle shift during the 1980s. Developing countries realized that the assistance available to them through intergovernmental organizations and bilateral government aid was not necessarily as helpful as the bodies concerned had tended to claim - nor was it sufficient. The questionable practices of corporations could be forgotten where funds were directly forthcoming - especially if decision makers were appropriately "rewarded" and the effects on citizens could be ignored or portrayed as "temporary."
Multinational corporations got tired of the bad press they repeatedly received and seem to have used their considerable influence to seek ways to out-manoeuver their critics. A number of bodies representing business indirectly emerged to assist in this process.
Criticism within the United Nations was muted and the UN Centre on Transnational Corporations was encouraged to adopt a much more conciliatory position. The role of UNCTAD was severely diminished, and its continued existence was threatened. Academic critics were encouraged through appropriate funding to recognize the positive role of corporations in development. The UN ceased to be a channel for the articulation of questions concerning the role of such corporations - rather such criticism was transposed into analyses of the movement of capital and investment funds, detached from explicit association with multinational corporations.
With the fall of the Soviet Union, the role of such fora as the annual Davos Symposium provided an increasingly attractive environment in which CEOs of the largest multinationals could rub shoulders with government leaders from many countries - notably developing countries. As a "nongovernmental" meeting, those attending could do so without having to indulge in the degree of posturing typical of more formal intergovernmental gatherings - in which there exists no arrangement for the presence of "nongovernmental" bodies, other than the NGOs recognized through the consultative status arrangements.
Such fora were successful because of the way their exclusiveness was managed to flatter those who participated - as well as offering the prospect of lucrative contracts. It became "OK" for government leaders of developing countries to be seen to be closeted with CEOs of the previously stigmatized multinationals. The fact that the success of multinationals in expanding their operations into developing countries could result in significant earnings for the host country helped considerably to ensure the complicity of governments of industrialized countries. UN officials and associated diplomats could also be found at such gatherings - even prepared to play a role less prominent than was their wont.
From the late 1980s, the inability of intergovernmental organizations to deliver on their "development decade" promises of "health for all", "jobs for all", "education for all", "justice for all", "housing for all", etc became increasingly apparent - and was more widely recognized through the development of global media.
The credibility of the United Nations was increasingly called into question, culminating in widespread acknowledgment of its complete dishonour following its betrayal of a promise of "safe haven" to citizens of Srbrenica - leading to the death of some 7,000 Bosnian Muslims. This was followed by the shambles of Rwanda in which, yet again, the UN played a key part in supervising a massacre. The current Secretary-General unwittingly played a key role in the mismanagement of both occasions, and notably in the second -- as acknowledged in subsequent reports (http://www.eucom.mil/europe/bosnia/usis/99nov16.htm; http://www.eucom.mil/africa/rwanda/usis/99dec16.htm).
It is important to recall that according to Article 58 of the UN Charter, the General Assembly was to coordinate macro-economic policies. Moreover, according to Article 63, ECOSOC should also coordinate their implementation by the specialized UN agencies. In fact, following an agreement by the General Assembly without a vote in 1947, the UN effectively gave up control of these policies to the World Bank and the IMF. According to Victor Menotti:
"The practical result of their self-declared autonomy is that the BWIs now restrict the participation of the UN's specialized agencies at BWI functions and meetings. Meanwhile, the BWIs actively participate not only in the meetings of ECOSOC, but also the meetings of the UN's specialized agencies. This massive bureaucratic dysfunction has produced today's international system that institutionalizes corporate rights (as enforced by the BWIs) over the universal citizens rights (as embodied by the UN)". (http://www.e-terra.net/stories/storyReader$129).
It is important to recall that the term "NGO" derives from Article 71 of the UN Charter. The social phenomenon recognized through this negative category is a consequence of what the UN has been willing to recognize through its political processes and related administrative procedures -- highly influenced by Cold War game-playing. The UN was, in the light of its Charter, unable to recognize or establish relationships with any other form of organization now characterized as part of civil society. Efforts to do so were traditionally framed as part of "public relations".
Until the Earth Summit in 1992 in Rio de Janeiro, the United Nations had been remarkably successful in managing its relationship with such recognized NGOs through layers of privileged access, studied indifference (wherever possible), and the adoption of a highly critical NGO review procedure -- according to standards to which the UN itself only paid lipservice. This arrangement was periodically oiled by remarkable eulogies of cosmetic appreciation from the highest intergovernmental level - whose content, promises and minimal follow up had changed little over the decades.
At Rio somehow the floodgates were opened and "NGOs" of every kind suddenly sought some form of relationship with the United Nations system - overwhelming the administrative procedures of the past. Many of these groups were new to the international scene but were quick to distance themselves from traditional "international NGOs" -- whether by wielding comparatively large financial resources or by according significance only to "peoples movements" uncluttered by decision-making structures and secretariats.
This process was aided and abetted by the UNDP -- which had previously sought(and found) means of bypassing any international nongovernmental structures in order to develop its own direct relations with field level NGOs in developing countries through UNDP Resident Representatives. The process was further complicated by the sudden recognition of the role of "civil society" organizations in countries of the former Soviet Union -- following the chaos of official intergovernmental efforts to manage the transition to western capitalism.
These three tendencies raised a multitude of coordination and funding issues for which solutions are still to be found - as admirably illustrated by the chaotic operation of any humanitarian disaster relief.
With the cessation of the Cold War, it became possible to recognize the level of corruption through which the international system was operating -- whereas previously it had been considered prudent to deny such matters. Attention was given to the existence of international crime rings and questionable decision making processes. It became apparent the extent to which international business contracts were dependent on "facilitated" tendering processes. The nepotism and other questionable practices of intergovernmental agencies could now be discussed openly without fear of sanction.
Whereas espionage had been a legitimate tool of Cold War processes to protect "national security", its redefinition as economic espionage towards the same end became a new strategic peacetime weapon. The existence and function of the Echelon system was finally acknowledged (now the subject of deep concern in the European Parliament, see: http://www.europarl.eu.int/dg4/stoa/en/publi/166499/execsum.htm).
The academic world was very slow to respond to these developments. They completely upset a tidy world of international relations, macroeconomics, international law and community-level sociology that had empowered a world view of development theories and policies. These were recognizably threadbare in the light of the cumulative failure of a succession of "development decades" and the shambles of the economic transition of eastern bloc countries during the early 1990s (under the guidance of western expertise).
Following the fall of the Soviet Union, and the critical role of actors and phenomena that had long been systematically ignored - including organized criminal networks and systemic corruption -- academics found themselves quickly obliged to provide a post facto rationalization for realities with which others had been obliged to deal for some time. Foundations have been happy to support recognition of this new reality by traditional centers of excellence after reinforcing their preoccupation with the previous reality for such a lengthy period. However, although slow on the uptake, academics have proven quick learners and have successfully redefined the field of discourse to position themselves as the discoverers of phenomena with which others have been engaged whilst they were preoccupied with the earlier social reality.
But unfortunately they have not been fast enough. Despite desperate attempts by governments and international institutions to reframe the emerging reality to minimize any disruption to business as usual, it has become increasingly clear that the ability of institutions to cope with daily challenges and emerging crises is now totally problematic - a disaster thinly disguised by spin. The scholars claiming relevance have few credible recommendations and none on which they themselves are prepared to stake their livelihoods. In its years of vain effort to redefine itself, with the aid of those who ensured its previous inadequacy, the United Nations is itself in search of new myths through which to regain credibility and respect.
The 1990s saw the explosion of the Internet and the Web -- unpredicted, unfacilitated and unexplored by the UN system, even though electronic mail had been available since the 1970s. This gave new meaning to "global" and the power of local groups employing it -- "Think globally; Act locally".
"Globalization" has now been hyped as the panacea through which the specific ills of everyone will be healed - a form of conceptual "snake-oil". As before, it is only necessary to make some regrettable "adjustments", mediated by the World Trade Organization (IMF, etc), and everyone will achieve a better quality of life -- some time in the future (but without any tangible guarantees).
This myth was catastrophically called into question by the Asian financial crisis and the destruction of the livelihoods of many -- whilst the high priests of globalization looked on in innocent bemusement from the armchairs of their centres of excellence. That financial crisis then drifted into the past, the vulnerabilities of the financial system were minimized or denied.
Then came Seattle and an extraordinary self-organizing conglomeration of "civil society" protesters that viewed the purveyors of globalization with the deepest suspicion, and managed to attract more support and media attention than their detractors had imagined possible -- and then followed up this success with others. To consider options, the Group of Seven (or Eight) met in Okinawa in 2000 at an estimated cost of one billion dollars - the most expensive gathering in the history of mankind - and with virtually undetectable consequences (at a remarkable cost of over $100 million per delegate!).
It is from these different threads and trends that the UN's Global Compact with multinationals has now emerged.
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