Background to Emergence of the UN's Global Compact
- / -
Part 1 of: "Globalization": the UN's "Safe Haven" for the World's Marginalized
UN opposition to transnational corporations
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."
Reaction of multinational corporations
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
Acceptance of 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.
Search for alternatives to intergovernmental aid
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;
Disconnect of the Bretton Woods Institutions (BWIs) from the UN
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).
Implicit reframing of NGO relationship by the UN
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.
Acknowledgment of what had been denied
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
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.