Monday, June 28, 2010
06/25/2010 The double standards of multinationals | Martin Khor

Developing countries should be able to adopt a 'polluter pays' principle for ecological disasters â€" just like the US has with BP

$ 20 billion fund that Barack Obama managed to get BP to agree to set up to meet claims for economic losses and environmental costs from the Gulf of Mexico oil spill is impressive, especially since the amount can be increased. The political pressure so evident also caused BP to temporarily suspend paying dividends. This should set a precedence for how host countries of multinationals take stern action, and executives of multinationals respond to meet their responsibilities â€" even if only partially.

But then the US is a powerful host country indeed, and BP had little choice but to yield given the political pressure and public anger. Developing countries are also host to multinationals that in many cases have poisoned the environment or caused immense loss of life and property. But these multinationals have got away scot free or paid miniscule sums for the harm they caused.

These double standards must change. There should be international co-operation between the host and home countries of multinationals to ensure they compensate for the environmental clean-up as well as pay victims for ecological disasters they cause, wherever they take place. The G20 leaders should talk about it this weekend, and not just focus on bank levies and the shift to fiscal austerity packages.

Though the Mexican Gulf oil spill may be the United States' greatest environmental disaster, worse ecological catastrophes have been caused by international companies in developing countries. Little, if any, compensation has been paid by these companies. And the governments of the countries whose people own the companies usually turn a blind eye. The two most directly related cases â€" because they also involve oil spills â€" are in Ecuador and Nigeria. Ecuador's Amazon region has been contaminated by oil and toxic waste in amounts far larger than the Gulf oil spill so far. The oil and waste was discharged by Texaco (bought over by Chevron in 2001) when it operated an oil concession in 1964-1990.

The New York Times reported indigenous people in the area saying that toxic chemicals had leaked into their soils, groundwater and streams, and that some of their children had died from the poisoning. It cited a report of an expert (contested by the company) who estimated that 1,400 people had died of cancer because of oil contamination.

The second case is the Niger Delta in Nigeria, a major oil-producing region in which Shell and other companies operate. A recent article by John Vidal in the Observer entitled "Nigeria's agony dwarfs the Gulf oil spill. The US and Europe ignore it", describes how spilt oil has contaminated swamps, rivers, forests and farmlands in the region. "In fact, more oil is spilled from the delta's network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico," wrote Vidal.

A report by environment groups calculated in 2006 that up to 1.5m tons of oil â€" 50 times the pollution unleashed in the Exxon Valdez tanker disaster in Alaska â€" has been spilled in the delta over the past half century. According to Amnesty, in 2009 the equivalent of at least 9m barrels of oil was spilled and it accused the oil companies of a human rights outrage. Life expectancy in the rural communities has fallen to a little above 40 years.

By Nnimo Bassey, the Nigerian who is chairman of the Friends of the Earth ":" We see the desperate efforts to stop the oil spill in the U.S.. But in Nigeria, oil companies have largely ignored their diversion, cover them and destroy the people 'livelihoods and the environment. "

Then there is the worst environmental disaster in Bhopal all , where poisonous gas from the US-owned company Union Carbide in 1984 affected half a million people, killing 2,300 immediately, with another 15,000 to 30,000 dying subsequently and many thousands of others maimed seriously. Neither Union Carbide nor Dow Chemical, which bought the firm in 2001, accepted responsibility for the disaster. Union Carbide paid $470m in a deal in 1989 with the Indian government, but this is a small and wholly inadequate amount, given the enormity of the disaster.

These cases show a big contrast between what the US administration is doing to hold a multinational company financially accountable, and how similar companies that cause ecological catastrophes in developing countries are able to get away either freely or with grossly inadequate pay-outs.

Developing countries should learn lessons from the United States and to take similar measures in accordance with "polluter pays" "basis.

But these countries just don't have the political clout of the United States. Thus, the governments of the home countries of the multinationals should also act to make their companies accountable for their actions when they operate in other countries, and to compensate adequately when they cause environmental damage.

Martin Khor ? Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions| More feeds

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